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Two visions for delivering PCs to emerging nations

One Laptop Per Child and Intel take competing approaches to manufacturing, pricing PCs--and it's not yet clear which will prevail.

A correction was made to this story. Read below for details.

In its effort to bring computers to emerging nations, the nonprofit trade organization One Laptop Per Child has linked up with some of the world's largest contract manufacturers and component suppliers to build its low-cost machines.

Chipmaker Intel, meanwhile, is working with companies like Zinox, a hardware maker from Nigeria you've probably never heard of.

The difference, though, could prove pivotal in determining which vision for expanding computing into emerging nations spreads more broadly and rapidly. By centralizing manufacturing, One Laptop Per Child (OLPC) says it can keep the cost of its XO computer to a minimum. Taiwan's Quanta will make the laptops while Chi Mei Optoelectronics and FoxConn will supply the screens.

The laptops cost $150 to make and will go down over time, according to OLPC's founder and chairman, Nicholas Negroponte, and this year about 1 million of the machines will be made each month. The organization is also trying to get governments to subsidize its programs.

"OLPC has one goal: to maximize the number of children who have a connected laptop," wrote Negroponte in an e-mail. "Intel views children as a market and we view them as a mission."

By contrast, PCs based on Intel's Classmate PC blueprint will cost about $300 this year and eventually get below $200, said John Davies, vice president of the World Ahead program at Intel. Although potentially more expensive, the Intel systems will be made in the regions in which they'll be sold, which will lead to local job growth, better customer support and, ideally, the start of a local IT industry. The infrastructure in many places already exists, Davies added.

"Eighty percent of the PCs in Pakistan are assembled by Pakistani companies," he said.

Companies like Taiwan's Via Technologies take a similar tack. Via collaborates with universities and local manufacturers in Africa and India to develop inexpensive PCs and thin clients based on its chips.

"One factor is local job support and one is local tech support. When the products are out in the field, who is going to stand by and support them? Support is absolutely critical," said Richard Brown, vice president of marketing for Via. "Oftentimes, schools want to buy locally."

Low Cost PCs

Who's right? Who knows, but analysts and outsiders tend to lean toward the Intel and Via view of things.

?There's something to be said for having regional knowledge about your audience," said Richard Shim, an analyst at IDC. "If you do a cookie cutter approach, you can do it more cheaply, but it may not fit the existing situation."

The "build local" ethos can also definitely impact local economies, said Wayan Vota, the director of Geekcorps, which helps bring technology to rural villages in emerging nations. Geekcorps partners with Via.

 

Correction: This story misstated John Davies' first name, as well as the name of the program for which Davies works. It is called World Ahead.

In the West African nation of Mali, a former local Geekcorps intern named Moussa Kita has formed his own IT firm, called Zirsun. Kita only has around four employees.

"But in Mali that's a midsize business, and they are working on projects across West Africa," Vota says. "We try to import as little as possible."

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Negroponte, for his part, says the jobs that local PC manufacturing can provide are somewhat illusory, particularly if the cost of hardware goes up.

"Every country I visit, bar none, even the small ones, ask if they can build the XO in their country. My reply is in two parts. One, yes, if you will accept the price going up. Two, if you understand that this is really assembly and that assembly jobs are both few and not great jobs," he wrote. "The only justification to build the XO in each country is national pride--which is certainly important. Otherwise, local manufacturing does not affect economics as all the parts are (imported) anyway."

Negroponte added that the two groups are in some ways targeting two separate demographic groups. The chipmakers are mostly reaching out to the so-called next billion users, or the villages and urban centers that are poor but have experienced some of the benefits of economic growth in places like China and India.

"We really want to bring the XO laptop to the poorest and most-remote kids, for whom school is often a tree and whose teachers may not even show up," he wrote. "It is about learning. It is a long-term investment in young children who will not be in the job market for 5 to 10 years at least. Teaching 6-year-olds Excel is criminal."

Intel's Davies and Via's Brown, though, stated that any cost benefits under the OLPC vision, in the end, won't be large at all. The OLPC laptop is made out of the same components as a PC, and will rely on the same sort of back-end servers and wireless antennas. Davies, in fact, doubted that the OLPC will hit its goal of $150.

"We know what LCD monitors cost," Davies said.

Local PC manufacturing is also growing alongside national and regional initiatives to increase PC ownership. Sri Lanka, for instance, has relaxed value added taxes and duties to make it cheaper to import computers while some banks in Turkey are offering zero-interest loans for PC purchases, noted Davies. In Brazil, Banco Santander Central Hispano, a large local bank, is offering zero-interest loans to students for PCs if they open accounts, Davies said.

"It's actually a cheaper way to acquire a customer," he said.

And learning business applications isn't generally viewed as bad among educators in emerging markets, Davies said. Often, it's what they want to teach kids.

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