Microsoft Offers Mega-Discount on WinXP to Low-Cost Laptop Makers [Microsoft]

Ultra low-cost PCs such as OLPC's XO laptop could end up bundled with copies of Windows OS after all, if Microsoft's most recent scheme to grab market share works. The company is giving computer manufacturers Windows XP Home Edition at a steep discount to put on ULPCs, in hopes of luring them away from Linux.

In order to be eligible for the price cut, tech firms need to be making low-cost PCs that limit their screen sizes to 10.2 inches and hard drives to 80GB and under. The computers must also not have more than 1GB RAM or a 1.0 GHz single-core processor, and come without touch-screen technology. These limitations help ensure that the ultra cheap laptops won't eat into the market for mainstream PCs running Windows Vista.

Microsoft will charge $26 for XP in emerging markets such as China and India, and $32 for developed markets like the United States. What do you guys think—will the price cut destroy the inroads Linux has been making into the consumer market? [ ComputerworldUK]