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

via: Times
The latest iteration of the XO

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.”

So the big boys stamped on the fingers of the XO. Intel called it a gadget and then made their own cheap laptop, the Classmate, which they sold aggressively against the XO. Microsoft’s Gates said, “Jeez, get a decent computer?” and then went around trashing Negroponte’s earnestly well-meaning machine.

“He said that sort of thing privately to people I knew,” says Negroponte. “There was a fair amount of that. I was annoyed enough to say so, and he apologised for it – a lot of good that did.”

Gates’s reaction was especially tasteless. Apart from being – like, apparently, everybody else rich, powerful or famous – an old friend of Negroponte, he is the greatest philanthropist in the world. But even though he’s stepped down as the head of Microsoft, he remains almost paranoiacally defensive of Windows.

Yet, miraculously, in spite of all this the XO is still alive, clinging to the cliff face. But for how much longer?

The Massachusetts Institute of Technology (MIT) is geek central, the greatest school of its type in the world. Along with Harvard, it dominates the city of Cambridge, across the river from Boston. MIT is a city within a city consisting of the campus but also the penumbra of gigantic, architecturally eccentric buildings in which live the high-tech companies that graze on the institute’s talent. Around Kendall Square, people shuffle along the streets lost in thought. In the cafes they read and write notes on yellow legal pads. This is where money meets IQ. It is not quite like anywhere else on Earth.

It was here that, in 1985, Negroponte founded MIT’s Media Lab with the idea of “inventing a better future”. It was an idealistic attempt to show that the computer and communications revolutions could, indeed, make the world a better place. The XO – high tech for the poor and unconnected – was the perfect embodiment of the Media Lab’s idealism.

In the OLPC boardroom in an office in Cambridge I meet Negroponte. He is a staggeringly well-connected Greek-American from a wealthy background. The background and the connections give him a slightly remote, slightly languid, though not pompous or grand, air. His staff at OLPC regard him affectionately and with some bemusement.

A techno-utopian by nature, MIT is his natural home. And it was at MIT in 1968 that he met Seymour Papert. Papert had worked with the great educational theorist Jean Piaget. From Piaget’s work, Papert had developed the learning theory of constructionism. Put simply, this means that children learn most effectively when they are doing things rather than just sitting and listening. Negroponte became an enthusiastic constructionist. It synched with his world-transforming view of technology. Computers were to be the perfect constructionist tool, allowing children to discover and make things on their own. If Negroponte is the father of the XO, Papert is its grandfather.

“The question we were asking,” says Walter Bender, long-term Negroponte collaborator, “was not the ‘how’ of computing but the ‘why’. And the primary answer was learning.”

Constructionists tend to be sensitive creatures, primarily because they have been so angrily attacked. Children have to be told something, say the critics: they can’t just be set free to do anything they feel like. Sane constructionists accept this, but, to be honest, I do have a suspicion that they may be more geeks than educators. They want computers to work in schools because they like machines.

Through various experiments, Negroponte and his colleagues zeroed in on the idea of the computer as the key that would unlock the predicament of the world’s poor. In 1999 Negroponte built a school in Cambodia.

Then, in 2001, he suggested his son go to it and, using a satellite link and a few laptops, connect it to the internet.

“This was a very remote village – no electricity, no telephone, no TV – but the wi-fi was so well done that when I asked myself if you look at the constituent parts they were all replicable and in most cases the prices would scale down. The one exception was the laptop. That became the focus?”

Yet laptops were expensive and they never seemed to get any cheaper, they just got more complicated. They have become loaded with “bloatware” – over-featured, over-complex software. “Everything becomes like an SUV,” says Negroponte. “It’s crippling because, like an SUV, most of the power in that machine is being used to drive the machine, not you or I.”

Pricey laptops meant that the Cambodian scheme was not “scaleable”. Cheap wi-fi connections could be scaled up, but then each child would need a laptop and there was no cheap way of providing these. This was a huge frustration to Negroponte, who firmly believes in constructionist learning through computers and that a connected world would be a better, more harmonious world.

But, I point out, it doesn’t seem to have worked so far. Our new connectivity hasn’t made us significantly less evil. “It’s not working as well as it should because not enough people are connected at the moment,” he admits.

So the price of laptops was standing between this world and a better one. By 2004, Negroponte was ready to do something about it. He asked Intel to provide a low-cost, low-power chip. “As long as you don’t call it a laptop,” said Intel, with the tactlessness that seems to be a corporate policy. It meant they didn’t like the sound of this new machine. “Did they actually say this?” I ask earnest Agnes. No comment.

