This is an outline of where the Retail Sales Model fits into the whole concept of a $100 laptop.
Within this model, the OLPC's role is primarily to design and deliver a working prototype of the $100 laptop. This involves a lot of innovative technical work because these devices will have many features that current laptops do not have.
The secondary role of OLPC is to broker agreements with various national governments and manufacturers. This brokerage role includes the same elements as normal product development, but stops short of developing a sales channel. Instead, the OLPC focuses on marketing the potential of a $100 laptop and on bootstrapping national groups in various countries. These national groups are either within national ministries of education or closely aligned with them and they make the final decisions on software, content and distribution methods. Because the distribution role falls outside of the OLPC, there is no retail sales channel.
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According to OLPC founder, Nicholas Negroponte:
Many commercial ventures have been considered and proposed that may surface in 2008 or beyond, one of which is ‘buy 2 and get 1.'
Government support of an OLPC rollout is essential. The money to buy the $100 laptops comes from various countries' national budgets and the rollout is coordinated with their ministries of education. The OLPC provides information, assistance and a framework, but does not make any decisions regarding distribution. This decisionmaking is all done by the national government or is delegated within the country in question.
OLPC negotiates with Commercial Manufacturers in the same way that any other device manufacturer would do. Both parties work closely to design, build and test prototypes, make component sourcing decisions and cost out production at various scales. The OLPC in this relationship is the intellectual property holder and follows a familiar product development process with the manufacturers.
Retail Sales on the Open Market
This part of the model is currently not clearly defined. Firstly, it is not something that OLPC itself will do either now or in the future. However, there will be retail sales of XO or similar models. This will happen sometime after the initial country rollouts when the manufacturers are comfortable enough with production on a large scale. At that point, there will be a process for retail sales channels to licence the design and contract for it to be manufactured targeted directly at the retail market. Given the expectation of volume shipments of educational units in the summer of 2007, it is unlikely for retail sales to begin before 2008.
Initially, this is likely to be for units virtually identical to XO targeted solely at the educational market in North America and Western Europe. But the design will be available for licensing to companies who want to produce a device for the open market. Before this will happen, the OLPC will review their licencing terms to determine what special restrictions may need to be placed on open sale of these laptops. This is done in order to protect the educational deployments which are, and will remain, the primary focus of the OLPC.
Any restrictions will be designed to limit the possibility of educational units being diverted to the open market. This likely means that the case styles will be different and that units may have some enhanced capabilities such as built-in Ethernet, extra flash RAM or it may be required that they are bundled with one or more accessories.
What differentiates it from normal laptops
What would this laptop add in comparison with a normal laptop? Why would someone want to buy a 100 dollar laptop for let's say 250 dollars or more, with limited options and an operating system that isn't very familiar to most computer users?
One major application would be as a simple yet robust, energy efficient, portable and rugged word processing device. For many individuals, the written word is the primary medium of creative expression, civic engagement, and sharing of ideas among peers. In addition, the other collaborative expression features of the laptop may foster new avenues of creativity, much as the features of existing hardware and software have done.
Of course it's a cool gadget as well, for the more technology-oriented people among us. It may find great favor among individuals who are dedicated to sustainability principles, notably those who are using off-grid power, are on limited budgets for increasing their power supply capabilities, and thus have to calculate their electricity consumption carefully.
Another application might be for students in non-target countries, in primary, secondary, and post-secondary education, who are seeking simple and effective machines for use as robust portable notepads in the classroom. For this market, a keyboard that is quiet and thus non-disruptive to classroom lecture and conversation, may be particularly useful. As well, a means for a teacher to remotely turn off certain collaboration features may also be useful where the laptops are used to take tests and the test criteria require each student to complete his/her own exam without help from others.
Additionally, these units may find widespread commercial application in companies that need simple and effective office or field-portable machines. At present the paradigm case in field laptops is the Toughbook, and useful lessons could be learned from its design (or better yet, through active collaboration with Matsushita/Panasonic if this is not already underway). Yet the Toughbook is a standard full-featured machine, and there are numerous cases where the functionality and features of the new laptop would be more than sufficient. Consider for example, that smaller or startup companies unable to budget standard laptops for all of their field employees, could gain the means to obtain operational efficiencies similar to those enjoyed by larger or established firms.
Last but by no means least: New communications and expressive technologies will always find unexpected uses. We cannot predict where this will go, and perhaps that is the best part. The military designers of what became the Internet no doubt understood (and expected) that it would unleash the First Amendment upon the entire world when it was made available to the public, but it is doubtful they could have expected that the emerging citizen journalists would become serious competitors to mainstream news sources. The engineers who created the early four-track cassette recorders intended them as composition and practice tools that could liberate musicians to compose and edit songs, but probably did not foresee that they would contribute to the rise of a grassroots movement of self-produced music in the 1980s. The XO paradigm represents a major breakthrough in transcending the office/desk metaphor in favor of a kind of shared space that we have barely begun to describe much less define.
