Communications - June 2009

the 2010 version of the One Laptop per Child, the XO- 2, will have a foldable e-book form and reduce power consumption to one watt.

units in four months. It was soon joined by major PC makers, including Acer, Dell, Hewlett-Packard, and many smaller ones in creating a new category of PC known today as netbooks.

While the XO was specifically designed for the poor, rural education market in developing countries, netbook vendors target urban consumer and education markets in developed, as well as emerging, markets. In 2008, the netbook market exploded, with sales of 10 million units worldwide mostly running Intel’s low-cost Atom processor and Windows; sales are expected to double in 2009.¹⁶

The OLPC has been credited with spurring the netbook market, but the competition it spurred is now OLPC’s own biggest challenge. Developing countries today have a wide choice of vendors offering inexpensive netbooks, and, though not designed like the XO for the rigors of poor rural villages, they are competitive in large, easier-to-serve urban populations. OLPC responded by announcing in January 2009 that its second-generation laptop design would be licensed freely to PC makers to manufacture and distribute, hoping to use the resources of these firms to get millions of laptops into the hands of poor children in developing countries. Negroponte hopes to have a prototype in 18 months (from January),

selling them for perhaps $75 each. ⁵

Lessons

The OLPC experience offers lessons for innovators and others aiming to introduce and deploy IT innovation to benefit the poor, as well as for the governments of developing countries. For innovators, we thus draw three general lessons:

Diffusing a new innovation requires understanding the local environment. OLPC recognized correctly that laptops could reach the poorest children only if they were subsidized by government or other funding sources. This is similar to rural electrification and telephone service, which usually cannot be provided economically and end up subsidized by government or by charges to urban customers who can be served profitably. However, innovators should understand that governments are not monolithic entities, nor are they the same from one country to the next. In some cases, funding can be allocated by an education ministry, in others it must be approved by the legislature, and in others provincial or local governments have jurisdiction. Commitments from high-level officials or political leaders are as binding as a politician’s campaign promises. ²⁶ Flying into a country and winning initial support is only a first step and must be followed by a sustained effort by people

with a deep understanding of the local environment to ensure commitment leads to money and action.

Likewise, social, economic, and cultural environments vary greatly across and even within countries, and deploying new technologies requires understanding these environments. Innovators must consider the need for expertise in sociology, anthropology, public policy, and economics, as well as for engineers, and establish coherent criteria for selecting countries to target based on social, economic, and political characteristics. Success in a few developing countries is critical to broad diffusion, as potential adopters look to their peers for evidence of the value of the innovation. ¹⁸

Innovative technology can be disruptive and trigger a backlash from incumbents. Some innovations pose a threat to industry incumbents, who may seek to undermine the innovator’s efforts. The more visible the threat, the stronger the reaction is likely to be. This illustrates a dilemma for developers. A program less ambitious and less publicized than OLPC might not attract the attention of industry incumbents but also might not attract the partners, investors, and other sponsors needed to develop and deploy the innovation. As multinational companies direct more attention to emerging markets and so-called “bottom of the pyramid” consumers, there is more likelihood of competition but also more opportunity for cooperation as well. PC makers across the board are still seeking a formula for well-designed, low-cost computing devices, along with a complementary delivery value chain, market strategy, and business model.

Innovative information technologies do not stand alone. A technology like the XO is a system-level innovation that requires complementary assets to be valuable. While OLPC was able to deliver high-level design and hand off development and manufacturing to Quanta, it had no one to handle marketing, deployment, and support. ¹⁵ Unlike the commercial PC companies, it was not part of any established business ecology and lacked resources to establish its own ecology.