Is it better to sell 1,000,000 XOs at $200 without subsidy or 100,000 at $400 with subsidy?
Given that you are already selling laptops to privates via G1G1 and that the orders from governments are not materializing as expected, wouldn’t the “distractions” and “headaches” of a permanent commercial offering start to be justified? In this context, does a 100% subsidy make any economic sense? I do not know how the demand would respond to a halving of the commercial price, but please bear with me for the sake of the argument. The extra 800,000 machines would reduce production costs, attract more developers, and improve product awareness and visibility. Wouldn’t that far outweight the advantage of having 100,000 laptops to give away for free, particularly in the current context? And should the $200 OLPC become a commercial success, outclassing the competition in the free market, wouldn’t that help to pitch the laptop to governments? I am not claiming that there should never be a subsidy, only that in such early stages, a subsidy might actually be detrimental to future deployments.
