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.
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.