Intel walks out on OLPC, chooses to put its profits first

January 5, 2008

 Intel walks out on OLPC, chooses to put its profits first Intel surprised no one when it left the One Laptop per Child (OLPC) project. The biggest surprise was why the chipmaker joined up with OLPC when it’s currently selling the OLPC’s competitor – the US$350 Classmate PC. Think of the kids or think of your profit margins – no surprise where Intel swung.

A little harsh on Intel, you say? In the New York Times article on the breakup of the partnership, it’s obvious the OLPC group wasn’t the one threatening the relationship. Intel’s sales rep, Isabelle Lama, tried to dissuade a Peruvian official from buying an OLPC and go for the Classmate instead. Never mind that the OLPC costs $150 less than the Classmate.

Paul S. Otellini, Intel’s chief executive, said that Intel would change their practises and accelerate the development of the Intel OLPC prototype. OLPC founder Nicholas Negropointe called their bluff. Negprointe insists that on the sales field, nothing changed. Instead, he claimed that Intel salespeople were now using the OLPC spat as part of their sale pitch, saying they had insider knowledge that the organisation was in trouble.

Now Intel’s spin is that their leaving is due to a stalemate regarding whether they could still sell Classmate PCs. Let’s see, you’re selling a product competing with the one you’re supposed to jointly promote. The conflict of interest was glaringly obvious from the start. Why both parties wasted time going through with it initially is mind-boggling to say the least.

It’s sobering that what was supposed to be a charitable endeavour to provide underprivileged children affordable access to PCs is being undermined by corporate self-interest. Intel is well within its rights to produce what they probably see as a better alternative to the stripped-down OLPC. What it had no business doing was getting its fingers in both pies and deliberately sabotaging an effort it had promised to promote. In the end, it all boiled down to ethics versus profit and Intel chose the latter.

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5 Responses to “Intel walks out on OLPC, chooses to put its profits first”

  1. John:

    Your analysis is so simple-minded and predictable you should have just written “greedy corporation puts profits before people” and left it at that.

    Do you really belive that Intel “deliberately sabotaged” OLPC? If so, I suppose you also imagine that that joining OLPC was Intel’s devious ploy to destroy the competition from within. Maybe you’ve been reading too many spy novels lately?

    I notice that you conveniently omit the fact that the XO runs Linux while the Classmate PC runs Windows. Are you so condescending as to imagine that third world children don’t want or need the same platform that 97% of rest of the world uses? I suppose for Intel to mention this useful fact constitutes unfair competition.

    If you had bothered to take your anti-corporate blinders off you might have figured out the real story: Intel was forced out of OLPC by the unreasonable demands of a megalomaniac named Nicolas Negroponte. Negroponte essentially told Intel that if they wanted to stay in OLPC, they needed to abandon the Classmate PC and only promote the XO. Never mind the fact that various countries might actually benefit from being given a alternative platform that better suits their needs.

    Here’s the bottom line Erna, stop assuming that corporations are evil and that poor people are stupid. No one can force Peru or Nigeria to buy something they don’t want. At least Intel is giving them a choice; Negroponte, the good guy in your scenario, is more interested in building his green computer empire than in helping people.

  2. Erna:

    You’re entitled to your opinion. The point here is, if you’re in on the OLPC initiative, then you shouldn’t be undermining it at the same time. It’s not about ‘oh the greedy corporation strikes again’. Intel’s and Microsoft’s choice not to join the bandwagon initially was a smart business move, one I am not disputing in the least.

    If Intel had decided to stay out of the OLPC consortium, there’s no blaming them. But tearing down what you agreed to build is bad business practise. Intel should have known from the start that pushing two competing products was a definite conflict of interest. There was no grey area here – it’s like McDonalds joining the World Food initiative then telling third-world countries, “Screw it. Why don’t you buy our cheap eats instead?”

    This is just one viewpoint – OLPC has come under attack for other things. Like how its initial target price of $100 had to be revised. How children in Iraq and Afghanistan have other basic needs as well – security, clean water, medical treatment.

    But unethical sales practices cannot and should not be condoned. Whether big corporation or family-owned small businesses.

  3. Bohol:

    Intel is a profit-oriented company. Its move is understandable in the point of view of a seasonal businessman.

  4. IHATEJOHN:

    Isabelle Lama’s name is mud! Actually, as a Spanish name, her “maiden” name should be included as part of her published proper name.
    Some of Iraq’s officials are asking the US for brand name Windows computers in the name of “educational and charitable purposes” so that they can be sold on the black market. For all its faults, OLPCs foesees this problem. “John,” I think you’re proving that its not only corporations that are evil, but individuals like you can be evil, greedy and stupid!

  5. John:

    My take on it is that Intel decided it was getting too much bad PR being seen as the bad guy and, I imagine, Otellini genuinely didn’t want to *be* the bad guy. So why not contribute to OLPC with the assumption that there’s room enough in the third world for two computing platforms?

    I don’t buy the idea that selling another product in the same market is de-facto “tearing down” the competition, or that Intel can’t simultaneously support both products. Companies compete against themselves all the time; it’s part of branding. If done right, the two brands are genuinely different and therefore appeal to different people with different needs. It would certainly be hard to argue that having a choice between Windows and Linux is not a benefit to people in the third world.

    Intel screwed up by not supporting OLPC from the outset. Instead Craig Barrett called it a “100 dollar gadget.” Probably not the most appropriate stance toward the efforts of a humanitarian organization. I think what happened afterwards is that Otellini tried to mend fences by joining and financially backing OLPC. Unfortunately, Negroponte made that process quite difficult. Intel was apparently put on “probation” (Negroponte’s word) where they had to accede to OLPC’s numerous demands (e.g. trashing the Classmate PC) or else be expelled from the organization. It’s clear in retrospect that Negroponte preferred a quasi-dictatorial “clarity of purpose” (again, his term) to meaningful compromise.

    Too bad. In making that choice he threw away a great opportunity to leverage Intel’s considerable resources for the benefit of millions.

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