Way back in July of last year you may have caught the news of Intel joining the One Laptop Per Child campaign, and in October there was talk of Intel designing a new OLPC-friendly processor so the news that Intel is puling the plug on its dealings with Nicholas Negroponte's brainchild is a little surprising.
Depending on which side you listen two the reasoning behind this parting of ways differs. OLPC's President, Walter Bender, says that his charity has seen little benefit from the partnership with Intel calling it "half hearted" and suggesting that the move to join forces in the first place was more a PR stunt than a genuine desire to help. Intel, on the other hand, claims that OLPC was demanding that it (Intel) pulled involvement in any scheme rivalling the XO; rather unreasonable if true. Certainly OLPC's Negroponte has been verbal enough with his protestations towards Intel taking market share away form the XO with its Classmate PC.
Intel still has a vested interest in both its own Classmate system and devices such a the Asus Eee PC so the time spent developing the CPU intended for the Intel XO won't go to waste. OLPC still has companies such as Google offering support to the XO, so it probably won't suffer from the withdrawal of what funding Intel was providing; however if it has rubbed Intel up the wrong way it could see some fiercer rivalry from the Classmate. Still, as long as the third world countries are benefitting from the much wanted PCs, does anyone really care who's supplying them?