As the One Laptop Per Child project scrambles to revitalize itself after numerous setbacks, staff layoffs and dismal sales, it could find the footing it needs to survive by playing to its product's hidden strength as a low-priced, take-it-anywhere e-book reader.

The OLPC's XO Children's Machine is still a little clunky around the edges, and the availability of free, modern e-books is slim. But several open source projects are emerging that promise to improve the XO's capability as an e-book reader.

Once the kinks around software and content are ironed out, the XO could be pitched to commuters, students and travelers as a purely consumer device — "it's the rugged Kindle!" — the OLPC project can generate much-needed revenue to fund its educational, open-hardware goals.

"It is a great e-book," says Walter Bender, former president of OLPC software and content who is now the head of Sugar Labs, the non-profit group that continues to develop the XO's "Sugar" interface.

Bender says he can't speak for OLPC regarding its sales strategy, but he does say that its laptop has a significant advantage: Unlike e-books devices like Amazon's Kindle or Sony's Reader, the XO is a fully featured computer.

"So while you can use it to read a PDF or wiki page," he says in an e-mail, "you can also use it to annotate pages, write commentary, or even publish your own book: consumer as producer."

Like Bender, those involved directly with the project are quick to point out that OLPC is still primarily focused on serving the developing world and not consumers. But they also acknowledge that the little green-and-white machine fills a niche.

The XO laptop's greatest asset is the quality of its hardware. It's beefy and difficult to damage. The battery lasts around six hours under normal use — not as long as the Kindle or Sony's Reader, but comparable to newer netbooks — and it lasts a few hours longer if you turn off the backlight behind the LCD screen. The XO's screen was designed for high visibility with the backlight off, especially outdoors in daylight. You can also flip the screen around and put the XO into tablet mode. When you do, it's comfortable to hold and scroll through pages using the keypads under your thumbs.

It's cheap, too. An XO Children's Machine, when purchased through the Give 1, Get 1 program, costs $200 — cheaper than Amazon's Kindle ($360) and Sony's Reader ($270).

OLPC founder Nicholas Negroponte has been making the rounds with a mocked-up design of the next generation XO, a booklike dual screen computer with a hinge. Negroponte says the new hardware will be ready in 2010.

In the meantime, the XO's creators aren't interested in pimping out their hardware to turn a quick profit, but they do see the potential.

"We're not planning on selling machines directly to people in the U.S., but the XO is an awesome e-book reader," says OLPC director of community content S.J. Klein. "Our primary interests are in making sure there are amazing new books for people to use, and in making the experience as interesting and engaging as possible."

The availability of books for the device is one major stumbling point. For example, you can't buy a bestseller at Amazon and expect it to work on your XO. The files are saddled with Digital Rights Management, or DRM, restrictions that limit you to reading on an approved device — such as Amazon's Kindle.

There are free books to be had, though. The Internet Archive currently has one million books available for free, and the nonprofit continues to add to its library at a rate of 1,000 books a day. There are also thousands of free books available through sites like Gutenberg.org, Manybooks.net and Feedbooks.com.

The XO also has the ability to read offline web pages, so a user can download stories from news websites and read them on a train or on the beach.

Still, the software is young and presents usability problems.

Sugar, the XO's Linux-based desktop environment, can be confusing for adults used to their Windows and Mac desktops. It comes with some bare-bones reader software built in, but to get type to display optimally, you have to learn how to install fonts — using a Linux command line, no less. Some e-books also have to be re-formatted with larger type or narrower margins before you can read them without a heap of zooming and scrolling.

"I definitely agree that one of the strengths of the OLPC is the e-book reader ability," says Aleksandar Kalev, a software developer working on an e-book viewer for the XO. "However, I don't think that, for the moment, it could compete with the dedicated e-readers."

The device is too big and a bit too sluggish, and Sugar is too young of an operating system, he says.

Sugar Labs plans to release a new version of the Sugar desktop for the XO in March 2009, featuring an improved default reader. There are also several open source software alternatives in the works that significantly improve the e-book experience.

The most promising is GnuBook, which uses HTML and JavaScript to render pages in an easy-to-browse interface. There's also the more mature FBReader, which integrates directly with online libraries. The Evince community, which produces a document viewer for Linux, has been working closely with the OLPC project as well.

Whatever innovations come about, they will happen with the project's educational goals in mind, says OLPC's Klein.

"We want it to be an awesome experience for everyone, but especially for teachers and people reading in classrooms," he says.

"And especially classrooms that don't have walls or paper."

Photo: Jim Merithew/Wired.com

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