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The Intel Classmate PC. The chipmaker's low-cost laptop initiative is set to get a boost Wednesday from Portugal's government, which is pledging to provide elementary school students with 500,000 computers based on Intel Corp.'s design. ((AP Photo/Intel Corp.))

Intel Corp. on Wednesday pledged to provide elementary school students in Portugal with 500,000 computers based on its Classmate PC design, the latest move by the computer chip maker to take the lead in the emerging low-cost laptop market.

The computers will be delivered over the course of the 2008-09 school year. An Intel spokesperson declined to disclose how much the laptops will cost parents or other financial terms of the deal, saying Portugal's Ministry of Education is working out pricing details.

As part of Intel's deal with Portugal, Intel will serve as a technology adviser to Portugal's Ministry of Public Works, Transportation and Communications, which is co-ordinating the laptop program.

In a single move, Intel has nearly matched the 600,000 total orders for the One Laptop Per Child organization's XO laptop, heating up what has become a difficult relationship between the company and the nonprofit organization.

When the nonprofit OLPC first introduced the idea in 2005 of marketing low-cost laptops to children in the developing world, the computer chip maker was at first a vocal critic of the project. The company joined OLPC's board of directors last summer, only to leave the board earlier this year.

The XO became known as the "$100 laptop" due to the original estimated price. The laptops now cost about $188 US, and run with Microsoft Corp.'s Windows in addition to a Linux-based operating system.

Classmate PCs first went on sale in 2007 and though originally marketed to the developing world have begun to shift focus to more developed markets like Portugal. Built by other manufacturers and sold under a variety of names, the laptops are based on Intel's design and include its processors.

A number of computer makers, including Dell Inc., Hewlett-Packard, Acer and Packard Bell , have either entered the market for low-cost laptops or announced their intention to do so.

A report from Stamford, Conn.-based technology analyst firm Gartner Inc. released Monday said declining component costs for the devices could reduce prices for the laptops by 10 to 15 per cent in the next two to three years, but that the goal of the $100 laptop isn't a realistic short-term target.

"The economic benefits of IT literacy in emerging markets are currently driving the push for the $100 PC but there are many open questions that remain," said Annette Jump, research director at Gartner. Jump said software, packaging and assembly costs are likely to remain the same, keeping costs too high for some developing nations.

Some observers have questioned whether low-cost laptops are the best way to bring the internet and computer literacy to the developing world.

Ken Delaney, also an analyst with Gartner, told CBC News last fall that mobile phones were a better vehicle than a laptop for poorer regions such as Africa and southeast Asia.

"A mobile phone can be used more places than a laptop, and the infrastructure for mobile phones is already coming into place," he said.

With files from the Associated Press