onelaptpper-child.jpgThe founder of the ambitious “$100 laptop” project, which plans to give inexpensive computers to schoolchildren in developing countries, revealed Thursday that the machine for now costs $175, and it will be able to run Windows in addition to its homegrown, open-source interface.

Nicholas Negroponte, the former director of the Massachusetts Institute of Technology Media Lab who now heads the nonprofit One Laptop Per Child project, updated analysts and journalists on where the effort stands, saying “we are perhaps at the most critical stage of OLPC’s life.”

That’s partly because at least seven nations have expressed interest in being in the initial wave to buy the little green-and-white “XO” computers — Uruguay, Argentina, Brazil, Pakistan, Thailand, Nigeria and Libya — but it remains unclear which ones will be first to pony up the cash. The project needs orders for 3 million machines so its manufacturing and distribution effort can get rolling.

The ever-optimistic Negroponte didn’t sound worried, however: He expects mass production to begin by October, and he said many other countries, including Peru and Russia, have been inquiring about taking part.

The XO machines will be made by Quanta Computer Inc., the world’s leading manufacturer of portable computers. Quanta agreed to take a profit of about $3 per machine, less than what it gets from mainstream PC companies, Negroponte said.
Even so, the machine — which boasts extremely low electricity consumption, a pulley for hand-generated power, built-in wireless networking and a screen with indoor and outdoor reading modes — now costs $175. The One Laptop project takes an additional $1 to fund its distribution efforts.

Negroponte’s team has always stressed that $100 was a long-term target for the machines, but recently publicized figures had put it in the $150 range. Negroponte says the cost should drop about 25 percent per year as the project unfolds. He added that Citigroup Inc.’s Citibank division has agreed to facilitate a payment system on a pro bono basis; Citibank will float payments to Quanta and other laptop suppliers, and governments will repay the bank.

Even at $175, the computers upend the standard economics in the PC industry. A huge reason has been XO’s use of the free, open-source Linux operating system, tweaked for this project with the help of one of its sponsors, Red Hat Inc.