As Nicholas Negroponte stormed the developing world trying to drum up buyers for the innovative $175 computers designed by his One Laptop Per Child (OLPC) education nonprofit, he encountered a persistent obstacle: competition from Intel Corp.

Intel's chairman, Craig Barrett, had derided Negroponte's machines as mere gadgets. And Intel was signing up international governments for its own line of low-cost PCs, called Classmates, which follow more conventional computing designs than OLPC's radically rethought "XO" computers.

Negroponte was suspicious of Intel's motives, since the XO runs on processors from Intel's fiercest rival, Advanced Micro Devices Inc. Negroponte said Intel had hurt his mission and "should be ashamed of itself."

But in recent weeks, Negroponte and Intel CEO Paul Otellini began peace talks, culminating in a face-to-face meeting on July 12 at Intel headquarters in Santa Clara, Calif. And on July 13, the two sides said they had joined forces: Intel will join OLPC's board and contribute money and technical expertise to the project.

Intel will continue to sell the Classmate, which has fallen in price from about $400 to the low $200s, attracting buyers in Pakistan, Brazil, Mexico, and Nigeria, according to spokeswoman Agnes Kwan. And OLPC still hopes its machines reach schools in several countries this fall.

But now, Intel and OLPC might seek ways to package their computers together. For example, Intel's Classmate, which has to be plugged in, might be an option for governments to deploy in urban schools, while the XO laptops, which use very little power and can be mechanically recharged by hand, could go into rural districts.

"There are an awful lot of educational scenarios between K and 12," said William Swope, Intel's director of corporate affairs. "We don't think all those are going to be served by any one form factor, by any one technology, by any one product."

Walter Bender, who oversees software and content for OLPC, said his Massachusetts Institute of Technology spin-off would benefit from the addition of Intel's technical expertise. OLPC expects to be constantly trying to perfect the XO machines--and get their cost closer to the originally stated goal of $100.

"It's a big problem, more than 15 people at OLPC can do all by themselves," Bender said. "Getting more talent lined up to help us is only a plus."

At least the initial wave of XO computers will still use processors from Advanced Micro Devices. AMD has been a major partner in OLPC, along with such other big names as Google Inc., News Corp., and Red Hat Inc.

But without a doubt, Intel would love to oust AMD as the processor supplier. After all, that is Intel's core business--not selling low-cost computers.

"We're going to go compete for the XO business, because we think we build first-class silicon," Swope said.