MSFT and One-Laptop-Per-Child

OLPC project is showing a pattern of tumultuous relationships with leading IT companies. In the wake of a widely publicized fall-out with Intel comes a disagreement with Microsoft over the meaning of “dual-boot laptops.” To recap:  news reports suggested that OLPC and MSFT were working on models of the XO that could run both the custom Linux operating system and garden-variety Windows. Later Microsoft firmly denied these rumors and suggested the company had a different vision than Negroponte for integrating the Windows platform into the XO system.

Hardly any surprises here because XO laptop and Windows are ultimately irreconcilable concepts. There is no question that earning the loyalty of future PC users in emerging markets is critical for the long-term success in the platform battle. It is important enough to justify giving away copies of an operating system at a loss or trying to co-exist in an open-source ecosystem. But this is going to be a difficult balancing act.

One-Laptop-Per-Child project started out with the goal of producing $100 devices at scale. Some SKUs of Vista cost more than that already. This is a glimpse into the  impending reality check for Windows: as the price of hardware drops and the licensing costs for the operating system begin to constitute ever increasing shares of that price, vendors and customers are increasingly motivated to search for alternatives. Cost is a huge factor for OLPC but so is energy consumption and CPU/memory resources– two things that Vista has a voracious appetite for. That’s good news for Intel, AMD and for that matter any company supplying PC components: as long as the software continues to peg capabilities of the hardware, improvements in hardware can make a meaningful impact on the overall user experience and justify the investment.  But the target audience for OLPC is not subject to the standard hardware upgrade cycles, nor expected to meet the minimum recommended specs for Vista.

Even if copies of a highly stripped down version of Windows could be made to run efficiently in the highly minimalist specs of the XO and given away for free (similar to the Starter Edition sold at a significant discount at emerging markets where even the basic SKUs are very expensive compared to standard earnings) it will not create a sustainable advantage. Converting those free copies into full-paying licenses down the road will be a challenge to the extent that the premium for a Windows PC over an open-source one is appreciable– exactly the situation guaranteed by Moore’s law and dropping hardware prices.


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