But, for months, Intel did no more than think about it. AMD, in contrast, said yes in a few hours. So, by the time of Davos, Negroponte was ready to announce the new machine with an AMD chip. “Why didn’t you give us a chance?” whined Intel a month later. Remembering this, Negroponte laughs wryly: “It was like you get married and then your girlfriend comes back.”

For whatever reasons, Intel didn’t get it and AMD did. “I’m not sure,” says Dan Shine, a director of AMD, choosing his words with the care of a Hamas spokesman at the UN, “[that] Intel viewed it quite as holistically as we did.”

Negroponte had also hooked a spectacular range of backers: Red Hat, Google, AMD, Brightstar and News Corporation (the parent company of The Sunday Times). These each contributed $2m upfront and then a further $500,000. All the companies put in money as sponsorship rather than investment. This was, to the core, a pro-bono, philanthropic enterprise. OLPC, at Negroponte’s insistence, had been set up as a non-profit operation.

“It was probably the best decision we ever made,” he says, “but we came this close to not doing it. I was advised by absolutely everybody to make it a profit-making entity so we could make lots of money and then give it away? But the non-profit decision was important because it provided clarity of purpose – first, a head of state will talk to you because it’s about children and learning and not profit and, secondly, the best people will work for you for zero salary.”

Negroponte then went out to sell the machine. Connected as he is, he decided to use a top-down approach. He sold straight to governments and heads of state. It seemed to work like a charm. As if by magic, he conjured up promises to buy millions of laptops from Argentina, Brazil, Nigeria, Thailand, Pakistan and Libya. It was, in publicity terms, a brilliant coup. From nowhere this not-yet-existing machine seemed to be conquering the world. The press lapped it up. Negroponte was on a roll.

Unfortunately, none of the orders materialised. “He would go from prime-minister meeting to president-of-country meeting and that was his sales model,” says Rebecca Gonzales of AMD, who now advises OLPC. “And it didn’t work, absolutely not. As we have learnt in the business world, just because you have a handshake from the president or the prime minister, it doesn’t mean you have an order.”

In fairness to Negroponte, his strategy had at least earned OLPC a high-publicity profile, and some of the non-orders were due to unforeseeable events – there was, for example, a military coup in Thailand.

“There’s nothing I regret about this strategy,” he says. “It created enough hype and pictures of Nicholas shaking hands with heads of state that, back in Taiwan where 250 engineers were working on it, people felt part of something.”

Meanwhile, industry-changing technologies were being applied to the design of the computer itself. In its finished form there are three things this computer has that all laptops should have but don’t.

The first is its screen. This was created by OLPC’s chief technology officer, Mary Lou Jepsen. It is, first of all, cheap. Jepsen points out to me that the screen is the most expensive item in any laptop and yet, for some reason, it is not normally included in the hardware costs, so it gets overlooked. Secondly, it is superbly readable in any light. It isn’t glossy or reflective. It is probably the best laptop screen in the world.

The second thing is mesh networking. This means if you have 10 XOs in a room, they can all talk to each other directly without going through the internet. So even in an African village without wi-fi, the people could have their own intranet. Mesh also means that when they do have a wi-fi connection, its range can be massively extended as the mesh picks up the signal and rebroadcasts it. The XO has probably the best connectivity of any laptop in the world.

And third, it probably has the lowest power consumption of any laptop, essential in environments where power is at a premium.

The hardware, in short, is superb. The software, however, has problems. Sugar is a development of Linux, a free, “open source” – more of that in a moment – operating system.

It is tuned specifically to the needs of children and they, I am told, pick it up quickly. Adults who have any experience of computers, however, will find it hard. It has also been quite buggy. And the user interface (UI) – the way you interact with the machine – is very hard work compared with Windows and Apple. “It can take years to get a UI right, so starting from scratch for me was a question,” says Ethan Beard.

All of which was bad news for the computer when it first appeared – it went into production in November 2007. A review in The Economist in January said “the implementation of the technologies is terrible” and described the Sugar operating systems as “cumbersome”. The Economist being read by precisely the sort of people who might buy this machine in quantity, this was catastrophic. It was also not, given the quality of the hardware, entirely fair.

