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What's Next for One Laptop Per Child?

The ambitious One Laptop Per Child program announced big staff cut backs amid what its founder Nicholas Negroponte called "streamlining" and "refocusing on our mission."

In a blog post at the OLPC site, Negroponte said fifty percent of his staff was being laid off and the remaining 32 staffers can expect salary reductions.

"While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries," Negroponte wrote. "We thank team members who are departing for their contributions to this important mission."

OLPC could not be reached by press time for further comment.

The news comes in spite of exploding interest in low-cost computing, including the emerging class of netbooks.

The news is a blow for OLPC's efforts, which brought it into heated competition with chipmaking giant Intel. Intel markets a low-cost PC of its own, the Classmate, to similar markets.

Both companies have been targeting emerging markets, which generally can't afford computers in there schools, at least not at the going rate. OLPC was launched several years ago with a goal of producing a $100 laptop for emerging markets.

But Negroponte began blaming Intel for at least some of reason for its slow uptake, in 2007 claiming that Intel sold its Classmate computer below cost to undercut OLPC's efforts. The two companies since patched up their relationship, but remain in competition.

As it turns out, OLPC's woes this week come at the same that Intel (NASDAQ: INTC) plans to announce a new, convertible version of its Classmate netbook, which now doubles as a Tablet PC. Intel is expected to unveil the new model today.

Despite the setbacks, Negroponte maintains that OLPC's work will continue. The company's innovative, and colorful, Linux-based XO computer ultimately debuted at $199, and is currently available in the U.S. via mega-online retailer Amazon.com (NASDAQ: AMZN). The units use low-cost processors made by OLPC partner AMD (NYSE: AMD).

In his blog post, Negroponte said OLPC remains dedicated to "bringing the cost of the laptop down to Zero for the Least Developed Countries -- the $0 Laptop."

OLPC's main business model is dealing directly with governments on mass distribution deals. The company has been particularly successful in Latin America, and Negroponte said that portion of the business will now be spun off into a separate support unit.

He also noted plans to make Sub-Saharan Africa "a major learning hub" and to put a greater focus on the Middle East, Afghanistan and Northwestern Pakistan.

Cause for optimism?

Negroponte concluded his post noting some of the successes the non-profit project has had to date, while conceding it challenges remain.

"The fact that there are 500,000 children around the world who have laptops is testament to their extraordinary work and is already a key part of OLPC’s legacy.

"The future brings with it some uncertainty, some difficulty, but also the excitement that comes with the rededication to a cause, and a new path that will allow us to realize the moral purpose of OLPC. I hope that each one of you will remain supportive of OLPC, and its mission of opening up a universe of knowledge to the world’s poorest children living in the most remote parts of the Earth.

Negroponte also said OLPC plans a renewed focus on development of a "Generation 2.0" of devices, as well as a no-cost connectivity program and the distribution of a million digital books.

It will also cease investment in contributing to the development of the Linux Sugar operating system, he said -- leaving that to the broader community of that software's supporters.

IDC analyst Richard Shim said OLPC has been hurt by problems in the world economy and is probably ahead of the curve in targeting some parts of the developing world with computers. "It's hard to say anyone can bring some of these nations up to par with more developed countries overnight," Shim told InternetNews.com. In some cases, there are more basic challenges like just having electricity."

Another OLPC competitor, NComputing, jumped on the OLPC news to tout its own low-cost, shared PC network solution for developing nations and cash-strapped school districts.

"OLPC promised a product -- a sub-$100 laptop -- it simply can't deliver based on underlying economics of the computer industry," NComputing said in a statement sent to InternetNews.com.

"And it asks governments already unable to provide basic services to not just buy these laptops but pay to ship them from the factory in China, truck them throughout the countryside to the schools and then support and maintain them. The hidden costs were a nightmare."