OLPC downsizes half of its staff, cuts Sugar development

The One Laptop Per Child (OLPC) project announced Wednesday that it plans to downsize half of its staff and reduce the salary of the remaining employees. OLPC will also halt its development of the open source Sugar environment and focus on building its next-generation hardware device. These plans are part of a major restructuring effort that has been necessitated by the financial downturn and the organization's dwindling resources.

OLPC was originally founded by Nicholas Negroponte and his colleagues from the MIT Media Labs with the intention of building a low-cost portable computing device for education that could be sold in bulk to developing countries. The project aimed to spread constructionist learning methodologies and make technology more accessible to students who would not otherwise have an opportunity to use computers on a regular basis.
The project has been afflicted with serious setbacks, technical and logistical problems, personality conflicts, and bogus litigation. It has been on a path of steady decline for months and has largely been displaced by Intel's more sustainable Classmate PC project.
Despite the failures and challenges ahead, Negroponte still intends to push forward with the development of the organization's ambitious new prototype design, which was announced last year. The new model has two touchscreen displays and a form factor that vaguely resembles a book.
In an announcement posted to the OLPC wiki, Negroponte reveals that the organization will have to significantly scale back and cut costs in order to continue operating. The new budget constraints have necessitated major layoffs and pay cuts.
"Like many other nonprofits that are facing tough economic times, One Laptop per Child must downsize in order to keep costs in line with fewer financial resources. Today we are reducing our team by approximately 50% and there will be salary reductions for the remaining 32 people," he wrote. "While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries."
Another victim of OLPC budget cuts is the Sugar project, a Linux-based education software platform that OLPC developed for its laptops. This cut is unsurprising, because OLPC has gradually been moving away from Sugar and has increasingly sought to support Windows. It is still unclear whether OLPC will continue to encourage its large buyers to adopt Sugar, but Negroponte says unambiguously that the organization will be working on transitioning Sugar development entirely to the community.
OLPC's decision to end its participation in Sugar's evolution doesn't mean that Sugar itself will be coming to an end any time soon. Former OLPC president of software, Walter Bender, who left the organization last year, launched Sugar Labs to facilitate ongoing community-driven development of the Sugar project. Sugar Labs has done well for itself—it recently joined the GNOME Foundation and is currently in informal talks with some hardware vendors.
Alongside the cuts, Negroponte has also announced some new initiatives, including a digital book project and a no-cost connectivity program. He also says that the organization's branch in Latin America will be "spun off into a separate support unit." He intends to increase focus on the Middle East.
The OLPC project's extreme dependence on economy of scale has proven to be a fatal error. The organization was not able to secure the large bulk orders that it had originally anticipated and fell short of meeting its target $100 per unit price. The worldwide economic slowdown has made it even more difficult for OLPC to find developing countries that have cash to spare on education technology. The latest restructuring effort could help OLPC regain its focus, but the failure of its past attempts to do so don't really provide much confidence.