But until somebody in the industry breaks from the pack and says "I'm going to offer this cheaply, damn the profits", all that cost savings accrues in profits to the OEMs. That maverick could be an upstart startup intent on market share with nothing to lose. Or it could be a nonprofit director on a mission to save the 3rd world.

In this case, the OLPC was the catalyst. The technology existed beforehand, and most people knew the technology existed. But Nicholas Negroponte was the first one to say "It can be done, therefore let's do it."

The same structure exists in lots of other industries. Why is broadband 10x faster in Japan than here (citation: http://www.worldpoliticsreview.com/Images/commentarynews/bro...)? They have the same technology. But the telecom industry in the U.S. is a duopoly between Comcast and Verizon (with a few bit players), and they have an incentive to dribble out only enough in speed increases to stay ahead of their competitor.

Perfectly competitive markets exist only in an economics textbook. In the real world, things don't happen until somebody says "We're going to make it happen."

...or the manufacturers concentrate on bringing the features of $1500 laptops into the next generation of $1000 laptops, instead of bringing the features of $1000 laptops into a new generation of $750 laptops.

* Manufacturers were using the lower cost electronics to add more features at the same price point rather than lowering their price point. The OLPC definitely shook that up.

* The OLPC led the way using linux for the underlying OS, which led to the first netbooks using linux. This really shook up Microsoft, resulting in them offering deeply discounted copies of WinXP to netbook manufacturers to recapture that market ($15? vs. $50++? http://en.wikipedia.org/wiki/Netbook#Windows, http://www.electronista.com/articles/09/04/19/ms.asks.15.for...).

With respect to the last bullet, the OLPC drove down software prices as much as Moore's Law drove down hardware prices.