Since 2007, a new category of PCs has arisen, inspired by the OLPC project. Nicholas Negroponte's refusal to cater to paying customers left the field wide open to others to fulfil the obvious demand. First off the blocks was Asus with its Eee 701 laptop. This garnered immense interest, and has been single-handedly responsible for Microsoft extending the availability of Windows XP past its official cutoff date of June 2008, as well as slashing its price.

The defining characteristic of this market segment is a modest, yet useful spec at a modest price. These machines would not be adequate as the primary machine for an experienced or advanced computer user, but they work well for simpler uses (e.g. by school students or senior citizens). Low-cost laptops, in particular, are also useful as a second machine for an experienced user that can be taken to places where the primary machine would be impractical.

One interesting consequence is that the hardware prices of these machines are so low that the typical licensing costs of Microsoft Windows start to loom large. Furthermore, the hardware power is too modest to run Microsoft's latest Windows version, Windows Vista. And thirdly, the uses of these machines are such that ability to run all the same software applications that might be found on users' existing machines is not of such great importance. These three characteristics mean that offering Linux preinstalled instead of Windows becomes an attractive proposition to the hardware vendors.

The precise name for this market category varies somewhat. Intel talks about "nettops" (low-cost desktops) and "netbooks" (low-cost laptops); Microsoft has used the term "ULCPC" ("Ultra-Low-Cost PC"). HP refers to "Mini-Notes" or "mini-notebooks". It should certainly not be confused with the "UMPC" ("Ultra-Mobile PC"), which was a high-cost category of machines that received only disappointing sales in spite of promotion by Microsoft over several years.

At one time Psion started asserting its trademark rights over the name “netbook”, but gave up.

Roundups of some models are at The Register and Computerworld.

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