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Saturday, March 17, 2007

OLPC : Possible, But Not Sustainable

The major aim of the OLPC(One laptop per child) project, expected to price at US$150/laptop is trying to save costs, and hence, it uses the simplest and cheapest components. The biggest difference in terms of system cost comes from :
1) storage,
2) software, and
3) battery.
- Less storage: OLPC does not need HDD (hard disk drive) and ODD (optical disk drive). Instead, it uses a 512MB NAND flash drive as the main storage device. That saves US$60+ in material costs.
- Free software: OLPC adopts Linux OS (operating system) instead of Windows, saving US$50 per system.
- Smaller battery: OLPC uses NiMH battery instead of Li-ion, saving US$20+ per system. However, battery life is shorter and quality is not as good. With these changes, OLPC save around US$150 in system cost, when compared with Wintel architecture.

A recent ML report shows the cost structure as under:
The report adds that OLPC also eliminates the cost of warranty, MVA (manpower value-added), OEM brand and distributors’ profit. All these measures save another US$100 per unit. Thus, OLPC can be sold at a street price of US$150, or 60%+ lower than Intel’s Classmate PC (US$400).

The downsides and imbalances may force the whole scheme to be unsustainable. OLPC features a broken supply-chain and the business model might not be globally sustainable. Linux, which is the standard for OLPC may have a limited ecosystem for people to actively look at it as an option . Broken supply chain means that the planned ramp-up in volumes from 7m to 60+plus million in 3-4 years may not happen at all.

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