Developed by the non-profit One Laptop per Child in 2005, the goal of the product was to make computers available to children around the globe, who normally would never be able to have a computer. The product initially was supposed to be $100, but due to manufacturing costs, the product retails for $199.
The computer is designed for low power consumption, and has a rugged design that makes it more durable. It uses flash memory instead of a hard drive and its operating system is a distribution of Linux that is derived from Fedora.
The XO-1 was a major inspiration for netbooks, which were first released in 2007, because of the hardware similarities they share, such as the lack of a optical drive, and the use of flash memory.
References: http://en.wikipedia.org/wiki/XO-1_%28laptop%29