And the truth of the design is that it had to be done that way to get the price down. Both hardware and software had to be rethought from the ground up. This is most difficult with the software in the time available, because good user interfaces takes many years to develop. Apple – the industry leader in this area – is only as good as it is because of three decades of development. But Sugar was free, and buying Windows off the shelf – Apple does not license its system – would have almost doubled the price of the machine.

There is a further element to all this which is crucial to understanding the idealistic, visionary zeal of the geeks who worked on the machine. From its beginnings in the 1970s, the personal computing revolution has been suffused with countercultural idealism. Apple was born of the conviction that the “people” should have computing power and IBM, the then big player, was the corporate beast that was not going to provide it. Even now it, too, is a corporate beast, Apple still markets itself as the countercultural alternative to a Microsoft-powered machine. But the ultimate countercultural gesture is “Open Source” software.

With Apple remaining a minority brand, Open Source is the biggest threat to the dominance of Microsoft. Buy Windows Vista Ultimate – the latest Microsoft operating system – at PC World and you will pay £230. Vista is not popular, but hundreds of millions have to have it. Linux, the Open Source operating system, is, if you are geek enough, free. No wonder Microsoft said from the beginning that they couldn’t back an Open Source machine like the XO – they would be promoting their biggest weakness.

Linux is not just software, it is a countercultural movement whose most fervent adherents believe in the overthrow of the Microsoft monopoly. Sugar is based on Linux and Sugar’s greatest lover is Walter Bender.

I meet Bender in the Media Lab. There is something shy about him. A senior figure at the Media Lab, he left OLPC. He was its most high-profile departure. The reasons are disputed. Some say he was just too awkward to work with. But his reason is clear. OLPC had decided to produce a new “dual boot” version of the machine – this means it can either run Sugar or Windows. For Bender, this was a betrayal of the Open Source faith.

Open Source allows users to change any or all of the software, to “drill down” into the very depths of the machine. For Bender, this makes it more true to the constructionist faith than any proprietorial software. Children can remake the XO from the bottom up, impossible with a Windows machine. “I left because the future of Sugar was going to be bigger and bolder than just being confined to the OLPC laptop,” says Bender.

The question raised by Bender’s departure was: is OLPC an open-source crusade, or is it a project to spread computing to the poor by any means available? In practice, OLPC has answered no to the first and yes to the second. But, if it is just about spreading computing to the poor, then is the XO itself that important? Wouldn’t any cheap laptop be just as good? It is this question that lies at the heart of the most spectacular crisis surrounding the project: the war with Intel. And here we come to my new best friend Agnes.

Microsoft may have used words and a refusal to co-operate as its weapons against the XO; Intel used brute force. The company dominates global computer hardware in the way that Microsoft dominates the software. And, like Microsoft, it is a fierce protector of its ascendancy. So fierce, in fact, that the Federal Trade Commission in the US has recently opened an investigation into its alleged anti-competitive practices designed to shut out AMD. On the academic side of the OLPC project, they were shocked by the ferocity with which Intel attempted to kill their product. On the business side, they just shrugged and they all said the same thing: “It’s in their DNA.”

Intel’s response to the XO was the Classmate. It is nothing like as radical a machine in that it is, basically, a straightforward Windows laptop. Intel will tie itself in knots rather than admit its laptop was a response to OLPC’s.

My Intel spokesperson, Agnes Kwan, seems to exist to evade the issue. I played e-mail ping-pong with her over several days. She was trying to avoid giving me any dates that would show the Classmate came after the XO. This included sending me a bizarre and barely literate “ethnographic” study of computing in the developed world. In the end, all she would say about the timeline of the Classmate was: “It’s hard to pinpoint a start date with the nature of ethnographic research in which ethnographers collect data over a long period of time.” Sorry?

Many in the industry says the Classmate was intended to be an XO killer and that’s how Intel behaved. Their formidable global sales operation charged into any market in which OLPC might get a foothold, trashing the XO and pushing the Classmate. Nigeria, where Negroponte had one of his handshake deals with President Obasanjo, was a typical example. In August 2006, Craig Barrett, Intel chairman, wrote a hard-sell letter to Obasanjo asking for a meeting in which he could explain their World Ahead programme, “which is chartered to extend PC access to the world’s next billion users”. This programme had been launched in May 2006, 15 months after the OLPC announcement at Davos – bit of a dead giveaway there, Craig. Barrett’s letter was backed up by documents listing “the shortcoming of the OLPC approach”.

