Mary Lou Jepsen is a tech necromancer who battled the odds to conjure up a product that most experts said couldn't be built: a $100 laptop (give or take a few twenties). Now she's back, with plans for low-cost, low-power, super-readable, LCD-based screens that will go into everything from e-book readers to netbooks and computers.

"We are creating e-paper with color and video capability, but on high volume, standard, mass production lines, so they will be available easily," says Jepsen, founder of Pixel Qi (pronounced Pixel Chee), a San Bruno, California-based startup. The company plans to have samples of its display out within the next two months, "and we are pulling all-nighters now to get the product ready."

Jepsen was the chief technical officer and first employee of the One Laptop per Child's XO computer, and she was charged with making the cheap computer technically feasible. A low-power LCD was the cornerstone of that effort. Now, Jepsen wants to take her OLPC experience – and her 48 display-related patents – to market with a for-profit company.

Pixel Qi's displays called 3Qi will operate in three settings: a full-color, bright, conventional LCD mode; a very low-power, sunlight-readable, reflective e-paper mode; and a low-power, basic color transflective mode. The screens are initially expected to be available in 10.5-inch and 7.5-inch screen sizes.

If successful, the 3Qi displays could effectively bridge the high-speed, full-color benefits of traditional LCDs and the low-power, reader-friendly qualities of electronic ink displays. The market for electronic ink is currently led by Cambridge, Massachusetts-based E Ink, whose extremely low power, sunlight-readable electrophoretic displays are used in the majority of e-book readers today, including the successful Amazon.com Kindle and Kindle 2. However, despite the readability of E Ink's screens, the displays take a second or two to refresh, making them unsuitable for video or animation. Also, they are currently only available in monochrome.

"Effectively what [Pixel Qi is] doing is creating a hybrid display that combines the best of E Ink and regular LCDs," says Robert Barry, director of business development for Team Research, a company that makes an e-book reader called the Astak Mentor. Team Research has partnered with Pixel Qi to include the latter's display into a new e-book reader codenamed 'Spectrum.'

There's just one problem: Although Jepsen has said that the first 3Qi displays will be available later this year, no one has seen a working prototype of a Pixel Qi display yet. That means Jepsen will have to first prove Pixel Qi's claims even as she steers the company through one of the most difficult economic environments for a startup.

Since Amazon introduced the Kindle in November 2007, the e-books reader market has taken off in a big way. This year alone, Amazon introduced two new e-book readers, the Kindle 2 and Kindle DX. Other companies such as Sony, Samsung, Fujitsu and Foxit are also fighting for a share of this fast-growing market. To succeed in the e-book market, Pixel Qi will have to break E Ink's near monopoly on the market.

Jepsen is counting on a two-pronged strategy to break that stranglehold. First, Pixel Qi plans to use existing LCD production lines to manufacture the displays at a high volume and extremely low cost. Second, the company is betting its displays will be much more more versatile than E Ink's (for instance, they can display color and video) and can be used to power netbooks and tablet PCs. Potentially, a 3Qi display could make a netbook or tablet do double duty as an e-book reader.

"When people design a new computer chip there's a good reason they still use silicon as a material though there are other options," says Jepsen. "They can try something new but it will take a lot longer to bring it to market. I think it's the same with displays."

That's why Pixel Qi's displays are based on LCD technology, says Jepsen. "The LCD manufacturing industry is a $100 billion a year business and is cost-optimized in a way that is very hard for E Ink to scale to," she says. "The problem has been that no small entity got access to the big LCD production lines. But we have cracked the door open on the LCD factories just like the smaller guys did with the silicon fabs."

To pull off her plans with Pixel Q, Jepsen is counting heavily on her previous experience as the founding chief technology officer and the first employee of the One Laptop Per Child project. The project aimed to bring $100 laptops to children in developing countries. Jepsen helped create the OLPC laptop's display technology and its ultra-low-power management system. As OLPC laptops went into large scale production, Jepsen resigned from the project to start Pixel Qi in late 2007.

"She's very smart and very energetic," says Jennifer Cosgrove, director at research firm Display Search. "She has relationships with display manufacturers in Taiwan from the OLPC project and she has worked hard to persuade many of them to be part of her new idea."

But Pixel Qi has been a greater challenge than Jepsen may have realized. The company completed its first round (Series A) funding two months ago. It hasn't disclosed its investors or how much it has raised, though Jepsen says getting investors for Pixel Qi has been the biggest challenge of her career. The LCD and display industry has become "incredibly risk averse," says Jepsen, and convincing companies to bet on her idea has been "ridiculously hard."

"It was harder for me to get money for this venture than for art school," Jepsen says. "I can't say we didn't think of shutting down. There were an awful lot of moments we thought we wouldn't make it."

What's holding Pixel Qi together is the promise of the screens that Jepsen and her team say they will deliver. For now, though, Jepsen won't talk much about what she says is the "secret sauce" of her new display screens.

"We have really, really focused on the details of the different layers that go to create the OLPC screens and how we can put them together differently to create a new kind of display," she says. "What I have done is massively improve on the OLPC display design."

Despite the lack of extensive information or prototype, Pixel Qi's partners are keeping the faith. Team Research's Barry says that Pixel Qi's technology checks out. Early versions of his company's Spectrum are expected to be ready around October and he plans to show them at the Consumer Electronics Show in January 2010. But even Barry hasn't seen a prototype 3Qi display yet. In other words, even though Pixel Qi has yet to deliver the first sample of its display, Team Research is already scheduling a future product release around it.

The reason, says Barry, is that Pixel Qi will offer color displays, something its rivals including E Ink are still struggling to bring to market. "The race in the e-book reader market is now for a color display," says Barry. "Everyone's looking for a technology that will allow long battery life with color."

Though E Ink is currently working on a color display it is unlikely to have it available till mid-2010, says Display Search's Cosgrove. "E Ink has shown some demos of color displays but they are not close to high volume production," she says. "E Ink displays also can't do video very well because the response time for display is pretty slow." Cosgrove pegs response time for E Ink displays at about 200 milliseconds and says she expects Pixel Qi's displays to show average response time between 5 ms and 30 ms. As the e-book readers market matures, companies are likely to seek a second display supply source and Pixel Qi could emerge as a viable alternative to E Ink.

Jepsen is also counting on sheer innovation to help drive sales. Netbook manufacturers are hungry for new ideas to help them stand out in an increasingly crowded and price-sensitive market.

"We are the only sort of new display screen that the market has seen in a long time," says Jepsen. "There's not been much innovation in this business."

*Photo: Mockup of an OLPC Tablet/The OLPC Foundation

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See also:

E-book Reader Round up*

*Amazon Kindle 2 Review

Amazon Set to ReKindle its E-Book Reader