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Last Updated: Thursday, 27 September 2007, 07:43 GMT 08:43 UK
Portables to power PC industry
By Mark Ward
Technology correspondent, BBC News website

School children using XO laptop, AP
The XO has been developed to help children
The XO laptop may have been created to help children in developing nations, but its influence is likely to be felt far beyond the classroom.

The PC industry is going to be among the first to feel its impact in November 2007 when, for a week, the gadget goes on sale to almost anyone that wants one.

Before now, few have had a chance to test out the capabilities of the device and compare it to the portable computers - laptops, palmtops and notebooks - available in high street stores and online.

But the sheer amount of features crammed in to the device combined with its low price may mean questions start to be asked of PC makers who typically charge a premium for portability.

Willy Agatstein, general manager for Intel's emerging markets platform group, said it was hard to compare PC-based laptops with devices such as the XO and Intel's own Classmate gadget.

Mr Agatstein said the two educational laptops were developed for the "unique" purpose of serving children in those developing nations.

"There's no one size fits all," he said.

For both OLPC and Intel this has meant ditching many of the features expected in an average laptop sold in the US or Europe.

Student using laptop, BBC
Portable computers are proving popular with many people
Some, he said, were simply not needed but others were left out because most of those who will get an XO or Classmate have little experience of other portable computers.

"What's really different is the expectation of performance and the actual performance," said Mr Agatstein.

What was appropriate to the ages and use patterns of school children people in developing nations, he said, would fall short for many road warriors who travel with a laptop.

If nothing else, he said, the keyboards would likely be too small as they are made to fit the small fingers of children rather than the chubby digits of their parents.

Pain and gain

Brian Gammage, a senior research analyst at Gartner, said the OLPC was likely to come under scrutiny from PC makers because it is being sold into exactly the portion of the market that they were all aiming at.

"If you look at this category of device and the cost implications involved then there's no doubt that if it finds success in volume it might pull in customers that otherwise might have bought notebooks," he said.

"That has to represent cannibalisation in an industry that's always under pressure," he said.

"The industry that sells us PCs is not healthy," he said, "it continues to bump along on relatively low margins."

Inside a computer, Eyewire
Most PC makers struggle along on relatively small margins
Many firms, he added, have been looking to the sales of smaller, portable gadgets as a way to boost sales. Industry data shows that sales of laptops are by far the fastest growing segment of the market.

The PC industry was interested in laptops and other portables not solely because they can charge more for cramming components into smaller cases.

Mr Gammage said many recent developments in the hi-tech industry had pushed many to believe that the future lies in portable devices.

Ubiquitous wireless networks and lifestyle changes which wed us to the net and the expectation that we will want to get at our stuff anywhere and everywhere were also driving the move to be mobile.

More broadly trends towards virtualisation and the rise of web technologies mean there is less and less call for full-featured computers.

"The key component there is the operating system," he said, "we seem to be beginning to shove that away which raises the question of what is an operating system anyway."

The rise of smartphones was also starting to eat into the potential sales that laptop makers thought they could grab for themselves.

Some PC makers were starting to worry, said Mr Gammage, that all their future growth will come in that portable portion of the market because so many factors that demand a fully formed PC are on the wane.

"It's an industry scrabbling around looking for the next growth opportunity," he said.

In that sense the XO laptop may not just signal a sea change in the developed world, it may also trigger big changes in the wider hi-tech industry too.

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