Microsoft Corp. on Thursday confirmed that a special cut-down version of Microsoft Windows XP operating system (OS) that would run on XO laptop created by OLPC non-profit organization is being developed and tested by the company. But while the company started to port its most popular OS to the XO in early 2007, the work will not be done until mid-2008.

“We are hard at work on the project here, and we are using an approach that is a little unusual for Microsoft. […] We are managing the entire process of adapting and testing an existing version of Windows for a new PC. Usually the hardware vendor does this,” said James Utzschneider, a member of marketing and communications team from Microsoft’s Unlimited Potential Group, in his blog.

The XO laptop from One Laptop Per Child (OLPC) organization – which currently uses Linux operating system – is aimed at developing countries and is meant to assist education of children over there. It is important for Microsoft Corp. to enter the emerging markets with its products since in other scenario the markets will rely on competing Linux OS and Microsoft will have to invest into advertising and marketing programs to enter those markets eventually. Moreover, if the youth in those emerging countries will only have skills to operate Linux, it may be even harder for Microsoft to persuade them to pay for an OS from the software giant.

Currently Microsoft is working on a cut-down version of Windows XP for the XO machine, but the work will only be completed in mid-2008 at the earliest. But the good news is that the company plans to start field testing of the OS already in January, 2008. The actual “field trials” will allow Microsoft to collect feedback from the users as well as determine whether it can fulfill the demands at a price-point that governments purchasing the XO laptops would accept.

“Between Microsoft employees and third party contractors that we have brought into the effort, we have over 40 engineers working full-time on the port. We started the project around the beginning of the year and think it will be mid-2008 at the earliest before we could have a production-quality release. Because of this, we have not announced formal plans to support the XO yet, and we will not do so until after we start getting feedback from our first limited field trials starting in January before we make the final call,” Mr. Utzschneider said.

It is interesting to note that current hardware limitations of the XO prevent Microsoft from creating a fine port of Windows XP for the device. It is obvious that 1GB of NAND flash memory built into XO is not enough for Windows, Office and educational programs. As a result, Microsoft asked OLPC to tweak the XO so that more memory could be installed.

“The XO actually only comes with 1GB of flash, and we asked the OLPC to add a slot for an internal SD card that will provide the 2 GB of extra memory needed to run our software,” said Mr. Utzschneider.

Current OLPC XO laptop features AMD Geode LX-700 processor with 433MHz clock-speed and built-in graphics controller, 256MB of PC-2700 (DDR 333MHz) memory, 1GB NAND flash that substitutes hard disk drive, 7.5” screen with 1200x900 resolution, wireless and wired network adapters as well as integrated webcam, microphone, speakers and so on.