IXL Social Enterprise Case Studies Education March 2010 | Page 3

One Laptop per Child: Taking the Next Step to Realizing Nicholas Negroponte’s Vision

Exhibit 2: Breakdown of manufacturing costs
for the XO in 2007.
Breakdown of costs
Overheads
$10
Administration
$1

LCD, Battery, AC Adapter,
WiFi, Camera
$63

Mechanical
$41

Motherboard
$73
Adapted from “ ‘100 laptop begins production,’ ” BBC News,
http://news.bbc.co.uk/2/hi/7082701.stm, November 7, 2007,
accessed March 3, 2010.

Success has been slow, but steady. When production
of the computer finally started, the “$100 Laptop”
actually sold for $188.5 (See Exhibit 2 for breakdown
of costs of computer parts in 2007.) As of the end of
2009, OLPC has manufactured 1,284,000 computers
to 20 countries.6 Principally targeting the government ministries in charge of education, OLPC has
generally depended on its computers being bought
in large quantities and distributed through large
government programs.7 It has encountered the most
success in South America, particularly Uruguay and
Peru. In 2009, Uruguay signed up for 435,000 XOs
and was the first large-scale government agency that
committed (and succeeded) to reach 1:1 saturation
in all public school systems. Peru has embarked on
a similar objective but will take longer as there is far
more primary school children in Peru.8
Finding a way to realize the goals of OLPC by ensuring that every child has a laptop available to them
has continued to elude its founders. So the questions
facing OLPC today need to be answered quickly if
Negroponte’s 1999 vision is to be realized. How does
OLPC arrive at a tipping point to drive scale and
make 1:1 a priority for the world’s poorest children in
the twenty-first century? How does the XO become
the minimum standard tool for high-quality education for children around the world? In the words of a
current Board Member and Former President Charles
Kane, OLPC will succeed when “it creates a design
that others will build.”9 Additional pressure to find the
right business model has emerged with the recent economic crisis. With the foundation that funds OLPC
suffering, pressure has been building for OLPC to be
run more on a “for-profit” business basis as a means
to ensure sustainability of its mission without charitable donations.
A more detailed look into the history — successes
and surprises — of the XO will offer some insights
into potential new options available in the future.
The Challenges of Creating the $100 Laptop
When Negroponte announced OLPC in 2005, one
goal of the organization was to enable more people
to have access to XO-style computers by driving
down the cost of manufacturing towards $100.
OLPC aimed to cut costs wherever it could in the supply chain. The most impressive achievement in this
area was their innovations in computer screen production. OLPC’s former Chief Technology Officer
Mary Lou Jepsen, (who had directed the technology
development at Intel’s Display Division, made an
LCD screen that used 80% less power than conventional screens and cost only $40.10 As important, the
screen had a sun sensor that would automatically
adjust the content to black and white in sunshine. This
was critical for classrooms without a roof.11

And because OLPC was a start-up of sorts, establishing a manufacturing arm to put these innovative
parts together would take too much time and be too
costly. In 2007, OLPC turned to Quanta Computer
Inc., a Taiwan-based company with an impressive
track-record: it was responsible for about 33% of
global laptop production with clients including companies such as Dell, Lenovo, and Hewlett Packard.12
Another task was creating the software to run the
computer. In 2007, Red Hat contributed a compact
version of its Linux-based Fedora operating system
which was used to build the Graphical User Interface
(GUI) called Sugar. Red Hat and OLPC software
engineers, together with help from the open source
community, developed and continue to enhance this
software. Sugar required only 130 megabytes of
memory (compared to Windows XP, which required
1.65 gigabytes). The XO GUI was designed to be
intuitive to children. Rather than the typical subject
/ folder organization of Windows OS (the traditional
desktop environment), the XO GUI as chronologically organized like a journal, where you can easily
find the work you’ve done on Monday or Wednesday, for example.13 Soon afterwards in May of 2008,
Microsoft agreed to license its XP system to OLPC
at the rate of $3 per computer.14 Microsoft may have
been motivated by the fear of missing out on a huge
portion of the world’s next generation of computer
users if the XO took off.
OLPC also experimented with innovative marketing. One of these efforts was the “Give One Get
One” campaign, which ran from November 12
through December 31, 2007 in the US and Canada.
For $399 a consumer would buy two computers:
one to own and one to give to a child in a developing nation. In total, the campaign raised $35 million
and a total of more than 100,000 XO laptops were
distributed to children in Afghanistan, Cambodia,
Ethiopia, Haiti, Mongolia and Rwanda.15
In its first two years, OLPC did not make a profit and
was funded principally by its foundation and corporate donations. OLPC first aimed to start production
only when 5 million machines had been ordered and
hopefully making a profit of $1 per machine, but this
scenario had not been realized by 2007. It seemed
that, at least for the time being, the $100 price goal
would not be feasible.16
.
Business Models Used by OLPC
In growing demand to date, OLPC mainly targeted
governments. OLPC worked with often big and
cumbersome government bureaucracies to make
the case for the potential benefit of the XO and to
overcome conc erns about the substantial outlay of
funds required for purchase of tens or hundreds of
thousands of XOs.

5 “ ‘100 laptop begins production,’ ” BBC News, http://news.bbc.co.uk/2/hi/7082701.stm, November 7, 2007, accessed March 3, 2010.
6 Interview of OLPC staff, March 1, 2010.
7 Interview with Charles Kane, January 7, 2010.
8 Interview of OLPC staff, March 1, 2010.
9 Interview with Charles Kane, January 7, 2010.
10 John A. Quelch and Carin-Isabel Knoop, “Making the ‘$100 Laptop,’ ”HBS No. 9-508-024, (Boston: Harvard Business School Publishind, 2008), p. 4.
11 Interview with OLPC staff, March 10, 2010.
12 John A. Quelch and Carin-Isabel Knoop, “Making the ‘$100 Laptop,’ ”HBS No. 9-508-024, (Boston: Harvard Business School Publishind, 2008), p. 6.
13 See John A. Quelch and Carin-Isabel Knoop, “Making the ‘$100 Laptop,’ ”HBS No. 9-508-024, (Boston: Harvard Business School Publishind, 2008),
p.5 and “A Computer in every Pot.” The Economist, Jully 27, 2007
14 Dan Nystedt, “Colombia Signs up for OLPC Laptops with Windows,” PCWorld, November 10, 2008, http://www.pcworld.com/businesscenter/
article/153650/colombia_signs_up_for_olpc_laptops_with_windows.html, accessed March 5, 2010.
15 “One Laptop per Child Giving Campaign Raises $35 Million,” OLPC Press Release, Cambridge, MA, January 7, 2010.
16 Interview with Charles Kane, January 7, 2010.

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