Intel brings low-cost laptops to the U.S.

March 20, 2008, 6:00 PM UTC

By Michal Lev-Ram

Intel’s Classmate PC was meant to be an affordable laptop for underprivileged kids in developing countries. Now the chip giant says it plans to bring the low-cost personal computers to the United States and Europe.

But the Classmate PC won’t be the first stripped-down laptop to be sold in the developed world. Others, including the 2-pound Eee PC by Taiwanese manufacturer Asus, have already hit saturated computer markets in countries like England. If the trend continues, analysts say it could force other manufacturers to cut prices to compete, especially in a weakening tight economy. Of course, the Classmate also would drive demand for Intel’s chips.

Intel says the cost of making the next-generation Classmate will be between $250 and $350 a pop. At this point it’s not clear how much they will retail for in the United States and Europe. But Intel says the price point will stay within the “netbooks” category — a growing segment of bare bones mini laptops that sell for under $500.

Intel (INTC) began selling its Classmate PC last year in Brazil, Mexico and other countries. The small rugged laptop has a waterproof keyboard, 7-inch screen and just 2GB of flash storage. But an Intel spokesperson said the model that will go on sale in the United States later this year will be a second-generation version that caters to the needs of students in more mature PC markets.

“It’s an initiative in the PC market that is in tune with the challenged economic climate,” says Matthew Wilkins, an analyst with research firm iSuppli. “Disposable income is being pushed, and a platform that is more affordable for the consumer is a good thing right now.”

Wilkins says it’s likely big manufacturers like Dell (DELL) and Hewlett-Packard (HPQ) will launch low-cost laptop models later this year.