From OLPC News: The Real Plan of Intel for its Classmate PC

In the One Laptop Per Child News website, a guest writer by the name of Charbax (of OLPC.TV) posted on Sept 28, 2007, an article questioning the real price of Intel's Classmate PC and the Asus Eee PC. More importantly it questions Intel's real intentions.

Highlights of the article -

A lot of bloggers and news media are reporting the Classmate PC costs $225 and the Asus Eee, $199. Some bloggers are even saying it wouldn't make sense for a government or anyone to buy a AMD Geode-powered thin Linux running XO laptop when you could get a fully featured XP laptop running on an Intel chip for $20 or $40 more.

But what are the real prices that Intel would charge a government that would like to order 1 million laptops? Does Intel plan to manufacture that many Classmate PCs when they have just announced the lower power and hopefully lower cost Menlow x86 processor?

Back in January, Intel said its Classmate PC cost over $450 to manufacture. By mid-year, it cost only $285 dollars with the price dropping to $200 by year-end as Intel spokeswoman Agnes Kwan told AFP. Accordingly, several thousand units have been shipped to Brazil, Mexico and Nigeria, and the target is 100,000 laptops by December. Pakistan has ordered 700,000 for 2009.

Can Intel be trusted on its intention to manufacture cheap laptops in large quantities anytime soon? Or is it only trying to influence bloggers and other media into saying that its solution costs the same as the XO? When a government is in talks with Intel about the Classmate PC, Intel will probably provide small test quantities. But does Intel really plan to mass manufacture it, or is the Classmate PC just there to make it look like Intel has got an alternative?

Asus and Intel jointly announced the $199/$259 for the Asus Eee PC at the Computex (Tawain) last June before Intel joined the OLPC. But at the recent Intel Development Forum, Asus admitted that most of the initial shipments of the Eee are likely to be the "mainstream" $369 configuration.

While the XO is now prepping up for mass production by Quanta, Intel and Asus are still all about getting as much publicity as they can. Are they really preparing a cheap laptop alternative, or are they just after slowing down momentum that the XO is getting? Quanta is Asus' main rival in the laptop manufacturing business in Taiwan. AMD is Intel's main rival in the x86 processor manufacturing business.

Are we dealing with real honest competition here from Asus and Intel? Or has it mostly been so far a mere game from Intel and Asus, getting bloggers and the media talking about their OLPC XO-alternatives which aren't seriously going to be manufactured?

The Eee will mostly be available in the $369 or $399 configurations, as I really don't think Asus can sell it at $199. That was probably a made-up price which they said back in June when they said they would sell limited quantities to developing countries, thus basically selling Eee at a loss in small quantities.

To feed some of the bloggers, Asus might ship very limited quantities of the cheaper Eee model before Christmas, just so that they can keep having bloggers talk about it being an OLPC alternative. But most Asus most probably doesn't plan to sell large quantities of the Eee at $199 anytime soon.

Asus and Intel probably are hard at work on the Classmate-2 and Eee-2 to use the Menlow processor. That second generation Asus/Intel laptop due in 2008 hopefully will have a better battery life, and really be low cost this time. And why wouldn't they use the OLPC's revolutionary sunlight readable low cost screen for their next design?

Are Intel and Asus really serious about shipping large quantities of low-margin, cheap computers? Will this not cannibalize their existing market of high margin, expensive laptops? Are Intel and Asus at all interested at this time to start shipping low cost laptop computers, making small margins at large volume?

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The entire article can be read here. Don't fail to read the comments, though. A lot of them provide good counterpoints.