Year End - OLPC heralds era of low-cost computing

Even though it has not met its goal, OLPC has already made a huge impact on the computer industry

Critics of the One-Laptop-Per-Child (OLPC) Project like to point out that it has not yet lived up to its goal of putting US$100 notebooks in the hands of millions of kids in poor countries, but that's a short-sighted view considering the impact it's already having on the computer industry.

OLPC's XO laptop and the dream of the US$100 notebook PC have driven down the cost of computing and highlighted the issue of the lack of computing resources in developing nations.

It has inspired an entirely new class of low-cost laptop, which already includes two rival devices in the Eee PC and Classmate PC and will have many more by the end of 2008, according to research company IDC. The laptop has also roused big technology companies to join the fray with research dollars and plans for the future.

Intel and Microsoft, for example, are hard at work tweaking chips (Diamondville) and software (US$3 for XP, Office and a suite of additional software) for this low-cost segment of the laptop industry.

"There's a lot of potential, because everyone is looking at this market," said Richard Shim, research manager for personal computing at IDC.

A number of trends are occurring due to the low-cost laptop drive, he said. Prices are falling and companies are branching out with new laptop designs. The Eee PC, for example, is ultra-portable, weighing less than a kilogram and carrying a small, 7-inch screen.

Shim says he has already seen new low-cost laptops that have yet to be unveiled, and said "all the major guys" are looking into such devices, but he declined to reveal further information due to nondisclosure agreements.

To be sure, laptop PC prices were already falling prior to the launch of OLPC's XO laptop, said Rob Enderle, principal analyst at the Enderle Group. The proliferation of LCDs (liquid crystal displays) in laptops, desktop monitors and other devices has pushed down the price of such screens to below that of older, CRT (cathode-ray tube) monitors in some cases, and iPods and other digital music players have helped lower the price of hard disk drives and flash memory storage.

But the challenge OLPC Chairman Nicholas Negroponte raised a few years ago, to design a US$100 laptop computer for kids in developing countries, crystalized the need for lower-cost computers and unleashed new energy for the effort, he added.

In microprocessors, for example, not only has Intel stepped up its efforts to lower costs and increase power efficiency, but other processor makers are challenging the company by winning designs in the low-cost area as well, including Via Technologies.

The competition is prodding processor makers to improve their designs and lower prices, according to market researcher iSuppli. That's important because the microprocessor is normally the most expensive component in a computer, or second only to the LCD screen in some cases.

Ultra-low-cost mobile PCs are likely to have an impact on the component supply chain going forward, said Jamie Wang, computing analyst at Gartner. In addition, the average price of mainstream mobile PCs will probably be driven down to compete with the new breed of low-cost notebooks.

Still, people interested in buying a low-cost mobile device should beware, the analysts warned. In the electronics business, you often get what you pay for.

"You're making very severe trade-offs to get these costs," said Enderle. "You can't have too many trade-offs, or you lose the usefulness."

While products such as the XO and the Eee PC can be had for under US$250, there are mainstream laptops with far better performance available for US$500, he said.

There's also the problem of creating such devices for developing nations, where poor infrastructure such as a lack of electricity and Internet access make computing a far more difficult issue than just providing laptops, say Matt Wilkins and Peter Lin, analysts from iSuppli.

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