Nicholas Negroponte, founder of the One Laptop Per Child (OLPC) project, has announced that his organization will be cutting half its staff and ending in-house development of Sugar, the Linux-based operating system that ships on its tiny XO Children’s Machine laptops.

Even though the OLPC project has been praised by the mainstream media, the free software elite and humanitarian organizations for its goal to supply low-cost, educational computers to developing countries with little or no technology infrastructure, the project has been beset by a host of problems and delays. The worldwide economic downturn has slowed hardware orders, but the project was largely sidelined by the revolution it helped create — a wave of low-cost, low-powered laptops built to run Windows, like Intel’s similar Classmate PC. Now, even the OLPC project is transitioning to Windows after realizing it’s what customers want. […]

Sugar will continue to grow, thanks to Sugar Labs, an open community founded by OLPC-er Walter Bender dedicated to building up the OS.

Full Story: Wired