In an announcement Tuesday, the OLPC said the first XO machines were produced at Quanta Computer's manufacturing facility in Shanghai.

"We have answered the question of whether or not we can build a low-cost laptop," said a triumphant Walter Bender, OLPC's president of software and content, in a statement. "The challenge now is to fine-tune it to the needs of children's learning."

In addition to testing by children, the laptops will be dropped from different heights and the casings tested to insure they are dirt and dust resistant. The open source operating system as well as software applications will be debugged by software developers.

The initial production models are planned to be delivered early next year to school children in Argentina, Brazil, Libya, Nigeria, and Thailand. Mass production is scheduled to get under way next summer.

The OLPC timetable calls for early production machines to be priced around $135 to $140 on the way to a $100 price tag in 2008.

The XO laptops will have a 500-MHz processor, 128-Mbytes DRAM, 500-Mbytes flash memory, and four USB ports. The laptops aren't expected to have hard drives.

The non-profit OLPC was created by faculty members from MIT's Media Lab led by professor Nicholas Negroponte

Quanta Computer, which claims to be the world's largest manufacturers of laptops, has devoted major engineering and manufacturing resources to the OLPC effort, according to Tuesday's announcement.