Great expectations for cheap PCs

By Leon Engelbrecht for Gartner
Johannesburg, 03 Oct 2007

More than six million ultra-low-cost (ULC) mobile educational PCs will be shipped by the end of 2012, says Gartner.

The research firm's analysts predict this volume of ULC PCs "could provide a 40% uplift for education PC shipments in emerging regions".

"Gartner estimates ULC PCs will reach nearly one million units in 2008 and five million by the end of 2011. Volumes will remain limited in 2007 as the first shipped units will be seed units used to test usage models and determine the usefulness of such devices."

It adds that industry interest in ULC PCs is being fuelled by PC technology providers that are seeking new growth opportunities in emerging markets, or, in the words of author CK Prahalad, "the fortune at the bottom of the pyramid".

There are currently two product concepts: the Intel-based Classmate PC platform, and AMD's One Laptop Per Child (OLPC).

The OLPC initiative focuses on the provision of devices to children who do not have access to PCs. Intel's Classmate PC reflects a broader vision that encompasses the classroom environment, including networking infrastructure, teacher training and curriculum materials.

"A classroom-focused approach by the PC Classmate will ultimately prove more effective in driving ULC PC shipments," says Gartner research VP Luis Anavitarte. "Hardware alone is not enough; users will need software and education applications in local languages."

Gartner research director Annette Jump adds the "success or failure of ULC PCs will depend on the following six factors: government support and funding, Microsoft support, Intel and AMD support, attractive pricing, software and training in a local language, and support costs".

The Gartner study adds that while the primary target is publicly-funded schools, privately-funded schools also present opportunity. "Programmes should address both types of schools, as it may provide a secure way to fund ULC PC deployments in a given market."

Enormous obstacles

Not everybody shares this view. World Wide Worx CEO Arthur Goldstuck says he has "argued for a long time that there has been very little strategic thinking on the provisioning and sustainable usage of ULC PCs.

"Based on what I have seen of these devices so far, they are more likely to end up as novelties rather than serious tools at this stage. The obstacles are enormous and there has not been enough think-through. You can't sit in a media lab and dictate how someone in a village is going to use a piece of technology."

Digital Links International CEO David Sogan adds that ULC PCs are still too expensive for the least developed nations, except at a tertiary level.

"Our experience working in 22 countries in Africa shows that the phenomenon of low-cost computers will mainly affect middle income countries," Sogan adds. "Schools in the least developed nation countries will still rely predominantly on refurbished computers."

Goldstuck says educational PC providers have not integrated lessons learned from the clockwork radio, which was touted as a communications panacea for the Third World in the 1990s. "It turned out a lot more expensive than anticipated to get it to that market and only had limited utility. As a result, it appealed more to the outdoors market - hikers and campers - in the developed world than developing market."

He says ULC PCs lack utility, features and the kind of robust networking required by the model they have adopted. "They are designed to network through a wireless mesh. These stand or fall by infrastructure meshed together. Here it is assumed the PCs will themselves be the infrastructure. This is a deeply flawed model."

Competitive market

Sogan says the Classmate is more likely to prevail, as it is much cheaper and less prescriptive. "The OLPC model says a 500-student school should have 500 PCs, whereas in the Classmate model the school will need 20 to 40 PCs," he says.

Both Intel and AMD have indicated bulk buys would be necessary to provide the economy of scale required to keep costs low.

He adds that the economy of scale may not be possible as more vendors enter the ULC PC space. "It will also become a very competitive marketplace, with Quanta, Asustek, INK Media, CUT FS and several others entering this market segment," Sogan says.

"By contrast, Digital Links, working with Microsoft, EDS and the British government, can make high-end computers available for R400 - a cost that includes shipping, software and an environmental recycling solution.

"This is clearly a far more affordable solution for developing countries wanting to build their IT networks."