NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, October 11, 2005

MIT Media Lab, taking a page out of a revolutionary business book by C.K. Prahalad, is developing a Linux-based, full-color, full-screen laptop that will use innovative power sources — including batteries or hand crank — and will be able to do most everything that a standard laptop can do except store large amounts of data. According to MIT, these rugged laptops will be WiFi- and cell phone-enabled, and have USB ports, a 500MHz processor, and 1 gigabyte of storage capacity using flash memory instead of a hard disk.

The $100 laptop is the brainchild of Nicholas Negroponte, founder of the MIT Media Lab, who announced the concept at the World Economic Forum at Davos, Switzerland in January 2005. Negroponte plans to display the first prototype in November at a UN summit, but already five countries?China, Brazil, Egypt, Thailand and South Africa?have said they will buy over 1 million units each. Production is due to start in late 2006 with an objective of building 100 million to 200 million units by 2008.

MIT will work with the not-for-profit company One Laptop per Child (OLPC) to distribute laptops through those ministries of education willing to adopt a policy of “One Laptop per Child.” MIT believes that laptops “are a wonderful way for all children to ’learn learning’ through independent interaction and exploration,” while development experts believe the laptop program could generate long-term economic benefits for some of the world’s poorest people.

The $100 laptop initiative follows in the spirit of C.K. Prahalad’s The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, a book that looks at the world’s masses as potential customers instead of victims of poverty. In his book, Prahalad argues that by regarding the 80% of humanity living on less than $2 a day — whom he terms “the bottom of the pyramid” — as potential customers, businesses and the poor will be better off. Prahalad suggests that the private sector may do a better job eradicating poverty, building dignity and respect, encouraging entrepreneurship, and reducing dependency than handouts under traditional aid programs. Prahalad writes:

For more than 50 years, the World Bank, donor nations, various aid agencies, national governments, and lately, civil society organizations have all fought the good fight but have not eradicated poverty … If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up. Four billion poor can be the engine of the next round of global trade and prosperity … [and] a source of innovations.

As it exists today, the poor are essentially an under-served market. Bringing them the products and services that they demand will not only be worthwhile to the companies providing these products and services, but will give the poor recognition that they lacked as a part of “the masses;” respect in the form of the dignity of attention and choices previously reserved for the middle-class and rich; and fair treatment in being freed from having to pay the ?poverty penalty? whereby the poor have to pay a premium for the same products and services offered to the rich. Prahalad argues that “building self-esteem and entrepreneurial drive at the [bottom of the pyramid] is probably the most enduring contribution that the private sector can make” to poverty alleviation. Ignoring the poor does not help. Corporations and policy makers alike need to listen and respond to their needs instead of making assumptions about how they feel and what they require.

Reaching the poor is going to require more than just offering them “an existing portfolio of products and services,” writes Prahalad. “Because these product portfolios have been priced and developed for Western markets, they are often out of reach for potential customers in [bottom of the pyramid] markets. More important, the feature-function set has often been inappropriate.” Multi-national corporations are going to have to thoroughly re-engineer products to reflect both the very different needs of poor consumers and economics of the market — small unit packages, low margins, and high volume. Innovation in product development will be key and may reverse the flow of concepts, ideas, and methods to improve existing products offered in developed markets. The use of existing western products and methods will simply not cut it.

With this philosophy in mind, MIT has developed just such an innovative product that can meet the needs of the world’s poor and offers the potential to help them escape “the bottom of the pyramid.”

How is it possible to get the cost so low?

First, by dramatically lowering the cost of the display. The first-generation machine may use a novel, dual-mode LCD display commonly found in inexpensive DVD players, but that can also be used in black and white, in bright sunlight, and at four times the normal resolution?all at a cost of approximately $35. Second, we will get the fat out of the systems. Today’s laptops have become obese. Two-thirds of their software is used to manage the other third, which mostly does the same functions nine different ways. Third, we will market the laptops in very large numbers (millions), directly to ministries of education, which can distribute them like textbooks.

Why is it important for each child to have a computer? What’s wrong with community-access centers?

One does not think of community pencils?kids have their own. They are tools to think with, sufficiently inexpensive to be used for work and play, drawing, writing, and mathematics. A computer can be the same, but far more powerful. Furthermore, there are many reasons it is important for a child to “own” something?like a football, doll, or book?not the least of which being that these belongings will be well-maintained through love and care.

What about connectivity? Aren’t telecommunications services expensive in the developing world?

When these machines pop out of the box, they will make a mesh network of their own, peer-to-peer. This is something initially developed at MIT and the Media Lab. We are also exploring ways to connect them to the backbone of the Internet at very low cost.

source: MIT Media Lab