On a desk in a messy office on the eighth floor of a building opposite the Massachusetts Institute of Technology sits a circuit board that might just transform education for millions of children around the world.

The board is the first prototype hardware for the ambitious OLPC (One Laptop Per Child) project. Led by Nicholas Negroponte, chairman of OLPC and a co-founder of the MIT Media Laboratory, the project seeks to develop a $100 (about £53) laptop computer for use by children in their studies. The machine will be offered in bulk to governments and other organisations.

The prototype's arrival in the US from Taiwan in early May represents a milestone. However, the project is already running late, and there remain several obstacles before computers start getting into kids' hands.

The price of materials is one issue. The computer will use energy-saving flash memory in place of a hard drive and Negroponte originally called for 1GB of memory; this has now been cut in half. Analysts had expressed doubts that the team could afford 1GB memory, given the machine's target price of $100.

"I guess they were right," said Walter Bender, president of software and content at OLPC, in an interview. Bender joined the project earlier this year after serving as executive director of MIT's Media Lab from September 2000 until January 2006.

The project, which has changed its name to de-emphasise the $100 target price, says it expects the initial machines will cost about $130 (£69) and that they will come down in price over a few years to eventually cost around $80 (£42).

Other changes include a cut in processor performance. Initially this was to have been a 500MHz Geode processor from project supporter AMD, but the current specification calls for a 400MHz chip. Bender said the slower chip was easier to get hold of in quantity.

Perhaps the most significant change is in the screen. A projection screen was to have been used, but a new type of LCD that can be switched between a low-resolution colour mode and high-resolution monochrome mode (and which is still under development) is now planned. Bender said the new screen will be "kick-ass, cheap, super-efficient and beautiful", but development is yet to be completed.

A year ago, when interviewed in Tokyo, Negroponte said he expected to receive the first order in June 2005 and to have gathered orders for about six million machines by the end of that year. However, the group has yet to receive an order from any government.

One reason for the lack of orders is that OLPC is not officially accepting them until it has completed development of the prototype and set production plans, said Bender.

Bender showed the board running a version of Red Hat's Fedora Linux.

"What you're seeing is close to the final design," he said. "Very little is going to change on this board."

He expects to finalise the design late this year, and to begin production in the first quarter of 2007. A year ago, Negroponte said production would begin in 2006.

Still, the arrival of the first prototype board, the product of several months work by Quanta Computer, marks a strong step forward for a project that many doubted would even make it this far.

The Taiwanese company is the world's largest maker of laptop computers and one of a number of supporters that has pledged to assist OLPC.

Other supporting companies include AMD, Brightstar, Google, News Corporation, Nortel and Red Hat, while last week wireless networking chip maker Marvell was added to this list. Marvell will work on Wi-Fi networking for the computer.