Laptop wars: The £50 computer under attack from a Silicon Valley giant

In 2005, when Nicholas Negroponte of the Massachusetts Institute of Technology announced his vision, experts queued up to say it couldn't be done, and that the professor's plan was little more than a well-intentioned dream. Yet Negroponte was not proposing a manned mission to Mars, or a new theory of nuclear fusion - just a plan to make affordable laptops for the children of the developing world.

Early on, the omens were not good; when Negroponte employed Kofi Annan, no less, to unveil a prototype at a world summit in Tunisia, then the UN secretary general, managed to break the wind-up handle designed to power the computer in homes or schools without electricity. As a red-faced Negroponte hurriedly moved proceedings on, some observers, including the computer-chip giant Intel, dismissed the laptop as a "gadget".

But now, with support from big corporations and component makers, Negroponte's vision has become reality. The initiative, dubbed OLPC (One Laptop Per Child) has produced a laptop hailed by its makers as " revolutionary". It costs just $176 (£88), and is made available to governments who will order them in batches of 250,000 at a time.

But, just as orders are due to be placed, Intel has changed its tune as it jostles for position, with others who once doubted Negroponte's dream, in a market that could be worth billions.

The idea for a cheap, durable laptop for children in the developing world came to Negroponte eight years ago in Cambodia. The professor and his family had set up a school in a remote village and given each of its pupils a laptop. According to Negroponte, the village, which at the time had no running water or electricity, was transformed. Attendance at the school went up by 50 per cent, and the first English word the children spoke was " Google".

Seeing the potential for computers to link isolated or impoverished communities to the wider world, and to get more kids into class, Negroponte began thinking big and OLPC was born. Its mission statement is: "To provide children around the world with new opportunities to explore." The challenge: to build a cheap, child-friendly laptop that could be shipped by the million and survive the trip to school in sandstorms or monsoon rains.

With financing from Google and other big names, Negroponte and a team of engineers and programmers spent two years developing the XO. It might look like a sleek version of a My First Computer, but beneath the cute exterior it packs a hi-tech punch. By combining low-cost yet high-performance components with ground-breaking power-saving features, OLPC has created "a revolution in computing".

That's how computer expert Wayan Vota describes the XO. Vota is the director of Geekcorps, a US organisation that helps developing countries embrace technology, and editor of the independent OLPCnews.com. He says: "It's a whole revisualisation of the concept of a laptop and how a computer can work."

As the laptop took shape, Negroponte embarked on a glad-handing tour of the developing world to market his machine, and his dream. The Kofi Annan " wind-up" incident soon forgotten (and the troublesome crank handle dispensed with), Negroponte signed pilot contracts with a series of education ministers and world leaders, including Libya's Muammar Gaddafi and Nigeria's President Obasanjo, who was so effusive about the "enchanting" OLPC project that Negroponte vowed to turn the XO green and white - the colours of the Nigerian flag.

With interest across the developing world, and even in countries such as Australia and the USA, it is no surprise that the laptop establishment (working very much for profit) is playing catch-up. Vota says it's a simple equation: "There are around one billion people in the developed world, and that's almost a saturated market. There are more than four billion people in the developing world. Which market do you want a share of?"

In China alone, there are 200 million children. Worldwide, Negroponte estimates, there are more than a billion children who could get laptops. "Companies look at those numbers and say, 'If we're not there, we're toast,'."

One of those companies is Intel, which had earlier scorned OLPC. Now things have changed - and, last month, the race to bring computers to the developing world turned nasty. Appearing on the American CBS network's current affairs show 60 Minutes, Negroponte said Intel "should be ashamed of itself", claiming that the chipmaker has tried to drive OLPC out of business and "hurt the mission enormously". How? By " aggressively" marketing a rival laptop in countries OLPC is set to sign up.

With its colourful casing and chunky handle, Intel's Classmate laptop seems to have much in common with the XO. But, also on CBS, Intel's chairman Craig Barrett dismissed Negroponte's charges as "crazy", adding: " We're not trying to drive him out of business; we're trying to bring capability to young people and there are a lot of opportunities for us to work together."

Negroponte revealed a marketing document he said Intel had distributed to the government of Nigeria. An extract, emailed to The Independent by OLPC's Walter Bender, reads: "Although the OLPC organisation is making a strong attempt to address the computing needs of Nigerian schools, its approach has six major shortcomings." The perceived flaws the document lists include "less than fully functional hardware", "lack of multimedia digital content" and "no plans to develop connectivity". Bender describes these claims as "fabrication".

