The One Laptop per Child (OLPC) project that delivers low-cost laptops to children in developing countries has announced plans to reduce staff wages and cut employee headcount by around 50 per cent.
OLPC said that it had tried to avoid the cuts in recent months, but that they were now "unavoidable".
"Like many other non-profits that are facing tough economic times, OLPC must downsize in order to keep costs in line with fewer financial resources," said OLPC founder Nicholas Negroponte in a blog posting.
"While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries."
The cuts follow indications in late 2008 that the organisation was having difficulties accomplishing its mission.
In October, virtual desktop supplier NComputing managed to undercut OLPC and sign a deal with the Indian state of Andhra Pradesh to supply 5,000 schools with a system that enables seven users to share one PC at the same time for about $70 per seat.
And in November, OLPC announced that it was relaunching its Give One, Get One campaign that gives individuals in poorer nations a free XO laptop whenever customers buy the laptop for the full price of $399.
An NComputing statement sent to press on Wednesday cast doubt on the OLPC cuts being due to the state of the current economy, declaring instead that the business model is failing.
NComputing pointed to OLPC's inability to deliver the promised $100 laptop, and the hidden costs it charges governments to ship computers from its factories in China.
"It is easy for OLPC to blame the downturn, but their efforts, while noble, have been fraught with difficulties from the start," said an NComputing spokeswoman.
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