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December 14, 2005 4:42 pm

Quanta cool on contract for $100 laptops

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Quanta Computer, the world’s largest notebook manufacturer, may have just won a contract to make up to 15m notebooks from late 2006 – equivalent to almost a third of the number of laptops shipped worldwide this year. But jubilation is strangely absent in Quanta’s Taoyuan headquarters.

The company is to build so-called “$100 laptops”, ultra low-end machines for distribution to children in developing countries, which will bring Quanta a lot of work and no earnings contribution in the foreseeable future.

The project is being developed by One Laptop Per Child (OLPC), a non-profit organisation that comprises the Media Lab at Massachusetts Institute of Technology and corporates such as AMD, Google, Nortel and Red Hat.

The idea behind the project is a non-commercial one: to break through the “digital divide”. But if it succeeds, the cost-cutting innovations could easily have an impact on the commercial PC industry.

Moreover, OLPC plans to launch a commercial version in 2007, which could help bring the numbers up to 200m units together with the non-profit model. “Potential partners to be approached at that stage would include Apple, Dell and HP,” says Nicholas Negroponte, chairman of the Media Lab at MIT.

That is the real reason why Quanta had to bid for the project. The company emphasised yesterday that it wanted “to do something for charity”. But privately executives say as a contract manufacturer, Quanta has to make sure it is “in the loop” in case the commercial version is indeed launched in the future.

“With profit margins at 6 per cent, you make US$6 from one $100 notebook. How could that be a business anyone would want to be in?” says an executive at a rival notebook maker.

“But as there is a risk that our customers could be in that business commercially in the future, we need to be in there, too.”

Quanta beat three other Taiwanese and one Korean contract manufacturer in the project tender.

Mr Negroponte says: “Any previous doubt that a very low-cost laptop could be made for education in the developing world has just gone away.”

Quanta is much more cautious. “You are getting the wrong idea if you think that all that’s left to do is assemble it,” the company says.

A team at Quanta Research Institute, a company R&D facility, will be working on the $100 laptop exclusively for the next six months.

“We still need to put a large amount of research and development into this, and will then hopefully be ready to make a finished product in the second half of next year,” the company says.

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