The UN and donations help

At present, nations like Argentina, Brazil, Libya, and Nigeria have already promised to order a total of almost 3 million laptops. Only Libya has already signed an agreement; it has agreed to provide each of its 1.2 million schoolchildren with one of the laptops. Time will tell what these declarations of intent are worth once the laptop has reached serial production, because then the OLPC plans to start signing purchase agreements.

The OLPC says that production will begin when governments have ordered a total of five to 10 million units. After recent difficulties in reaching this goal, OLPC set the order minimum to 3 million and plans to sell XO to U.S. schools.

To reach this goal, the OLPC's Chairman Negroponte is drumming up support on the world's political stage. In January of 2005, he announced the founding of the OLPC as an organization at the World Economic Summit in Davos, and in November of 2005 he presented the laptop along with Kofi Annan, then UN Secretary-General, at the World Summit for the Information Society (WSIS) in Tunisia.

The XO laptop is made for children's hands and is therefore much smaller than conventional notebooks; its two "ears" at the top protect ports when closed and contain WLAN antennas. The laptop is a convertible whose display can be pivoted for reading.

But handshakes at the highest political level are not the only way that the project is to be expanded to a large number of countries; rather, Negroponte and Kemal Dervis, head of the UN's Development Program (UNDP) signed an agreement at the World Economic Summit 2006 in which the UNDP promises to use its 166 offices in almost all nations to support the OLPC project from initial contact with education ministers all the way to logistics.

Such a large project requires sound financing. The start-up capital comes from sponsors: AMD, Brightstar, Google, Marvell, News Corporation, SES Global, and Red Hat. In May of 2006, Nortel Networks and eBay also got on board. By February of 2006, Negroponte had managed to collect 20 million dollars from the sponsors, which would not have been possible without his charisma and excellent contacts. The OLPC can not only cover all of its expenses with this funding, but also the costs for the development of the laptop. The OLPC consists of only 10 chief members and eight consultants, including Alan Kay and CTO Mary Lou Jepsen.

The sheer size of the project makes it interesting for major industry players. In addition, the large scale is necessary to keep the cost of the XO down. Naturally, all of the sponsors want to earn money from hardware and software in the production of the XO; while the companies are supporting the OLPC, they will be paying that money back to themselves once production of the XO starts. Quanta will be earning money from the manufacture, Red Hat from Fedora Linux, and CMO from the display. Marvell plans to sell the WLAN hardware at a profit, Google is providing cards, and eBay is chipping in with Skype and PayPal. In Libya, SES Astra will be setting up a satellite system.

For the first round XO laptops, the sales price has just risen from 150 to 175 US dollars; the XO will thus not to be a 100 dollar laptop at the outset. The laptop will cost around 160 US dollars, with the display and the CPU plus chipset being the two largest cost items at around 30 US dollars apiece. Quanta & Co. thus have a margin of 10 to 20 US dollars. After manufacture, the OLPC will make sure that the laptops reach governments. The governmental agencies involved will handle logistics on location, possibly with the assistance of the UNDP.

Even stripped-down x86 notebooks cost too much, and current operating systems are not suitable for children. Therefore, common AMD/Intel hardware is not being taken into consideration, nor are current operating systems and their user interfaces. The project had to start from scratch. In doing so, it came up with an XO that contains a lot of innovations because the project did not have to focus on the compatibility of hardware and software.