According to a report on the Telecom TV website, the Christmas holiday period has been a disaster for OLPC with just 12,600 XO laptops sold, compared to 185,000 the year before.
To make matters worse, cash strapped governments of impoverished nations which had been persuaded by OLPC to buy XO laptops are now reneging on their commitments.
Aside from the global recesssion, the rise of the cheap netbook phenomenon, led by Asus, Acer, HP and a number of other big names, has commoditised the small computer space and made the relatively underpowered XO seem expensive rather than cheap.
Faced with a plethora of readily available cheap netbooks, supported by established well-funded multinational corporations, consumers all over the world have voted with their wallets and bought millions of Eee PCs, Aspire Ones, Mini Notes and other little computers instead of the XO.
As a result, the OLPC organisation is in tatters, with staff numbers at the Cambridge Massachussetts office slashed in half from 64 to 32, the remaining staff taking pay cuts, and the organisation's operating budget cut from US$12 million to $5 million.
In the wake of the global financial tsunami, the remnant of the original OLPC organisation appears to have descended into internal bickering over the future direction of the project.
Professor Negroponte reportedly intends to suspend all further software development and embark the development of a new computer. However, others who have been associated with the project from day one, including former head of software development Walter Bender, believe this is dead wrong, citing the futility of trying to build computers that could compete with the netbooks currently being produced by global hardware giants.
Needless to say, with a skeleton staff complement on minimal pay, a miniscule budget of $5 million and a global economic environment where funding is difficult to obtain, it is hard to see how OLPC will be around this time next year, let alone produce anything of value – hardware or software.