The announcement shocked the tech industry. In late 2005, the only computer found for $100 was stolen, was dead, or was ancient enough to require Windows 95. A real and functional computer for a $100 was a dream, but also made people wonder what sacrifices might need to be made to offer such a comparatively inexpensive machine. The big differentiators at the time were CPU details, storage capacity, added software, and display characteristics.
Intel and AMD in late 2005 were nearing the point where 64-bit CPUs were taking hold. The CPU industry was at a cusp, as processor speed of 32-bit CPUs coupled to their power consumption were differentiators; dual-core 64-bit CPUs were two years in the future. Apple was using IBM's PowerPC chip.
Microsoft's Windows XP, long in the tooth in 2005, dominated desktop and laptop computers. Microsoft's disastrous Vista operating system would be ready in 2006. Apple's MacOS X was merrily running on PowerPC G4 processors. Intel's Atom hadn't arrived. ARM processors were just starting to get traction in mobile devices.
But the laptop industry's big problems in terms of value had to do with speed versus quality of display (and storage) versus battery life. Machine weight was becoming bloated as large laptop display sizes and the desktop-replacement version of laptops emerged. Mobility was popular, but proprietary batteries with short lives and warranties for batteries from some vendors of just 90 days set the stage for a re-think. Netbooks for $100 provided just that.
The OLPC DNA was set as "The Children's Computer", initially designed to use the Linux operating system, whose use on desktop and notebook machines hadn't been very popular—but the cost of Linux and free/open source software kept the cost low. Later, after much fighting, Microsoft's Windows XP would be offered for just $3 on OLPC machines as an option alongside the Fedora distribution of Linux.
Battery life was to be long in the original OLPC design, which was dubbed the XO-1. An OLPC option was a hand-crank to generate the two watts of electricity needed to power the unit, but this feature was more conceptual-- and also served to drive the point that the OLPC was meant for a world where electricity might not be available or in spotty supply. To keep battery consumption low, an internal hard drive was waived in favor of solid-state storage—a solid-state one gigabyte disk (SSD). Its display was redesigned to cut power consumption to a minimum.
From this proposed DNA, a market shake-up took place. The chaos that ensued helped mark the difference in attitudes between the third world consumers, and their more comparatively wealthy first-world buyers.