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...

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