READERS’ RESPONSES:

Mergers, Acquisitions and Financial Results

ISSUE 334: BATTLE FOR CHEAP EDUCATION COMPUTER HOTS UP

I read about the cheap laptops in Balancing Act today. I have been wondering at Negroponte's success at deceiving the ICT4D world for quite some time now. 100 USD is ex factory cost, excluding payments for R&D, sales&marketing, distribution, transportation, duties , taxes and profits. Everyone who has ever had anything to do with industrial production knows that it costs 3-5 times as much to take the product from the factory door to the final user. This is true for clothes, egg beaters, cars and small computers. And I doubt if Dell/ Intel's factory door cost of their low end laptop is much higher than $100.

Negroponte has deliberately ignored these costs from the beginning. What he basically says is that computers will be available at his factory door for $100 a piece, come and collect them... and, by the way, you have to pick up 100,000 at a time.... and well, come to think of it, you must pay before we start the production.

But the costs of all the services mentioned above will not go away just because he choose not to mention them. So if governments are the prospective buyers of the computers, they will have to foot the bill for an additional $100-200 per unit, depending on if the governments will grant customs and tax relief. But if they do that, they will hurt the domestic PC markets by giving a subsidy to a new and major player. Because the little green things will soon leak out of the schools and find their way to the market.

These aspects affecting the realism of the initiative have rarely (if ever) been discussed. The effects of flooding the Brazilian PC market with 100,000 subsidised PCs should not be taken lightly. I mean, there are rules about these things...

Olof Hesselmark
Sweden

MORE OLPC LINKS AND COSTINGS

http://www.infodev.org/en/Topic.3.html

http://www.olpcnews.com/

Of course, two of the most important issues from our point of view are

1) cost
of a minimum-1 million-unit rollout in a developing country relative to that country's discretionary (non-teacher-salary) portion of its education budget (OLPC News has very good analysis on this) and total cost of ownership, which is something that needs a lot more scrutiny. And that's not even touching the question of priorities.........

Kerry McNamara
InfoDev

Corrections:
Brain failure on the names of the Ink people. It should have been Gerry Morgan and Jonathan Renaudon-Smith.