Many are those who will adopt the machine because of its affordability and simplicity, and then go on to discover the XO paradigm and create new forms of expression and collaboration. This is only one part of the overall promise of this project. Yet it is, in and of itself, sufficient reason to offer these machines for sale to the general public. The core focus of an educational machine should of course be on the needs of children. But let us not forget that learning is a lifetime endeavor, and that enabling older dogs to teach themselves new tricks is not only a virtue, but in these times, a necessity.
(adds and edits by G., 7 August 2007)
Grey market Sales
At some point, it is expected that attempts will be made to create a grey market in diverted or stolen 2B1's. OLPC will make every effort to discourage this particularly since such units will almost certainly be stolen property. Don't expect to buy a 2B1 on Ebay before the retail units come to market.
It would be naive to think that grey market trading of the products would not coexist. Nearly all efforts by economically advantaged nations to provide some product or resource to a less advantaged nation face a variety of unintended economic effects. Who is to say that some families of children who receives a laptop are not going to decide that the family will be better off by selling it? The only reliable method to thwart grand scale diversion is to flood the market, and make new purchases available at as low a cost as possible. Would not the contribution towards economy of scale be the most important contribution, short of volunteering or donating money directly? - Djony 18:46, 21 December 2007 (EST)
The simplest way to prevent grey market, is to take profit out of it. Providing the same laptop at $50 premium to anybody interested in purchase should do the trick.
Visually distinguishable (say, purple!) versions could quite easily be sold as "fashion items" - for several times the standard price offered to governments - to well-off westerners who'd like to show off their financial support for the OLPC project. Spreading standard issue XOs in the western world could help raise public awareness of the project (among designers, developers, teachers, innovators, corporations and politicians - all of which could provide support).
Someone started a webpage that to suggest selling our laptop for $300, so the balance of money can be used to support the poorest children. However, the pledge fell far short of the required 100,000 people. Here is the message that Pledgebank sent out on Nov. 1st:
We are sorry to have to inform you that the pledge to which you signed up did not meet its target in the required time. It required 100000 other, but achieved only 3678. The pledge, created by Mike Liveright, read: 'I will purchase the $100 laptop at $300 but only if 100,000 other will too.' This means you don't have to do your part of the pledge.
Please understand that you could not pre-order a Laptop there, you could only indicate interest.
There is now a new, more realistic Give 1, Get 1 trial being run by the OLPC's donation website (now defunct). This will give a truer picture of market demand for retail sales of the XO.
Not enough retail interest?
Does this mean there isn't sufficient retail interest?
The Pledgebank survey was entirely self-selected and it was done on a site that is oriented towards charitable good works, not market research. Until someone does some real market research, it is too early to tell how much of a retail market there is. However, the OLPC project has a very high public profile globally which would help any retail marketing campaign. The fact that the 2B1 includes so much innovative hardware and software research indicates that it is not a mainstream laptop and therefore does not compete head-on against commercial laptops.
Anyone doing market research would have to investigate the niche between PDAs and laptops. The PDA market has shrunk recently as PDA users shifted to either mobile phones or laptops depending on their needs. Lower laptop prices played a role in this. The 2B1 has the low price advantage even when you look at expected retail price points of $300-$450. Yet it incorporates more PDA-like features without the disadvantages of the PDA's small screen and incompatible OS.
It's likely the Pledgebank survey failed partially due to price, because it was asking for people who wanted to pay double the price so that the profit from the sale could finance one laptop for a child in a developing country. It was a survey oriented to charitable donations, not retail sales.
People with a serious interest in retail distribution should contact Quanta, the laptop manufacturer in Taiwan, directly rather than trying to engage the OLPC team. The OLPC is completely focused on educational projects in developing countries and will not get involved in peripheral activities such as retail sales. Quanta has already stated plans for a retail unit similar to the OLPC laptop sometime in 2008.
OLPC has stated that it is talking to many of the well-known computer vendors about a retail version of the Laptop. Please do not expect an announcement before the middle of 2008, when full production is scheduled to start.
The case could be made that an open distribution model, as opposed to exclusive deals with large vendors, is more consistent with the cultural paradigm of the laptop itself and the operating system. The ideal case would cover both bases, with perhaps two competing major chain retailers, and a vast network of regular wholesale distributors and locally-oriented retailers (in the sense of geographic locality, and/or in the sense of online community) who provide the added value of responsiveness to their communities. The distribution model should enable any local retailer, from an IT consultancy to an appliance store to even a toy store, to sell these machines at prices competitive to those of the chain retailers.
"The bottom line is that our mission is learning, not laptops. While we will be working with a commercial partner at some point for both machines and interesting parts--we've been looking at models where by the commercial side can help drive down the cost for the kids--our immediate priority is the non-commercial machine." --Walter (copied from Ask OLPC a Question)