These documents having been leaked, they became a significant embarrassment to Intel. Here was a mighty company trying to crush a philanthropic project. In May last year they seemed ready for a truce and a deal was done. Intel would join the OLPC board, invest $6m in the company, there would be moves to put an Intel chip in the XO, and there would be no more slagging off of the XO in the marketplace. The deal failed with almost Middle Eastern speed and finality. Intel attended only one board meeting and Intel salesmen – “it’s in their DNA” – carried on slagging off the XO. Intel also tried to parcel up the world into easy markets for Intel and hard ones for OLPC.

“You mean,” says Negroponte of this phase, “Ethiopia is mine and Mongolia isn’t?”

At the same time, Negroponte was demanding Intel stop marketing the Classmate. Intel refused on the basis that there was room for a plurality of solutions to the “digital divide”. On this issue – says Agnes – the deal collapsed and Intel left the board in January. Even the departure was contentious. Negroponte said there was a deal to say nothing until there could be a joint announcement. But, of course, Intel went ahead and spoke to the press anyway.

“It’s quite obvious,” says an OLPC spokesman, “that they waited until very late in the day to make it nearly impossible for OLPC representatives on the East Coast to get their side of the story in the ‘first stories’.” Bruce Sewell of Intel e-mailed Negroponte to apologise, saying “instructions were misunderstood internally”.

I put all this to dear Agnes. No comment.

Destructive as all this sounds, it represents a kind of success for OLPC. First, whatever Intel tries not to say, it is almost certain that the OLPC inspired the Classmate and cheap computers from others. Furthermore, as many on the business side of OLPC pointed out, the very fact that giants like Microsoft and Intel were bothering to trash the XO indicated the power of this idea to get under their skin. “If Nicholas hadn’t said what he said in January ’05,” says Dan Shine at AMD in Austin, Texas, “this machine wouldn’t be here and a lot of other technologies and discussions wouldn’t be here. He accelerated people getting access by probably years.”

And, finally, however “impure” it may be to the open sourcers, putting Windows on the XO was a huge breakthrough in the computing industry because Microsoft has let them have Windows XP for $3 per computer. One of the previous industry certainties was that Microsoft never ever sells anything cheap.

So, whatever happens to the XO, OLPC has changed the industry. The question then becomes – what will happen to the XO? A new OLPC machine, which is configured more like an electronic book, is due out in 2010 and, meanwhile, the XO is making inroads in Latin America and there should soon be one million in the hands of children in 16 countries. Sweet Agnes can only say that the Classmate has sold “tens of thousands”. If the war with Intel is to be won by sales, then OLPC is well ahead.

Palo Alto is the Californian equivalent of Cambridge’s Kendall Square. This time the great IQ warehouse is Stanford University. The streets of the town are, in a Californian way, less intense than those around MIT. But the corporations are here, not least Facebook, the vast social-networking site. In one of their many buildings, I meet Ethan Beard, an alarmingly young, alarmingly vigorous man. When at Google, he was sent to oversee their sponsorship on the OLPC board. Now, looking back, he thinks more radically than anybody else about the future of educational computing for the developing world.

“They could keep on coming up with innovations and license out the technology, take the money and fund OLPC. Or they could open-source the entire design of the computer.”

Or, he suggests, the whole system could be put into a “cloud”. Cloud computing means your machine does very little except contact the internet – everything else is taken from applications and storage in cyberspace. Beard thinks the whole OLPC project could live in the cloud, freeing it from the bonds of the heavy hardware earth through which it trudges.

But whatever future emerges from the heads of Nicholas, Dan, Mary Lou, Ethan, Rebecca, Walter or even Craig, Bill and the divine Agnes, the simple fact will remain that OLPC has been a noble attempt to do something the industry would never have done without provocation.

Computers are like drugs, literally. If the drug companies wanted to do the most good in the world, they would divert all investment from the illnesses of the rich – cardiovascular disease, cancer, diabetes – to the much more catastrophic ailments of the poor, primarily malaria, but also Aids. But they don’t; they sit comfortably on their high-margin drugs. Equally, if the technocrats really believed in the human value of universal connectivity – and all of them say they do – they would find ways of wiring southeast Asia and Africa. But they don’t; they sit comfortably on their high-margin laptops.

Or they did until Nick Negroponte, supreme prophet of digital connectivity, revealed a strange, tent-like object in January 2005 at the World Economic Forum in Davos and, at a stroke, gave Agnes her job description.