Looks like the rumors of OLPC opting ARM instead of Atom processor were true. The OLPC has finally decided to go for the ARM platform. The current XO-1 is very power-frugal and uses just 5 watts of power on an average, which is really efficient for an X86 machine. That said, if the company opts ARM, it would nearly triple the battery life of these devices with the same capacity battery. ARM has much better power management features and also has built-in WiFi. However, the desktop version of Windows does not support ARM processor, which means no XP or no Windows 7.
The OLPC has requested Microsoft to make a special version of Windows 7 that is able to run on an OLPC. In case that happens, this will ultimately kill Windows Mobile as a lot of Windows Mobile devices run on ARM platform. That is why, I feel that OLPC will need a do a lot of persuasion to the Microsoft for making an ARM-compatible Windows 7.
Note: Windows Mobile fully supports ARM. However, we understand that Windows 7 would be more suitable for the children.