Yahoo! News - Schools Debate Price of PCs and Corporate Altruism

http://story.news.yahoo.com/news?tmpl=story&cid=569&ncid=738&e=1&u=/nm/20040
710/tc_nm/column_pluggedin_dc

Technology - Reuters

Schools Debate Price of PCs and Corporate Altruism

Sat Jul 10, 8:50 AM ET
    
By Lucas van Grinsven and Bernhard Warner

AMSTERDAM/LONDON (Reuters) - A pilot project in Africa that aims to provide
a single computer that can be used by four students simultaneously has
stumbled across one of the business world's basic facts of life.

Why make a cheap machine when customers in the developed world will pay good
money for a more expensive one?

The question hangs over efforts being made by American computer-maker
Hewlett Packard (NYSE:HPQ - news), which in the last two weeks introduced
the Multi-user 441 desktop, a computer based on the open-source Linux (news
- web sites) operating system.

HP reckons the unique design -- in which four keyboards and monitors are
connected to a single central processing unit -- will save schools up to 60
percent of their ballooning computer costs.

But there is a hitch. HP has only made enough machines to sell to
cash-starved school districts in South Africa.

As interest in the machine grows, the limited supply has turned a
well-intentioned product into a source of confusion among educators and a
point of debate among industry analysts, who question whether a major
computer maker has an interest in bringing a low-cost alternative to a wider
mass market. 

"Usually what happens is, if we come across a system that works and works
well, we try to spread it out across our (schools) network," said Sara
Kyofuna, a member of SchoolNetAfrica, a non-profit organization aiming to
bring computers to classrooms in Africa's poorest nations.

"Why it would be made available for one market and not another, I really do
not understand," she said.

BUT, WILL IT WORK IN ANGOLA?


SchoolNetAfrica is a potential customer. It is interested in buying some of
the terminals for schools in Angola, but now the outfit is unsure whether HP
will supply them for schools there.

HP said while a wider roll-out schedule for the product has not been
finalized, it would like to bring the machine to new markets by year-end.
But, the computer maker added, the product will be marketed solely to
developing nations.

In the meantime, HP said it is talking to Pan-African organizations such as
SchoolNetAfrica to bring the 441 to markets outside South Africa.
Impoverished school districts in Western Europe and North America though
will have to wait. 

SchoolNetAfrica is facing a dilemma familiar to anybody with a stretched
technology budget. For boot-strapping start-ups in Moscow and poor school
districts in downtown Johannesburg alike, bargain hunting is essential to
meet growing IT needs.

A machine like the 441 may not suit everybody's computing needs, but HP has
shown that the day for an economical PC has arrived and, quite possibly,
unleashed a new era in computing.

KUDOS FROM THE SIDELINES

HP rivals including International Business Machines Corp.(NYSE:IBM - news),
applauded HP's move to bring a cheap Linux-based machine to market.

"Linux has always been able to support multiple users, and Intel
(Nasdaq:INTC - news) processors are also able to support multiple users.
It's a good use of the technology," said Doug Nielson, e-server consultant
at IBM in Europe. 

However, IBM could not say if it would follow suit.

Analysts wonder whether the cost of altruism may be too high for major
computer makers whose bottom line depends on selling PCs. It's a common
dilemma for companies who seek to sell their products in emerging markets.

"Large hardware vendors are likely to be reticent to introduce machines
which might reduce their total sales," said Martin Hingley at market
research group IDC.

They may be missing out on a yet-untapped market for small offices and home
users, however. "There is a massive opportunity for something similar to
this for the home," Hingley added.

SCARY LINUX 

While availability remains one issue, a move to a cheap Linux machine can
still scare users. 

Ton Wagenaar, who manages the computer network at the Dalton secondary
school in Voorburg, The Netherlands, likes the cost savings of Linux, but
worries about his students' preferences.

"The Linux desktop is quite different from what students are used to in
(Microsoft's (Nasdaq:MSFT - news)) Windows. For that reason, I can't see a
quick changeover," he said.

Moreover, users with elaborate computing needs would probably shy away from
a multi-user machine like HP 441, said Nikos Drakos, an analyst with tech
consultancy Gartner.

"That's why South African schools make sense. But it would not work for the
general knowledge worker who needs to run software programs written for
Windows," he said.