The founder of the ambitious ''$100 laptop'' project, which plans to give inexpensive computers to schoolchildren in developing countries, revealed Thursday that the machine now costs $175, and it will be able to run Windows in addition to its homegrown, open-source interface.


Nicholas Negroponte, the former director of the Massachusetts Institute of Technology Media Lab who now heads the nonprofit One Laptop Per Child project, updated analysts and journalists on where the effort stands, saying ''we are perhaps at the most critical stage of OLPC's life.''

That's partly because at least seven nations have expressed interest in being in the initial wave to buy the little green-and-white ''XO'' computers—Uruguay, Argentina, Brazil, Pakistan, Thailand, Nigeria and Libya—but it remains unclear which ones will be first to pony up the cash. The project needs orders for 3 million machines so its manufacturing and distribution effort can get rolling.

The ever-optimistic Negroponte didn't sound worried, however: He expects mass production to begin by October, and he said many other countries, including Peru and Russia, have been inquiring about taking part.

The XO machines will be made by Quanta Computer Inc., the world's leading manufacturer of portable computers. Quanta agreed to take a profit of about $3 per machine, less than what it gets from mainstream PC companies, Negroponte said.

Even so, the machine—which boasts extremely low electricity consumption, a pulley for hand-generated power, built-in wireless networking and a screen with indoor and outdoor reading modes—now costs $175. The One Laptop project takes an additional $1 to fund its distribution efforts.

Negroponte's team has always stressed that $100 was a long-term target for the machines, but recently publicized figures had put it in the $150 range. Negroponte says the cost should drop about 25 percent per year as the project unfolds. He added that Citigroup Inc.'s Citibank division has agreed to facilitate a payment system on a pro bono basis; Citibank will float payments to Quanta and other laptop suppliers, and governments will repay the bank.

Even at $175, the computers upend the standard economics in the PC industry. A huge reason has been XO's use of the free, open-source Linux operating system, tweaked for this project with the help of one of its sponsors, Red Hat Inc.

The result is that XO's software is highly original, in hopes of making the computer useful as a collaborative tool and intuitive for children who have never before encountered a computer. There are no windows or folders, but rather an interface heavily reliant on pictographic icons.

However, Negroponte disclosed that XO's developers have been working with Microsoft Corp. so a version of Windows can run on the machines as well. It could be the $3 software package that Microsoft announced last week for governments that subsidize student computers. It includes Windows XP Starter Edition and some of Microsoft's ''productivity'' software.

Word of Microsoft's involvement was somewhat striking given that the software company and its closest corporate partner, Intel Corp., have questioned whether the One Laptop Per Child's computers will do much to stimulate educational gains. Bill Gates once denigrated the machine as not being a ''decent computer.'' And Intel is pushing its own inexpensive computer for developing countries, the $400 Classmate PC.

The ever-optimistic Negroponte turned those criticisms around on Thursday, arguing that Microsoft wouldn't have bothered with its $3 international software package and Intel wouldn't be pushing Classmate unless they had something to fear from One Laptop Per Child's innovations.

A Microsoft spokesperson could not be reached for comment. An Intel spokesman said the company has been selling in emerging markets for over 20 years and that both Intel's and One Laptop Per Child's projects on the new class of devices began around the same time in 2005.

Whether the XO machines might someday land in U.S. schools has been an open question. Former Massachusetts Gov. Mitt Romney announced at one point that he wanted to buy the machines for students in his state. Some time later, Negroponte said Thursday, One Laptop Per Child decided not to work with American schools because ''we've designed something for a totally different situation''—meaning kids in poor countries.

Now, he added, that might change, since 19 state governors have shown interest. One of them was then-Florida Gov. Jeb Bush. When Bush first e-mailed and casually signed ''Jeb,'' Negroponte needed to ask his brother, former national intelligence director John Negroponte, whether the query was legitimate.