It's true that the AMD Geode processor in the XO is underpowered. It's almost as slow as a Cray-1. But that's partly the point. It runs on only half a watt. The XO _maxes_ at about 8 W, an essential design point for villages where they take car batteries in a donkey cart to get them recharged somewhere else in order to keep their mobile phones running.
I agree about selling to the First World, which we are in fact doing. There are 15,000 units in Birmingham, Alabama, and trials in New York. Likely-soon-to-be-Governor Pat Quinn of Illinois is a strong supporter of giving every child in Illinois a laptop and a real education. (Blago is due to be impeached next week, with a trial in the IL Senate to follow.)
It's still about education. We're getting moving now on post-Gutenberg digital textbooks. Not PDFs of dead tree books, that is, but interactive learning systems based on Smalltalk, or incorporating the digital oscilloscope function of the XO, and much more.
http://wiki.sugarlabs.org/go/Creating_textbooks
It's also about social transformation. Google
OLPC ethiopia-implementation-report
or
OLPC Astounded-in-Arahuay
to get both the reports and the discussion about them.
As for XP on the XO: I am greatly looking forward to the spectacle of Microsoft shooting itself in all of its shareholders' feet by sponsoring trials of dual-boot XOs. We are going to see tests of Fedora Rawhide Linux and Sugar vs. XP and a lame set of so-called educational software on the same hardware by the same people, hardly any of them on the Microsoft payroll. I have not been able to think of a suitable Onion headline that could make this seem worse for M$ than it already is.