The current model developed in India actually costs only 35 dollars, they expect the price to drop to 20 and even as little as 10 dollars soon.
The device has been developed by the Indian Institute of Technology and the Indian Institute of Science. It has a touchscreen system, Linux operative system (get used: Windows is out, Linux is in), web browser, PDF reader and video conferencing capabilities, being flexible enough to incorporate other stuff.
Source: The Guardian (includes a short video of the official presentation)
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