The Wall Street Journal ran a front page article this week detailing the woes of the One Laptop Per Child (OLPC) initiative. I can’t speak to the recent fourth-quarter motives of a certain New England football team (of which I am a fan), but in the case of OLPC, I don’t think the article went far enough. OLPC’s current path is untenable. Here are some problems OLPC faces:

1. Nicholas Negroponte is an idea guy. He is not a businessman. He makes comments such as “I’m not good at selling laptops. I’m good at selling ideas.”, and called the question of who would provide support for the OLPC laptops in a few years “a frightening question”. He refuses to participate in competitive sales situations, like one the Macedonian government suggested recently. OLPC is no longer in the idea business; it’s in the computer business. Negroponte should fire himself and ask the board find a new CEO who can sell, is good at strategy and has turnaround experience.

2. Intel is the enemy. OLPC uses AMD processors. Don’t be surprised when Intel acts in its own selfish interests. That’s their job. Either switch to Intel chips or return their money and kick them off of the board.

3. Microsoft is also the enemy. They can afford to slash the price for their software to $3 per machine to attack OLPC. Find a way to show OLPC’s software is better for certain markets, independent of price, or give up and get out of the software business.

4. Because OLPC can’t close enough sales in their target market, they are trying to sell laptops designed for third-world kids to American children at double the price. It won’t work. They should stop this and figure out a way to sell to their target market, or give up and get out of the laptop business.

5. OLPC is spending too much money. A $9.5 million budget for this year is too high for a business that shows no prospects of earning a profit. They should reduce expenses now, before corporate funding dries up, as it is likely to do in the wake of the the WSJ article.

On the positive side, OLPC has a worthy mission of producing low-cost laptops to millions of needy children. In some ways, they have succeeded, because without their efforts, Intel and Microsoft would not be offering such low-priced products to developing countries. OLPC should find a narrower, more defensible niche and focus its efforts there, recognizing that it can’t achieve its broad ambition on its own unless it has a more targeted, smaller success and can scale up from there. That is a daunting prospect, though. It may be wiser for them to figure out a way to include Intel and/or Microsoft in their plans, and use OLPC’s money and mission to push them farther and faster down the cost curve than they would proceed on their own.

Posted by Roger Greene
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