Tech Giants, Nonprofits Make Ambitious Push With Cheap PCs

Equipping the world's first billion users took decades because early PCs were underpowered and there was a dearth of compelling software. Intel and others have another factor on their side: Governments in the world's poorest nations, all of which would benefit from economic growth, are eager to cooperate. "Having computer skills can be the difference between making a decent living and forever being locked into poverty in some geographies," says Rob Enderle, a principal of the Enderle Group. "Most of these governments realize this and are very interested in getting computers out into their countries."

Intel has built three computing platforms for developing markets, primarily by using in-region computer makers and service providers that will sell the systems at 20% lower than prevailing prices. The systems will use Intel's mobile Core microprocessors, which are light on power consumption, and support broadband connectivity.

A "low-cost, full-featured" platform will be the first to hit the market. In a deal financed in part by the Mexican government and the Mexican Teachers Union, 300,000 of the PCs will be provided to teachers in that country, at a price of about $300 each. A second platform, the "community PC," is intended for markets such as rural India, where PC kiosks providing shared computing are prevalent. Those systems are expected to be priced at $500 to $600 and can be powered by a car battery. Next year, Intel plans to launch a third machine, a small notebook PC for students and teachers code-named Eduwise that will include interactive education software.

Market Realities
A billion-dollar investment in developing new markets might appear to be a big gamble, but if Intel could take in revenue of as little as $30 on each system sold, the net result would be billions in revenue if the company can reach hundreds of millions of potential new users, says Mark Beckford, general manager of Intel's emerging markets platforms group.

Enderle says Intel and AMD will have to accept lower margins if they expect to play in emerging countries. "The market is going that way anyway, so does Intel embrace it and try to benefit from it, or does Intel get hit right between the eyes?" he says.

Richard Brown, VP of corporate marketing for VIA Technologies, says the company views its pc-1 initiative as an extension of its research and development. VIA, a maker of processors and PC chipsets, has used pc-1 as a vehicle for developing complete PC reference designs and systems that it hopes will lead to millions of units sold annually within a few years.

"This is a two-way process," Brown says. "We are learning, and users are benefiting. This gives us a chance to test out our systems in the field and understand usage models. There's a huge potential demand out there, and you have to address it on a basis that is sustainable and profitable."

But entering emerging markets involves more than providing PCs for $250 or less. The systems go into regions that can be hot and dusty, and local service and support are spotty at best. Ruggedized designs and flash memory instead of fragile disk drives address the environmental challenges. These systems also are designed to work with alternative power options--not just car batteries, but also solar power cells and, in the case of the One Laptop Per Child computer, a crank that gives users 10 minutes of use for every minute they spend cranking.

The OLPC laptop will be equipped with a 2-watt AMD Geode processor, flash memory, built-in Wi-Fi, and a display that will be finalized after OLPC chooses among a dozen options headed to a June bake-off. The power crank has been moved from the laptop itself, as the original design specified, to a power adapter, reducing stress on the system. Although OLPC and its partners will work to ensure power capabilities at school installations, the crank is expected to be particularly useful to children using the systems at home, where there often is no power infrastructure.

OLPC's goal is to deploy between 5 million and 10 million laptops in Argentina, Brazil, China, Egypt, India, Nigeria, and Thailand by 2007. The first machines are likely to have a price close to 100 euros (about $128), but Walter Bender, president of software content for OLPC, expects them to hit $100 by 2008. OLPC intends to distribute 100 million laptops within two years.

The ultimate success of the "poor man's PC" will hinge not only on making it cheaper, but also on ensuring that the system meets the needs and expectations of users, says Roger Kay, an analyst with Endpoint Technologies Associates. "Certainly, people in developing markets are very price sensitive, but they have aspirations also, and they would like to have pretty much what we have," Kay says. "There are design elements that are specifically developing world-oriented, but one of the issues with cheap PCs is that if they are not full-featured, the user is going to be disappointed."

--with Aaron Ricadela