One trend we should see in 2008 is notebook prices will drop. Last year MIT's One Laptop Per Child group finally started shipping its XO to developing nations. This was supposed to be the $100 laptop marketed to help children of developing nations acquire technology. The XO wound up costing around $200 but it did prove functional laptops could be manufactured at a cheaper cost. Intel is also marketing its own low-cost machine to other countries and ASUS is selling low-cost laptops on the open market.

Well the genie is now out of the bottle. Engadget reported former OLPC Chief Technical Officer Mary Lou Jepsen has left the group to form her own company. The goal of her new start-up, Pixel Qi, is to produce a laptop with a cost of $75. While a $75 laptop might be a bit of a stretch for now, even producing one for $150 would be step in the right direction. Also, Pixel Qi plans to sell its machines on the open market, something both OLPC and Intel are not doing right now. If the machine works well new customers will be lured in by its price. This will force other manufacturers to produce lower cost machines as well and parents who have been reluctant to buy laptops for their children may start if the costs are below that of a Nintendo Wii or iPod.

OLPC is making a mistake by marketing its XO to other countries, although Birmingham, Alabama schools are making a large purchase. Schools districts wanting to start One-to-One programs but were afraid of the costs might be willing to take the plunge. This would lead to a lower cost of the XO because of economies of scale. OLPC will eventually realize they need to market to American schools to stay alive but will it be too late as the competition heats up?