I never liked the design of the original OLPC XO laptop, but the design of the XO-2 looks fantastic and very futuristic. It looks like two oversized iPhones connected in a clamshell design and it's using a soft touch-screen keyboard. It can be used in vertical book mode or in laptop mode with a virtual keyboard.
The problem is that Nicholas Negroponte still hasn't learned from his original mistakes of over promising and under delivering. He promised an instant booting instant loading laptop for $100 and he delivered a $200 (at quantities of 10000) laptop that took more than 3 minutes to boot and a minute to load applications. While the original XO has switched to a workable platform with Microsoft Windows XP and Microsoft Office, the cost remains high and problems with the keyboard persists. Now Mr. Negroponte is promising a price of $75 for the XO-2 with a delivery date of 2010 but it's hard to take his promises seriously. In fact I'll come up with the following formula.
Negroponte pricing = 0.5 x BOM (QTY 10000) pricing
The XO-2 may avoid the mechanical failure problem in the original XO rubberized keyboards by getting rid of a mechanical keyboard altogether, but the XO will go from inadequate tactile feedback to zero tactile feedback. That may not be a problem for casual typing and there won't be any failed sticky rubber keys. The touch-screen keyboard hasn't held back the wild success of the Apple iPhone but that's because it probably is the best soft-key system ever implemented and the other benefits of the iPhone outweigh the disadvantages.
The bigger question for the XO-2 (or devices like it) is whether it will come close to the high bar set by Apple's iPhone. The responsiveness of the animated and natural interface on the iPhone is not only revolutionary for Smartphones, but it puts the Windows and Mac OS X interface to shame. For a device like this to succeed in the market place, it must be an instant-on device with instant-load applications.
As for the CPU, it may use the second generation Intel Atom CPU codenamed "Moorestown" due in 2009 which has a TDP of less than a watt including the chipset or perhaps the successor to Moorestown" in 2010. But the raw costs of the parts alone will be more than $100 even in 2010 but then again, $100 is $50 if you're using pie-in-the-sky Negroponte pricing.
If the XO-2 or a similar device can come anywhere close to an iPhone experience, then it will succeed in the developed world as a $200 device in and outside of the education market. Just don't count on this succeeding in the third world any time soon unless someone has a lot of money to donate because no country will spend the annual salary of their adults on laptops for their children or even a fraction of that.