Wednesday, December 14, 2005

Bliss and Pain in CEO Land: the $100 Laptop

Well, the economic news is ambivalent: the trade deficit has hit an all-time record (as we sort of predicted it would here, last week); but CEOs are "upbeat for 2006."

Damn, I'd be upbeat too if I was making a few million a year already and saw nothing but roses ahead of me, whether my work booms or busts. You see, in corporate America today, success and failure are not very crucial factors anymore—perhaps this is one reason why our economy is basically owned by the Chinese. Indeed, if you're a CEO of a big or even mid-sized corporation, your fortune is assured, no matter how badly you fuck things up, and no matter how many people suffer from your incompetence, arrogance, laziness, complacency, and depredation. If the company fails—and even if you should be found to be in violation of certain laws—the golden parachute is there, waiting to be strapped on and the rip cord pulled to ensure a gentle, lucrative descent. And we haven't even gotten to the part about the book deal, post-retirement consulting, government work, and the lecture circuit. Most of these guys make more in a couple of meet-and-greet roasts or golf club appearances than the rest of us can earn in a full year of 50 hour workweeks.

So things are looking up for the CEOs, thank God. Sure, there are people in New Orleans sleeping on the street now, who had houses to live in this past August; maybe there's 50,000 or so auto workers being put out of work this month; and the residents of the greatest city on the planet are facing a cold and painful walk to work this Friday, all because a union of transit workers is being denied a 6 per cent pay raise. But goddam, things sure are looking pretty cool if you're a CEO. In fact, the horizon couldn't possibly be brighter: Congress has just passed yet another tax cut for the mega-wealthy; the new Defense bill is being loaded with a fresh cut of corpo-friendly pork; annoying environmental protections are continuing to be trashed by the neocon swindlers; and, as every CEO knows, you can fail and still be rewarded in this great land of ours. In fact, the more you fail, the more you are rewarded! God Bless America.

But, sadly, there is some cause for concern—a wrinkle on the otherwise smooth and glowing corporate brow. It has to do with another of those annoying intrusions of corporate bliss from those damned geeks. These technology people just don't understand wealth, and so they constantly screw things up with their head-in-the-sky ideas about making the world a better place for everyone.

This time it's the $100 PC that you may have heard or read about recently. It was developed by MIT with sponsorship from AMD, Google, and a few other tech firms, and its goal is to give kids from all cultures and socioeconomic backgrounds a chance at experiencing the learning, fun, and growth potential in technology. But the execs at Quanta Corp., which "won" the bidding for manufacturing these machines, are strangely out of sorts over their new contract.

Well, it seems as if what's causing all the discomfort is the rather thin profit margins involved. CEOs like fat profit margins, you see. Their needs are pretty simple, bless their hearts: let me have all the money and make my own overhead razor-thin. Oh, and the less work I have to do for it, the better. I call this the Jack Abramoff Principle, though Jack is hardly its originator (he's more like its prime contemporary spokesperson). So when they're called on to sacrifice some of their preferred monetary fat for the sake of social equity and the betterment of children, why suddenly they become worried and tentative. What will the stockholders think? How will this look in the media? Will my bonus or my stock options be affected? Can the foreign labor force take yet another pay cut, say from fifty cents an hour to thirty?

So why, you may ask, did Quanta bid for this project? Ah, there's the rub, the complexity that causes modern CEOs to frown: taking on such work calls for the least-favored quality in a CEO of today. It is known as vision—the capacity to accept a temporary shortfall for the sake of future gain. This virtue is not very well tolerated by shareholders and Sunday morning financial analysts on the big media networks: Brit Hume is not a proponent of corporate vision.

So give Quanta the credit it's due: as the FT article reveals, "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."

In other words, "we or someone else might be making some real money on these babies someday, so we'd better be in it now, when everyone else is taking a step back." Still, vision is not a warm and fuzzy sensation for most CEOs today. I wish I could say I feel sorry for them, the poor dears. Somehow, I wager, they will survive.

Incidentally, I would encourage you to read the MIT description of the purpose and technology behind the $100 laptop, if you haven't already clicked on the link above. I especially liked the comparison between the $100 laptop project and existing commercial laptops, under the heading, "How is it possible to get the cost so low?"

∆ First, by dramatically lowering the cost of the display. The first-generation machine will have a novel, dual-mode display that represents improvements to the LCD displays commonly found in inexpensive DVD players. These displays can be used in high-resolution black and white in bright sunlight—all at a cost of approximately $35.
∆ Second, we will get the fat out of the systems. Today's laptops have become obese. Two-thirds of their software is used to manage the other third, which mostly does the same functions nine different ways.
∆ Third, we will market the laptops in very large numbers (millions), directly to ministries of education, which can distribute them like textbooks.

"Two-thirds of the software is used to manage the other third": now, what software would they possibly have had in mind there? Hint: the $100 laptop is Linux-based.

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