The XO-1 was developed by the One Laptop Per Child organization for use by children in the developing world.
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One Laptop Per Child has cut staff and salaries, citing broader economic problems as one of the reasons.
The nonprofit announced in a blog post Wednesday that it had to cut staff and contractors by 50% from each of its teams and reduce salaries for its remaining 32 employees.
"While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries," OLPC Founder and chairman Nicholas Negroponte explained in his post.
Negroponte said the nonprofit would shift its focus to a no-cost connectivity program, 1 million digital books, passing the Sugar operating system to the development community, and helping young people.
OLPC will try to deliver zero-cost laptops for the world's least-developed countries.
The group plans to spin off its Latin American operations into a separate support unit, to make sub-Saharan Africa a major learning hub, and to increase focus on the Middle East, Afghanistan, and northwest Pakistan.
"Restructuring brings with it pain for friends and colleagues who are being let go," Negroponte said. "These are people who have dedicated themselves to the advancement of a noble cause, and to say that we are exceeding grateful for the time, the ideas, the energy, and the commitment they have given OLPC does not -- cannot -- adequately express our admiration or our gratitude. The fact that there are 500,000 children around the world who have laptops is testament to their extraordinary work and is already a key part of OLPC's legacy."