Last Updated: May 16, 2008: 6:29 AM EDT
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With Microsoft, OLPC may finally succeed

The software giant puts Windows on the "$100 laptop" (which costs about $200) and gives the program new life.

By David Kirkpatrick, senior editor

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Nicholas Negroponte hopes that with a Windows-equipped machine, the One Laptop Per Child program can live up to its potential.

(Fortune) -- Microsoft and the One Laptop Per Child (OLPC) initiative announced Thursday that the Windows operating system would soon be available on the so-called XO, also known as the "$100 laptop." In interviews, executives made it clear that this could be a catalytic shift in perception and market success for the innovative but up-to-now aberrant laptop intended for the poor children of the world.

The Windows version of the XO will go on sale by September. Like the regular, Linux-based version, it will at first actually cost closer to $200, because the project has not yet achieved the volumes that could drive costs down.

Making Windows available on the XO could make it far more palatable for developing-world governments to make the huge investment necessary to purchase large numbers of XOs for their children. "It's a very big deal," said OLPC chairman Nicholas Negroponte in an interview.

He has for three years unsuccessfully attempted to get governments to buy the laptop in lots of a million or more. Governments have so far put in firm orders for a total of 600,000 machines, and several hundred thousand are now in use. The greatest number is in Peru, followed by Uruguay, Mexico, with fewer in Rwanda, Cambodia, Mongolia and Haiti, among other countries.

It was a chance meeting Negroponte had with Bill Gates at last year's Clinton Global Initiative that enabled today's news to happen. Negroponte suggested the two organizations restart talks that had fizzled earlier, and Gates was receptive. Negroponte has from the project's inception hoped to have Microsoft's support and Windows working on the XO.

Following the Gates meeting and a series of conversations with Microsoft Chief Research and Strategy Officer Craig Mundie, Microsoft made a key concession. It will enable what's called a "dual boot," which means Windows will work alongside the XO's original Linux operating system. Users will be able to choose which one to use. That required a big change in Microsoft's approach, given its longstanding aversion of open source.

To get Windows working on the XO took time, because it has a number of unique hardware features, like an e-book reading mode. Microsoft will include its super-cheap $3 version of Windows and Office called the Student Innovation Suite with the Windows XO, which will thus be a full-fledged Windows NT computer.

In addition, Microsoft (MSFT, Fortune 500) has committed to "applying all the resources we can to insure this is successful," said James Utzschneider, who heads marketing for Microsoft's Unlimited Potential group, which is the company unit charged with helping get technology into the hands of the poor worldwide.

With Microsoft applying its entire ecosystem to the task, the XO is far more likely to get traction in countries around the world. The company will recruit its system integrator partners, its own consulting unit, and involve the XO in its teacher training programs, among other efforts.

Negroponte argues that this deal will transform OLPC's competition with Intel (INTC, Fortune 500), which he sees as the biggest impediment to its success up to now. "The one thing we could never dispute is that Intel had a working version of Windows [on their competing laptops]," he said. "The kids aren't buying the laptops. It will help a great deal that the people who really are buying them are familiar with Windows."

Microsoft's Utzschneider says government technology ministers and other leaders have long been attracted to the XO's innovative design, but were also partisans of Windows. They worried, he says, that support would be a problem, and also wanted students to use software they would also be using later in life. These are clearly reasonable concerns.

Negroponte says when he made the rounds in Egypt trying to interest the government in buying XOs, four ministers he met all asked "by the second sentence" whether they ran Windows.

For all Negroponte's enthusiasm for the new partnership with Microsoft, he admits it "comes at a price." His top deputy Walter Bender quit OLPC in protest, and the open source community, which has been very helpful to the development of the XO, is adamantly opposed to working with Microsoft. Negroponte says that if you accept that the real goal is to get computers into the hands of kids that will help them learn, then "this is a price worth paying."

Negroponte says that despite the project's slower than expected start, it is still generating "enormous" interest around the world. I want to believe him, though his predictions for hundreds of millions of laptops in the field by next year proved to have been far from the mark.

Next week OLPC unveils its plans for the next generation computer, to ship by 2010. Negroponte says it is as radical as the previous version, and will similarly spark imitators and inspire the industry.

There's no question OLPC has had a catalytic effect on the industry so far. With its partnership with Microsoft, it could finally start having the effect Negroponte has always wanted it to have on kids. To top of page

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