Intel cuts ties with $100 laptop project, gets downgrade by J.P. Morgan

Just as J.P. Morgan took its rating on Intel (NASDAQ: INTC) to "neutral" on the back of lowered orders and guidance from Europe, the world's largest microchip maker said it was cutting its ties with the One Laptop Per Child (OLPC) project founded bu MIT's Nicholas Negroponte. The reason given? Disagreements with the project and its founder. Translation: some kind of financial disagreement.

The OLPC project, which is distributing cheaper laptop computers powered by hand cranks and running free operating system software, have already been given to poor children in Africa, Latin America and other countries. The problem is that Intel is has been marketing a low-cost laptop in the same countries where the OLPC unit was already being distributed. The OLPC laptops contain a microprocessor from Intel's chief rival, Advanced Micro Devices (NYSE: AMD).

Ending a year of public sniping about each other, Intel's plan to introduce a low-cost, OLPC-designed laptop with an Intel chip inside at next week's massive Consumer Electronics Show (CES) probably spurred the chipmaker into just calling the whole thing off with Negroponte.

The entrepreneurial MIT alum wanted Intel to not compete with the OLPC laptop in the countries where it was destined to become a hit, as Intel's planned "Classmate" laptop would have been a direct competitor. Intel spokesperson Chuck Mulloy responded with "We can't accommodate that request." So far, Negroponte's OLPC laptop sells for $188 overseas, much more than the $100 target price with which the unit was originally envisioned.