Why Microsoft and Intel tried to kill the XO $100 laptop

via: Times

By Bryan Appleyard

At the World Economic Forum in Davos in January 2005, Nicholas Negroponte, supreme prophet of digital connectivity, revealed a strange tent-like object. It was designed to change the world and to cost $100. It was a solar-powered laptop. Millions would be distributed to children in the developing world, bringing them connection, education, enlightenment and freedom of information. The great, the good, the rich and the technocrats nodded in solemn approval.

And then some of them tried to kill it.

Microsoft, makers of most of the computer software in the world, tried to kill it with words, and Intel, maker of most computer chips, tried to kill it with dirty tricks. Of course, they don’t admit to being attempted murderers. And when I introduce you to Intel’s lovely spokesperson, Agnes Kwan, you’ll realise how far their denials go. But the truth is the two mightiest high-tech companies in the world looked on Negroponte’s philanthropic scheme and decided it had to die.

Yet, 3½ years later, the laptop is clinging on to life. It costs around $190 rather than $100 and it is called the XO. It is no longer like a tent, but it can still be solar-powered. It is a technological triumph. But only 370,000 are in use and another 250,000 ordered. One Laptop Per Child (OLPC), the company formed to run the project, is still driven by the same old idealism, geekery and technical brilliance. But Negroponte and his young staff are older and wiser. They were stunned by the savagery of the competition they faced – competition plainly intended to destroy a philanthropic idea. “I had wildly underestimated,” says Negroponte, “the degree to which commercial entities will go to disrupt a humanitarian project.”

For three reasons the XO turned out to be a gross provocation to the big players in the computer industry. First, it was always going to be cheap, undercutting the competition by thousands. Computers only cost as much as they do because the makers of the software – primarily Microsoft – go to enormous lengths to make their products necessary and expensive, and because makers of the hardware are constantly adding new features that you probably don’t need.

In fact, electronics have plummeted in price and there’s no real reason why you can’t get a decent laptop for a maximum of $400.

Second, the XO uses an AMD chip. The monopoly chip-maker in the world is Intel. It has three-quarters of the market, with AMD second. AMD and Intel hate each other with a hatred as hard as that of Hamas and the Israelis. For Intel, the idea of hundreds of millions of AMD laptops out there was intolerable. Intel could lose their market leadership – but not if Agnes has anything to do with it.

Third, it does not use software by Apple or Microsoft. Instead, it is run by Sugar, a free operating system devised by geeks for the love of it. For Microsoft in particular this was also intolerable. Its Windows operating system is the industry standard. Apple’s system is much better, but Windows, through sheer Microsoft muscle, has been made to appear necessary. The new massive non-Windows user base threatened by the XO is the sort of thing that seriously cuts into Bill Gates’s me time.

“This was a project that could operate outside the regular business world,” says Ethan Beard, a former OLPC board member representing Google, one of its backers, “and that’s not an unreasonable expectation. But it is in some ways threatening to businesses and when you threaten businesses, especially very large ones, they are going to react in ways that hurt you.”