Can Elonex profit from the £99 Laptop?

The Education Show in Birmingham next weekend sees the launch of a product with a price-point that is making everyone in the IT & Education world sit up. The UK’s first £99 laptop is being launched by Elonex, at a price that is less than a quarter of the average price currently being paid for laptops in the UK.

So is the £99 laptop a loss leader, an introductory promotional price, or a commercial disaster in the making? How can something so complex be manufactured so cheaply? How does Elonex expect to make a profit?

There has already been quite a lot of press coverage about the £99 laptop, which Elonex have named “The One”.

The Times has a good article this morning that analyses why the laptop can be priced so low.

In summary, the answer is:

- Opensource software - the £99 laptop runs the Linux operating system rather than Windows Vista
- The laptop is built using relatively old processing chips rather than the most advanced chipsets
- The features of the laptop are pretty basic - out goes the CD drive, the keyboard is cheap etc

Of course laptop customers pay for what they want.

The £99 laptop does exactly “what it says on the tin”; it is a very cheap, introductory machine that will allow children (and other users) to use basic, functional software, to browse the Web, share files etc

The question is - will Elonex achieve the sales volumes required to justify the investment?