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In January 2005, MIT Media Lab cofounder Nicholas Negroponte announced the One Laptop per Child program (OLPC), which was intended to improve education in poor countries by putting $100 laptops in the hands of schoolchildren (see “Philanthropy’s New Prototype,” November/December 2006). The laptop would not go into production, Negroponte declared, until OLPC had received five million orders from governments around the world.

Almost three years later, however, the program’s two largest customers were Peru and Uruguay, which together had ordered slightly fewer than 400,000 units. So in November 2007, OLPC began manufacturing laptops anyway, at a cost of roughly $188 apiece. At about the same time, OLPC began its holiday-season Give One Get One drive: any donor who contributed $399 to the project would receive a complimentary computer, and a second would be sent to a poor community. The drive raised $35 million to “bootstrap” laptop programs in countries including Mongolia, Haiti, Rwanda, Ethiopia, Cambodia, and Afghanistan, each of which will initially receive around 10,000 laptops.

In January, TR senior editor Larry Hardesty spoke with OLPC’s president for software and content, Walter Bender.

TR: Initially, you thought you’d need millions of advance orders to get the cost of the laptop down. Why wasn’t that the case?

Walter Bender: The correlation between volume and price wasn’t as extreme as we thought. Well, in the long run, it is. In the long run, you’re not going to do a large-scale integration without having sufficient volume to cover the nonrecurring costs. But because we raised money to cover all the nonrecurring costs for the [current] machine, we didn’t have to amortize any costs in the cost of the laptop.

TR: In the absence of large-volume orders, though, couldn’t you just run out of money before you reach critical mass?

WB: We don’t need a lot of money to keep One Laptop per Child going. It’s really more a matter of just keeping the factory running. And basically, we scale the factory based on the volume.

TR: But the Give One Get One program built volume by manufacturing demand.

WB: We actually manufactured more volume than the factory can manage right now. Which is why people are saying, “Where’s my laptop?” Because we don’t have the manufacturing capacity to deliver everybody their laptops yet. So in fact, we’ve got more volume in orders than we can fulfill right now.

TR: You’ve said that the point of the program is to get laptops into kids’ hands, and you don’t really care who ends up manufacturing them. But was that part of OLPC’s mission from the outset?

WB: Absolutely. One could argue that the need is one to two billion children. And as arrogant as a bunch of former MIT people can be, we’re not so arrogant as to suggest that we can service that need ourselves. We’ve built what I think is an amazing machine, but it’s inevitable that there will be other amazing machines that will emerge. And since our mission is one laptop per child–it’s not one green-and-white laptop per child–that’s great.

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Credit: Christopher Churchill

Tagged: Business

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