Confronted with the document on 60 Minutes, Barrett admitted that it was genuine and described it as an attempt by "someone at Intel" to compare the Classmate with the XO. "That's the way our business works," he added. But Negroponte claims the real reason behind Intel's strategy is petty corporate rivalry. One of the components that make the XO so inexpensive is a low-end processor made by AMD, the world's second-largest chipmaker and Intel's biggest rival. Negroponte told CBS: "Intel and AMD fight viciously and we're just sort of caught in the middle."

Vota describes Negroponte's outrage at Intel's approach as "the pot calling the kettle black". He says: "From the beginning, Negroponte focused on price and in his original mission statement he said he would welcome a competitor who could build a laptop cheaper, so I think it's pretty cheeky for him now to bemoan competition. With a projected market of one billion, are you expecting companies to play nice?"

It is unclear whether the emergence of competition has affected Negroponte's project, but recent developments suggest OLPC is being forced to scale down its plans. Earlier this year, Negroponte had predicted that production of the XO would top a million a month by the end of the year. But as a deadline for huge orders passed last Thursday without comment from OLPC, that figure has been revised to three million in the first year from September.

The lower-than-expected uptake has affected the XO's price, which was famously set at $100 but is now $176. However, Bender is confident that with sufficient orders, it will reach the $100 target, and could dip as low as $50 as the technology is refined.

If OLPC is in trouble, help could arrive from consumers in the developed world. The OLPC mission may be humanitarian, but Negroponte and team have hinted that a version of the XO could appear in computer stores alongside expensive machines from the likes of Dell and Apple.

Bender claims OLPC's mission would not be compromised by this: "Some of the profit would be used to subsidise the cost of laptops for children." Negroponte has suggested that laptops would be sold in pairs - one for the consumer and one for someone in the developing world.

Even if OLPC sticks to its mission, Quanta Computer, the world's largest laptop manufacturer and maker of the XO, says it is developing a consumer laptop that could sell for $200 (£100) as early as next year. Gartner, the research firm, forecast two years ago that global laptop sales in 2007 would exceed 70 million. The firm recently revised that figure to 102 million and expects sales to rise by almost 20 per cent a year for the next four years.

And Vota says the technology developed for the XO will have as great an impact on high-end laptops as on low-cost alternatives. "This machine will radically change the whole laptop industry," he says.

Vota singles out the XO's maximum 24-hour battery life as one of the machine's best features. Unlike standard computer chips, the XO's processor turns itself off when not busy and can even shut down in the pause between typing words. Along with other power-saving features, it means the XO runs on as little as two watts, compared to the 20-40 watts of standard laptops and the 100 watts-plus guzzled by a PC. "You'll be looking to a point where you can measure battery life in days," Vota says. "I would love to have that."

Whoever wins the race to satisfy our appetite for ever-cheaper and more advanced computers, it's the children of the developing world - those at the heart of Negroponte's mission - who will benefit most. The Luciana de Abreu School in the city of Porto Alegre in Brazil took delivery of 100 OLPC laptops in March as one of the project's trials. Before then, the school's 550 students had little or no access to computers.

Iron Otana, the school's principal, says his pupils "adore" their new computers. "The children who use the laptops are much more motivated and stimulated. Attendance is much higher and they have become much more spontaneous," he says. "And those who haven't got one have been frantically figuring out how to get involved."

What makes the XO special

* Screen

Supplied by the Taiwanese firm Chi Mei, the 7.5-inch LCD uses one-seventh the power of standard screens and is one-third the price. It has a " sunlight readable" mode.

* Memory

The XO does away with a fragile hard disk in favour of a gigabyte of Flash storage, supplied by Samsung. Without moving parts, it is much more robust and reliable.

* Processor

Instead of constantly checking that all systems are go (even if nothing is happening), the XO's processor, made by AMD, turns itself off in idle periods, even between keystrokes.

* Casing

The casing is totally sealed when the laptop lid is closed, keeping out dust and water. It is 2mm thick (the standard is 1.3mm) and has rounded edges for added strength.

* Keyboard

Made from a single piece of sealed rubber, the keyboard is spillage- and rain-proof. A separate touchpad allows drawing and writing using a stylus or finger.

* Antennae

XOs use inbuilt wireless routers, supplied by the US firm Marvell, to form a mesh network. Only one machine needs a net connection; the others can piggy-back.

* Hinge

The screen can be rotated using its "transformer hinge" and the laptop closed to turn it into an e-book or games console. The display automatically flips to stay upright.

* Battery

With a 24-hour life in e-book mode, the XO's battery is charged via a " power brick" hooked up to a hand crank, car battery or solar panel - or even a cow-powered generator.

* Operating system

XO laptops are shipped with Sugar, a Linux-based interface custom-designed by the open-source software firm Red Hat. It allows children to see what activities the community is involved in.

Interesting? Click here to explore further