$100 Laptops

Economic News

22 Jul 2010
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Quanta Computers announced it would start production of the low cost laptop for the One Laptop Per Child (OLPC) project in September and that 3m would be made in the first round of production, with the majority of components being sourced from Taiwanese companies.



The laptop is being developed by the OLPC organisation, which is a non-profit outfit created by academics at the Massachusetts Institute of Technology. The aim of the educational project is to produce inexpensive laptops for children in the developing world to encourage learning. So far, the governments of 25 developing countries have shown interest in the project, including Argentina, Brazil, Egypt, Libya, Tunisia, Thailand and Rwanda. The laptops will be distributed through the ministries of education willing to adopt the policy of OLPC and issued by schools.



Quanta Computers is a Taiwan-based Original Design Manufacturer (ODM) specialising in the production of laptop computers and one of the biggest suppliers in the world. It makes laptops for brands such as Apple, Dell and Hewlett Packard. It is estimated that Quanta produced 30% of the world's laptops in 2006 and successful production for the OLPC project could significantly increase their market share in the future.



An OLPC executive said to local press that Quanta would start producing 40,000 units a month from September 22 and that the delay in production, originally planned for the fourth quarter of 2006, had been caused by hardware alterations.



The upgraded XO includes a XL700 AMD X86 central processing unit, 256mb of DRAM and 1GB of flash memory. The computer will not include a hard disk.



Each laptop is expected to cost $175 initially although this will drop to the $100 target mark by the end of 2008 when production reaches critical masse. OLPC expects production to reach 400,000 per month by the end of 2007 and 10m within two years.



Mary Lou Jepsen, OPLD's chief technology officer, said that around 92% of the components used in the manufacturing of the computer will be sourced from Taiwanese companies and exclusively assembled by Quanta in Shanghai.



As production starts in September it is thought that components will have to be delivered by the end of July at the latest. This is expected to boost component suppliers' third quarter profits.



According to industry sources, Ene Technology, a Taiwanese Integrated Circuit designer, saw its share price rise 7% on speculation that it had been chosen to supply some components for the laptop.



There are also rumours that Quanta is looking to work with Foxconn Precision Industries, another large Taiwanese ODM company, to help increase production capacity.



Meanwhile, Everlight Electronics, a Taiwanese Light Emitting Diode (LED) manufacturer, confirmed they would provide backlighting products for the OLPC project. A company spokesman said the XO would need only 12 LED's for the backlight with a production cost of around $30 for each XO backlight system.



Chi Mei Optoelectronics, another Taiwanese company, is in charge of making the LCD screens for the XO. Producing low costs displays has been key to the total cost of the XO and the low-power Chi Mei displays can be switched to a greyscale mode so that the screens can be seen clearly in sunlight, which makes them environment-friendly in most developing countries.



Quanta is considering a commercial version of the laptop, which could help the OLPC organisation to gain revenue and finance the distribution of the laptop. One option is to sell two computers for the price of one: one to keep and one to give away to the developing world.



However, as marketing a commercial version of the XO could cause concern among its clients such as Dell, HP and Apple who could see the laptop as direct competition, Quanta would brand the laptops under their names so as to avoid a conflict of interest.

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