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Not just charity cases

Underdeveloped countries need technology too. Intel and others see potential markets.

January 12, 2008

Intel Corp. didn't win itself any PR points when it pulled out of a deal to spread technology and education to some of the world's poorest children -- especially when news emerged last week that it had apparently stabbed its nonprofit partner in the back. Yet Intel's abrupt split with the One Laptop per Child venture may signal a surprisingly beneficial trend for the developing world.

The One Laptop per Child Foundation was started three years ago by former MIT Media Lab director Nicholas Negroponte, whose radical goal was to sell millions of child-friendly laptops to governments in poor countries for $100 apiece. That may never happen; it turned out to be impossible to build a decent machine for so little, and the organization's XO laptop sells for nearly twice Negroponte's ambitious price point. It's still a phenomenal bargain, prompting Peru to buy more than 270,000 XOs for distribution to public schools. Peruvian children who can't afford books are now surfing the Internet, reading digital texts and taking and sending digital photos.

Intel had agreed to contribute millions to One Laptop per Child as well as to create a microprocessor to use in future generations of the XO (currently they run on chips from competitor Advanced Micro Devices Inc.). When it ended the relationship last week, a furious Negroponte went to the media with tales of double dealing. Intel had for months been urging potential XO customers not to buy the device, he said, because it's launching a competing low-price laptop for the developing world, called the Classmate PC.

The good news about this apparent betrayal is that Intel sees a market in poor countries that have long been ignored by the tech industry. It isn't the only one. Inexpensive laptops, intended for both poor countries and rich ones, are suddenly hot items, with an under-$300 model from the Taiwanese company Asus already available and another on the way from Menlo Park-based Zonbu; top PC makers such as Dell Inc. and Hewlett-Packard Co. are also said to be eyeing the market. With so many players entering the field, further innovation and even lower prices are almost sure to follow.

This commercialization of charity is reminiscent of the market success of microlending. Muhammad Yunus, winner of the 2006 Nobel Peace Prize, popularized the concept of "social business," in which commercial operations aim to achieve a social good while also turning a modest profit. Yunus was largely ignored when he began providing tiny loans to the desperately poor in Bangladesh in the late 1970s, but now microlending is a hot banking segment that has attracted giants such as Citigroup Inc. and is growing fast; there was an estimated $17 billion in outstanding microloans in 2006, according to McKinsey & Co.

Such free-market development could potentially play a greater role in reducing world poverty than the billions that governments spend yearly on foreign aid. Yet it takes visionaries like Yunus and Negroponte to demonstrate what should be obvious to corporate CEOs: There's money to be made in the forgotten pockets of the planet.

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