The world's largest software company is now working to adapt a basic version of Windows XP so it is compatible with the nonprofit One Laptop Per Child Foundation's.
"We're spending a non-trivial amount of money on it," Microsoft Corporate Vice Presidentsaid in an interview on Thursday.
"We remain hopeful with our progress to date, we still have significant work ahead to finalize our analysis and testing processes," he said. "At the end of the day, there's no guarantees."
The One Laptop per Child Foundation, a spin-off from the Massachusetts Institute of Technology, plans to start producing the $188 machines in China next month and eventually manufacture millions a year for elementary school children in developing countries in Asia, Africa and Latin America.
The foundation is also selling the machines in the United States and Canada for $400 apiece through a fundraising campaign.
The laptops were designed specifically to run Linux programs. If the machines run only Linux, Microsoft will lose an opportunity to expose tens of millions of children worldwide to its Windows system.
"We've made progress," Poole said.
If the foundation is able to meet its goal of producing millions of laptops for school children around the world and they are all loaded with Linux software, then they would end up being more comfortable with those programs than with Windows, said Wayan Vota, who publishes a blog that monitors the project.
"People will realize there is an alternative to Windows and they might like it better," Vota said.
But the new laptop uses some technologies developed by the foundation that haven't previously been used in personal computers, Poole said.
"We still have plenty of work to do in determining if the highly constrained performance, power, and memory in the first generation XO laptops will be compatible with Windows and popular Windows applications," he added.
Originally dubbed the $100 laptop, which is the group's target price for the machine, the XO features a string pulley to charge its battery, a keyboard that switches between languages, a digital video camera and wireless connectivity.
The laptop's designer, Mary Lou Jepsen, said in an interview earlier this month she expects the price to drop in the first quarter of next year because prices of memory tend to fall dramatically during that period.
The computer requires just 2 watts of power compared with the typical laptop's 30 to 40 watts and does away with hard drives, relying instead on flash memory and four USB ports to add memory devices.
The XO laptop's component makers include Advanced Micro Devices and Marvell Technology Group. Software maker Red Hat helped develop the device. Quanta Computer will manufacture it.
The foundation will start taking orders for its Give 1 Get 1 campaign on November 12 at laptopgiving.org.