Quote of note:

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.

Problem of note:

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.

PluggedIn: Price of PCs and Corporate Altruism
Tue Jul 6, 2004 01:41 PM ET
By Lucas van Grinsven and Bernhard Warner

AMSTERDAM/LONDON (Reuters) - A pilot project in Africa which aims to provide a single computer that can be used by four school 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 (HPQ.N: Quote, Profile, Research) , which in the last two weeks introduced the Multi-user 441 desktop, a computer based on the open-source Linux 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.