Almost worse than the news that we'll never see this folding, hybrid LCD/E ink budget computer in the flesh is how the news was delivered: By Nick Negroponte, in a low-profile interview with Xconomy, as if it everyone already knew:

2.0 (the XO-2) has been replaced by two things: 1) model 1.75, same industrial design but an ARM inside, 2) model 3.0, totally different industrial design, more like a sheet of paper.

Right, so all those mockups, all the talk of focusing on the next generation product, all that hope, dashed, and replaced an incremental upgrade—to a faster ARM processor, from the current model's AMD Geode—and vague promises of a 3.0 product:

3.0 is a single sheet, completely plastic and unbreakable, waterproof, 1/4" thick, full color, reflective and transmissive, no bezel, no holes. 1W. $75, ready in 2012

This from the guy who just vaporized a year and a half of buildup for his last project with a passing comment, so take it with a grain of salt.

Whatever happens next—and mind you, things aren't looking too great for the project as a whole—this is a sad situation. As ambitious as the project was, and as little chance as it ever had to come to pass, it was a rare phenomenon: it was genuinely cool, tied to a reputable organization and conceived with a good cause in mind. And now it's dead. [Xconomy via OLPC News via Liliputing]

OLPCs CTO Ed McNierney said in an interview today that the 5 watts of power used by the XO is too much for them. By switching to an ARM processor in the XO-2, they could get that number down to under a watt. This would benefit factors such as battery life considerably.

But on the other end of the spectrum, Windows doesn't really work without an x86 processor, which means that in all likelihood, the OS will be some sort of Linux variant. Not that's necessarily a bad thing: the upcoming Touch Book from Always Innovating also uses an ARM processor, and puts down some serious battery life in addition to rendering 3D graphics in OpenGL.

But we're still to far away from the late 2010 release of the XO-2 to start talking specifics. [PC World via Electronista]

The already beleaguered non-profit has been hit as hard as other charities during the economic crisis, says Negroponte, who said on the OLPC wiki:

Today we are reducing our team by approximately 50% and there will be salary reductions for the remaining 32 people. While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries.

The downsizing gives Negroponte an opportunity to more clearly phase out software development on the Sugar Linux interface and platform, he says in order to focus on the double-screened XO2. It's no secret that Negroponte was easing away from Sugar anyway, moving to Windows, so this presents a good excuse.

He also announced that they'd be spinning off the Latin America branch, a move that doesn't exactly build confidence in the organization overall. We certainly hope that Negroponte and his remaining team manages to pull that X02 together, but by the time they do, it may be just a proof-of-concept. [Ars Technica]

An interview with Valerio Cometti, the founder and managing director of V12 Design, confirmed that the upcoming version would support multitouch input and that a microphone would be built into the design for voice commands. Unfortunately, the image pictured above is the first gen version and no images of the current Canova design have been released. However, if they are on target with their prediction, we could have one in our hands by 2010. [V12 Design via Laptop Mag]

When asked about the possibility of tactile feedback for the keyless device, the spokesperson revealed that the company was "working on it." The second generation of the child-oriented budget laptop, announced last week, is more ambitious than the first, claiming full multi-touch capability and a price target of $75. The OLPC XO-2 release date is projected to be no earlier than 2010, but its design direction offers look into possibilities for near-future display tech. [Laptop]