Look Out, OLPC: A Microsoftie Jumps to nComputing

Posted by: Peter Burrows on September 09, 2008

With Nicholas Negroponte’s One Laptop Per Child initiative falling far short of its stated goals for bridging the digital divide, a far less well-known company called nComputing seems to be making steady progress towards putting the power of personal computers into the hands of economically disadvantaged kids around the world. The company’s CEO, Stephen Dukker, says that more than a million people are now using nComputing’s technology—mostly through deals with school systems in rural US states and places like Vietnam and Macedonia.

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That compares to OLPC orders for 750,000 units as of June (that’s orders—not deliveries), according to Steve Hamm’s story that month. “There’s been so much bluster [about low-cost computing for the masses], but we just went out and did it,” says Dukker. Unlike OLPC, he says, “We’re profitable, and we’re growing like a weed.”

Now comes a headline-grabbing vote of confidence: long-time Microsoft executive Will Poole will join nComputing as co-chairman, along with Dukker. Poole’s relevance is two-fold. For starters, he ran Microsoft’s Windows client business for years, so clearly understands the reality of how the PC world works. But of late he has also run the software giant’s Unlimited Potential Group, which is the Microsoft unit charged with finding sustainable ways to deliver computing to the five billion people who have no access to PCs or to the Internet. In an interview with me last week, Poole says he’s seen many efforts to accomplish the goal over the years, including thin clients and blade-computer architectures and network computers. But “nComputing is bringing technology to underserved markets, in a way that’s more cost-effective than any I’ve ever seen,” says Poole, who will be leaving Microsoft.

News of his departure comes just as Amazon.com has decided to distribute the OLPC device as part of the “Give One Get One” program launched by Negroponte last year, through which people can easily pay for two XOs and have one of them sent to a student in a developing country. (Contrary to some press reports—including a version of this post that accidentally went up yesterday, before nComputing’s embargo had lifted—the XO’s sold through Amazon will not be able to run Windows XP as an alternative to the standard Linux OS. Let’s hope the communications snafu isn’t a sign of continued problems for this creative idea).

But nComputing looks to have sufficient momentum without having to rely on the kindness of strangers. Dukker says it should deliver 1.5 million seats of its technology in 2009. The reasons: price, and profits. Rather than sell a $200 PC with miniscule margins, nComputing sells gizmos starting at around $70 that give a user a slice of the computing capacity from a garden variety PC. One such PC can serve up to 30 students—say, a classroom, or a rural community center. That’s $2,100 in initial capital outlay, versus $6,000 to buy 30 of OLPC’s XO laptop. And since there’s only one PC involved, the support, repair and power costs for the customer should be lower as well.

Since the nComputing technology is pretty much just a communications chip wrapped in plastic with the required connections to the PC, it’s dirt-cheap to build—not much more than $10 for the base models. That price will continue to fall, to nearly nil, says Dukker. As a result, he says the company enjoys software-like margins well over 60%. That means nComputing makes its money, at a price at which customers can afford to not only buy but also operate the gear—say, to pay the power bill and to hire someone with sufficient tech expertise to keep the set-up ship-shape. No doubt, there are disadvantages, like the need for a broadband connection and the cost of monitors and keyboards. In e-mailed comments after reading my inadvertent posting of this item yesterday, Negroponte said comparing OLPC to nComputing is “comparing Apple’s to oranges…If you want to bring a touch of the computer experience, IT savvy, if you will, to each student in a school, the cheapest way is to build computer labs and the least expensive way to do that is nComputing. If, by contrast, you want every child to have their own pencil, inside or outside school, that means a laptop, especially if you expect a book and learning experience, inside and outside school. One does not compete with the other, any more than bicycles compete with buses.”

Certainly, the technological plusses and minuses are up for debate. What’s interesting to me about nComputing is that it seems to have found solid financial footing. Dukker says nComputing is making good money, at a price that leaves room in customer’s meager budgets to pay for the IT staff and related costs to actually use the stuff. “We may be the first tech company in history that has built a profitable, socially significant enterprise around the developing world and underserved markets in the US,” says the loquacious Dukker, who is clearly piqued at Negroponte’s talent for monopolizing media attention for OLPC.

I wouldn’t be surprised if Poole’s top mission is to help Dukker raise nComputing’s profile, as OLPC continues to struggle. Try as he might, Dukker has struggled to establish himself as a powerful public evangelist for nComputing. But from what I can see, there’s lots to evangelize at this interesting company.

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Reader Comments

Anand

September 10, 2008 02:34 AM

Hi Peter,

I think it's unfair to compare the two - OLPC and nComputing.

Whereas both companies may be far from a non-profit (not sure about OLPC), Negroponte's vision, although slowing down is much bigger than what nComputing is trying to achieve. In the larger scheme of things, I don't see how nComputing's helped anything at all. One computer for every 30 students can be managed by a charity organization aswell.

Karim

September 10, 2008 10:52 AM

Both projects are great approach towards putting the power of personal computers into the hands of economically disadvantaged people around the world.
But I think, what nComputing is trying to achieve is more affordable and most needed in developing countries.




Karim Sharipov

www.BizFive.com

Business Directory and Resource

martin booth

September 10, 2008 09:21 PM

I work at NComputing and noted Negroponte's characterization that NComputing is best suited for computer labs only. That is just not the case. It has been our experience (and we have shipped many more units to many more countries than OLPC), that developing countries initially have very limited financial resources and computer teaching skills. So they get started with labs and then over time transition to the classrooms. The reasons are quite clear. By starting in a centralized location like a computer lab, the costs are 90% lower because the systems are shared. Getting started in a computer lab enables them get their infrastructure in place, ensure physical security, and efficiently leverage internet and electrical connections. And the teaching is more around basic computer skills (like typing and saving files) and basic literacy/e-learning. This is a proven, practical approach that is based on the real-world.

And it’s the same approach schools in the U.S. have taken. They started with computers in labs and then brought computing into the classrooms -- usually when the ratio of students to computers got to about 4:1. Most of our U.S. K-12 deployments (over 300,000) are in classrooms, not computer labs. As the transition from labs to classrooms happens, we find teachers integrating computing into the core curriculum like "on demand" research tools, project work, self-paced learning). The Sundance Channel has a show called Eco-Biz which just did a segment on how NComputing is being used in classrooms that’s worth watching. The video is at http://www.sundancechannel.com/thegreen#/ecobiz:landing

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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