February 13, 2008 — First Movers

A nongovernmental organization leads the way in offering inexpensive laptops to developing countries
By Nashat Moin

At the World Economic Forum in January 2005, Nicholas Negroponte first presented his idea of providing millions of school children in developing countries with $100 laptops. The goal of the former MIT Media Lab director was to "provide children around the world with new opportunities to explore, experiment, and express themselves."

His idea was well-received. Kofi Annan, former U.N. secretary general, publicly endorsed the concept, and companies like Google, AMD, and News Corp. gave $2 million each to Negroponte's One Laptop Per Child (OLPC) project for research, development, and production of the computers.

In the following months, the heads of state and education ministries in Brazil, Thailand, Nigeria and other countries expressed an interest in making large purchases of the proposed laptop, while Negroponte's lab at MIT worked hard to not only bring down the cost of the laptops but also to develop an interface that would be conducive to children learning by themselves.

Recent times have seen the growth in the number and influence of nongovernmental organizations (NGOs). These nonprofits can facilitate the provision of goods and services by working with the government or, more rarely, the private sector. On occasion, as is the case with OLPC, they can use donations, grants, and volunteer resources to become a "first mover" in developing country markets.

Hildy Teegen, a dean of the Moore School of Business at the University of South Carolina, explains in her 2004 article with Jonathan Doh and Sushil Vachani how NGOs often step in to fulfill needs that neither the private nor the public sector addresses. "Many NGOs are adept at providing certain goods and services because they have gained technical expertise and experience by working in difficult settings or with underserved populations," the researchers wrote. "Given their expertise and trusted position, they are often best suited to provide high-quality services at low cost to publics with unmet needs."

In the case of OLPC, it was the first time anyone proposed creating affordable laptops for young school children. At the time, not only did conventional laptops cost much more than OLPC's target price and require access to electricity and network infrastructure, but they were also unsuitable for use in harsh conditions.

OLPC's laptop, called XO, addresses these issues. The latest version on the market since last November can create a "mesh network" — each XO has its own wireless router that can automatically connect nearby laptops, enabling all of them to communicate with each other or share a single Internet connection. Also, the XO lasts four times longer on a single charge than regular laptops, and its battery can be recharged using a pull cord. Finally, the laptop case was built to withstand dust and rain when children carry the XO to and from school.

As a result of its extensive research and recent technological development that have reduced the cost of computer screens and other hardware, OLPC brought down the price of the XO to about $188. Although this is above the organization's target price, it was much cheaper than what the private sector was offering three years ago at the start of the project.

However, for-profits like Intel and Asustek are now entering the market for inexpensive laptops with an estimated price of $249 and up. Intel is at the pilot stage with its Classmate, which addresses another concern that affects technology-heavy products for developing countries: backup support. Intel plans to train local computer engineers to provide technical support. This may make the Classmate laptop a more desirable product for governments to purchase even at the higher price.

So how is OLPC facing up to this new competition? OLPC spokesperson Jackie Lustig blames government bureaucracies for why the sales of XO laptops are relatively stagnant so far. "An agreement with a head of state doesn't necessarily mean the issuance of a purchase order," she explains. Still, Negroponte's team is hopeful. "OLPC is making good progress and is in discussions with a number of countries about moving forward," Lustig adds.

According to Negroponte's comments in a November 2007 Wall Street Journal article, he wouldn't measure OLPC's success by sales numbers. "From my point of view, if the world were to have 30 million [laptops produced by other firms] in the hands of children at the end of next year, that to me would be a great success," Negroponte noted. "OLPC is not in the laptop business. It's in the education business."

So perhaps one should wait until the end of the year to judge the success of Negroponte's program. Yet, no matter who provides the actual computers, it's likely that the competition between NGOs and the private sector in the United States will make children in developing countries better off.