India has a population of over 1.2 billion people. They have the capability, resources and the potential market to take advantage of economies of scale. As the article states, the government is aiming for a price of $10.00 per laptop. This will effectively lock Dell, HP OLPC and other major manufacturers out of India. Not even OLPC could produce a laptop for $100.00. But then a few of the OLPC suppliers conspired to ensure that they could bring a similar laptop to market before OLPC could. To make matters worse OLCP many of the target markets were deeply tied into Microsoft and would not consider using non Windows powered computers. This resulted in driving up the cost of the OLPC laptops.
Since the Indian government is commissioning these inexpensive laptops and they stipulated Linux, Microsoft is not able to put in any bids to supply the operating system. But the biggest loser must be Intel as they obviously will not be supplying the chips. Intel could ramp up production, which will take some time. They could drop their prices but not enough to compete against Indian suppliers. However, there is a silver lining for both Microsoft and Intel - it will be a number of years before the Indian market is saturated with these low cost laptops and start selling in North America.
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