MARKETING THE $100 LAPTOPBRINGING TECHNOLOGY TO THE MASSESHigh-Tech MarketingMBA 6307

Paulina BaytlerChris FillyChristopher Serio

Case Overview

• Professor Nicholas Negroponte• MIT Media Lab – The $100 Laptop

• Expose children in developing nations to technology. One laptop per child.

• Idea Launch – 2003• Non-Profit OLPC (One-Laptop Per Child) – 2005

• Target Market – “The Next Billion”• Developing Economies – BRIC

• Benchmark• Five-Million Orders from BRIC to begin production

Problem Statement

• Is the Vision Still Viable?• Is Five-Million a Realistic Benchmark• Is a Kid-Centric Model the correct model• Large players competing fiercely• This became a race to penetrate these

emerging markets. • Education was the way to get the foot in the

door. Cheap computers were the key. Not designed with Children in mind.

Main Issues

• Marketing challenges• Dealing with unique demands and circumstances

• Supplier and production challenges• Creating an inexpensive laptop that works

• Design and concept challenges• What is the best way to bring technology to

emerging economies?

Marketing Challenges

o Government buyers• Unique demands• Access to open R&D• Multiple competing issues (health, crime, etc…)• Budget restrictions

o Created for children, but marketed to Gov.o Lack of classrooms, teachers, and textbookso The majority of children are not in school

Supplier and Production Challenges

o Supply chain issues• 800 different parts, suppliers around the world

o Open source R&D• Pros:• Web forum created for multiple designers• Lowers cost and has ability to move quickly

• Cons:• Lack of intellectual property• Transparent to critics/buyers/competitors

Design Challenges

o Hardware• Designed with teachers in mind• Designed with children in mind• Designed for emerging business

o Software• Linux vs. Windows• Elementary technology vs. complex technology

Concept Challenges

o Educating the teachers vs. providing basic technology for children.

o Assumption that elementary programming will lead to technology fluency.

o Convincing governments that…

• technology will greatly improve education.

• technology will alleviate suffering

Porter’s 5 Force Analysis

Porter’s 5 Force Analysis

o Barriers to Entry – Low• Open source technology• Commoditized products

o Supplier Power – Low• 800 different parts, no

customizationo Threat of Substitutes – Low• Leveraging existing infrastructure• Wireless-centric vs. PC-centric

Barrier to Entry

Supplier Power

Threat of Substitute

Porter’s 5 Force Analysis

o Buyer Power - High• Selling to governments in blocks• Modeling for the Consumer• Marketing to the Governments

o Internal Competition – High • Intel – Classmate PC: World Ahead

Program• Encore Software – Mobilis• Indian Government and Brazil’s Education

Ministry

• AMD – Personal Internet Communicator

Buyer Power

Rivalry

Analysis of Competition

o Intel – Classmate PC• Loaded with education software• Positioned towards educating teachers and schools

o Encore Software – Mobilis• Hybrid PDA / PC• Touch screen with integrated keyboard• Designed for “on-field” applications

o AMD – Personal Internet Communicator• Consumers device for people in global, high-growth

markets• Positioned for “first-time” technology users

Competitive Analysiso OLPC• Positioned to expose children to

technology• Education software loaded onto a server

(extra cost)• Non-Profit!

o Classmate PC (Intel)• Loaded with education software• Positioned towards educating teachers

and schools

o Personal Internet Connection (AMD):• Consumers device for people in global,

high-growth markets• Positioned for “first-time” technology

users

o Mobilis (Encore):• Hybrid PDA / PC• Touch screen with integrated keyboard• Designed for “on-field” applications

Competitive Analysis

Proposed Alternatives

o Stay the course• Seek fund-raising, donations, and sponsorship

o Moving to a mobile centric model• Pre-existing infrastructure

o Move to Windows based system• Teacher-centric Intel based model

o Change the benchmark• Selling in lower quantity and proving product

value

Recommendations

o We recommend that OLPC lowers their benchmark and order requirements

o This will allow them to prove the benefits of their solution make larger sales

o Need to move faster against aggressive competitors

o This may allow them to focus on smaller emerging markets other than BRIC• More in line with their original vision

Action Plan

o Determine the lowest order amount possible without HUGE increases in price

o Identify new potential markets that can afford lower purchase requirements

o Conduct research proving effectiveness of the OLPC solution (and deficiency of competitors)

o Build a stronger case for multi-million unit sales

Conclusion