ArsTechnica reports that

In an announcement posted to the OLPC wiki, Negroponte reveals that the organization will have to significantly scale back and cut costs in order to continue operating. The new budget constraints have necessitated major layoffs and pay cuts.

"Like many other nonprofits that are facing tough economic times, One Laptop per Child must downsize in order to keep costs in line with fewer financial resources. Today we are reducing our team by approximately 50% and there will be salary reductions for the remaining 32 people," he wrote. "While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries."

Another victim of OLPC budget cuts is the Sugar project, a Linux-based education software platform that OLPC developed for its laptops. This cut is unsurprising, because OLPC has gradually been moving away from Sugar and has increasingly sought to support Windows. It is still unclear whether OLPC will continue to encourage its large buyers to adopt Sugar, but Negroponte says unambiguously that the organization will be working on transitioning Sugar development entirely to the community.

The report goes on to describe the OLPC project’s “extreme dependence on economy of scale” as its Achilles heel.

The organization was not able to secure the large bulk orders that it had originally anticipated and fell short of meeting its target $100 per unit price. The worldwide economic slowdown has made it even more difficult for OLPC to find developing countries that have cash to spare on education technology. The latest restructuring effort could help OLPC regain its focus, but the failure of its past attempts to do so don’t really provide much confidence.

Hmmm… I’m sorry that they’ve hit trouble, but my sympathy is tempered by irritation at the way the project seems to be re-focussing on running Windows.

Ivan Krstić was one of the key people on the OLPC project. He recently resigned. Here’s part of his explanation.

Not long ago, OLPC undertook a drastic internal restructuring coupled with what, despite official claims to the contrary, is a radical change in its goals and vision from those that were shared with me when I was invited to join the project. Adding insult to injury, I was asked to stop working with Walter Bender, without a doubt one of the most stunningly thoughtful and competent people I’ve ever worked with. Following Walter’s demotion from OLPC presidency, I was to report instead to a manager with no technical or engineering background who was put in charge of all OLPC technology…

What made Ivan despondent is his perception that Nicholas Negroponte sees the project as a vehicle for producing a lot of cheap laptops rather than as a primarily educational mission. According to The Register, he believes that

“Nicholas’ new OLPC is dropping those pesky education goals from the mission and turning itself into a 50-person nonprofit laptop manufacturer, competing with Lenovo, Dell, Apple, Asus, HP and Intel on their home turf, and by using the one strategy we know doesn’t work.”

Later: Actually, it’s more complicated that that quote implies. Just found a terrific, thoughtful essay by Ivan on the whole OLPC project. Lots of comments too.

There’s a serious OLPC deployment in Peru. David Talbot’s informative Tech Review report says that:

Peru is poised to deliver 486,500 laptops to its poorest children under the One Laptop per Child program–a figure that could swell to 676,500 if the Cuzco region buys in. It is the largest such OLPC purchase in the world (see “OLPC Scales Back”). I asked Becerra whether children in Lima’s slums would receive the green-and-white machines. “No,” he said. “They are not poor enough.” At first I thought he was making a hard-hearted joke. But he went on to explain that Lima residents generally have electricity and (in theory) access to city services, even Internet cafés. The laptops are headed to 9,000 tiny schools in remote regions such as ­Huancavelica, in the Andes, an arduous 12-hour bus ride over rocky roads southeast of Lima, and villages such as Tutumberos, in the Amazon region, days away. By the standards of children in those areas, the girl on the traffic island enjoyed enviable opportunity.

What Becerra told me drove home the true scope of what OLPC is trying to do in a country that, according to a survey by the World Economic Forum, ranks 130th out of 131 countries in math and science education, and 131st in the quality of its primary schools. “There is a long-term social cleavage in Peru that has been around forever,” says Henry Dietz, a political scientist and expert on Peru at the University of Texas at Austin, describing the country’s income inequality and rural poverty. “You get out of those provincial capitals, a half-hour in any direction, and you are in rural Peru, and things are pretty primitive. Electricity is a sometimes thing, and the quality of education–the school is four walls and a roof and some benches, and that is about it. There is very little there to work with.” In some cases, the laptop deployment will tie in to an existing program to bring Internet access to certain schools. But for the most part, the machines are entering an educational vacuum…

One of the things that has struck me most forcibly about my OLPC is how useful it would be as an eBook reader: the screen is highly readable in sunlight, so it’s interesting to see that in the Peru deployment each machine comes pre-loaded with 115 books. Hooray!