Microsoft apparently wants to inoculate its operating system into One Laptop Per Child Foundation's "$100 laptop", which will actually cost almost $200. The Redmond company is working on stripping down Windows XP to be suitable for the slow machine.

"We're spending a non-trivial amount of money on it," Microsoft corporate VP Will Poole told Reuters. "We're working hard. But we're still at least a few months away."

It was previously rumored that Steve Jobs offered to equip the laptops with a free copy of Mac OS X, but the foundation rejected Apple's offer on the grounds it did not want to accept proprietary software. It's unclear whether the OLPC foundation will accept Windows, as it previously stated it would like to offer use open source software that would allow its users to modify it.

The OLPC has recently launched a new campaign which will allow US residents to purchase two laptops for $399, one of which will be given away. The "give one, get one" scheme will thus see one laptop shipped out to a child in the developing world for free, while another will be shipped to the buyer. The scheme, dubbed G1G1, will only run for two weeks since Nov. 12.

The "100$ notebook" or OLPC XO-1 is produced by Quanta Computers, who has a 33% market share of laptops world-wide. It contains an AMD LX-Geode CPU at 700 MHz and 256 MB of RAM. There is no hard disk, but a 1 GB flash memory. A dual-mode SVGA LCD screen (monochrome and color mode) helps saving power. It has a built-in wireless network interface and color camera. The XO has no moving parts, can be powered by solar, foot-pump or pull-string powered chargers and is housed in a waterproof case. The laptop is sold only in batches of 250,000 units to governments.

In July OLPC announced they have succeeded to get the 3 million orders for OLPC that were needed to get production started and the OLPC is ready for mass production. OLPC said there are at least seven countries (Argentina, Brazil, Libya, Nigeria, Pakistan, Thailand, and Uruguay) that have expressed interest in purchasing these laptops.

During the same month the project received a major boost as Intel withdrew its opposition to the project and, more than that, entered a deal with OLPC, exchanging each other’s technologies. Intel’s decision was considered as a major win for OLPC’s initiative, because the chip maker has promoted its own version of a cheap notebook, called Classmate 200.