In an end to a nasty dispute between the chip maker and Nicholas Nagroponte, Intel decided to join the OLPC effort to sell $100 laptops to impoverished countries. The organization already has a number of participating companies including Red Hat, Google, eBay, Quanta and Intel’s archrival AMD. Although, the OLPC effort will do a lot of good by bridging the digital divide, this is not entirely an altruistic exercise for the companies involved. They get a foot in the door as well as valuable experience in what could soon be high growth markets. This is at a time when the PC market in developed countries is maturing. Countries that have already agreed to purchase laptops include Rwanda, Uruguay, Libya and Thailand. Participants also gain experience in low cost design which can be incorporated into their existing products. Intel’s drive to develop a rival low cost laptop underscores the importance that technology companies assign to developing markets. Clearly the criticism and accusations of trying to undermine OLPC caused Intel’s change of heart. However, the company will still see many of the benefits of being a participant in the project.
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As Clayton Christensen would say, the OLPC is an “disruptive innovation”. After some years of sustainable innovation (also a Christensen definition), the big laptop players reach a level of product performance that was aimed to the most attractive customers of the market, those who can afford the complexity of the product and also its higher price. But in the meantime, many people that could not afford neither the complexity nor the price becomes a possible target for a product with lower performance, more simplicity of use and a very lower price. In the laptop industry that moment arrived when some factors were combined at the appropriate time. Nicholas Negroponte and the OLPC organization have took advantage of that: lower prices of x86 processors, very lower cost of manufacturing in Asia, lower prices of other components, availabity of open source and the collaboration of the open source community, and some strategic factor that they brought: ex MIT genius and Seymour Pappert in the team, a new model of distribution by dealing directly with the goverments instead of using the tipical channels, among others. This combination is called by Christensen as a “disruptive circumstance”. In this circumstances, entrants are likely to beat the incumbents, says Chistensen in his book The Innovator’s Solution. My opinion is that Intel, after this years of trying to undermine the OLPC project, has recognized this “disruptive circumstance” and has decided to join the OLPC expecting to get some benefits of this disruption, if it is still possible, instead of been defeated by it. This is not the end of the story.
Comment by Max Ugaz - July 14, 2007 7:57 pm