Thoughts about the OLPC pricing scheme

[greggh]

It just struck me that there is no good reason not to make the OLPC available to everyone unrestricted at the lowest possible price. I've heard Negreponte say that as they manufacture more they will gain economies of scale and the price will continue to go down. Makes sense, and I believe that would be true. But they're not behaving as if they believe it themselves. If the goal of OLPC is simply to produce the lowest cost device, which would be a great benefit to impoverished countries and populations, then the quickest way to get to that lowest price is to make it available to all consumers at the cheapest price. That will result in the most units sold and fastest and biggest cost savings in manufacturing. These schemes of only allowing a normal consumer to buy one if they pay double the price only serves to lessen the demand and keep the manufacturing costs higher longer. Am I missing something? Just what is Negreponte really up to?

[snarkout]

I don't know much about why they've setup their current scheme and why they decided that right before xmas is the best time to sell these "for a limited time only." I'm guessing that they purposely do not want people to buy these and compare them to their Dell lappy. It's also very possible that the price they've given publicly is actually lower than what they really cost, and they can't actually afford to sell them at that price. Think xbox or similar here. Or they could actually believe that the world is full or altruists instead of greed heads and hope that lots of people snap these up in a humanitarian gesture rather than look at the price and go OMG WTF $$$ SUXXORZ!!!

In short, they may be taking the Apple approach of the price point picking the "correct customer" for their device, they might be hiding the real cost of the devices, or they might just suck at TEH BIZNISS. Who knows?

[Gomer_X]

If the goal of OLPC is simply to produce the lowest cost device, which would be a great benefit to impoverished countries and populations, then the quickest way to get to that lowest price is to make it available to all consumers at the cheapest price. That will result in the most units sold and fastest and biggest cost savings in manufacturing. These schemes of only allowing a normal consumer to buy one if they pay double the price only serves to lessen the demand and keep the manufacturing costs higher longer. Am I missing something?

They've been pretty open from the beginning about the goals of the project, and "simply to produce the lowest cost device" is not it. The goal is to get computers into the hands of people who can't afford them.

This can only work if some people pay more so others can pay less. When you buy an OLPC computer, you're really paying for 2. You get one, and a kid in Africa gets the other.

Releasing the thing at the lowest price possible to ramp up production and maximize economies of scale still wouldn't produce a $0 PC, which is what is needed. The high price is a subsidy.

[Vogateer]

I do wonder about having to buy two, though. By the time you buy two you can almost get a new cheap laptop. The XO-1 has a certain coolness factor, but I can't say I'm willing to pay $400 to help out on top of what I already give to charities. Maybe get one, give half of one would be more manageable.

Though the T-mobile thing does add considerable interest.

[snarkout]

Well, I wanted to get one, but like I've said before their right-before-the-holidays approach is problematic for me - I haven't checked for an update, but last time I looked, the plan was a brief 2 or 3 week span starting around now. Their thinking might be that people will want to give these as gifts, but I don't honestly see that happening. Their thinking might be that people are more charity-minded around the holidays, but then why not just start a huge "buy rice feed a child, buy a lappy, feed a village" kind of thing, and completely forego the one for the price of two deal?

In the end, if I do buy one, at least 75% of my motivation will be the charity angle, the remaining 25% being "hey nifty" in essence. You get a geektoy, and you get to help others - that sounds very good to me. Just not right before freaking xmas, especially when you consider that both my wife's birthday and mine are in Nov, my anniversary is in Nov, and my mom's birthday is in Dec. This makes my "the holidays" even more expensive than they are for most people.

[Vogateer]

Yeah, I try to space out Christmas shopping over a couple of months, but even then our car insurance is due in December, and money always gets tight around then anyhow.