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However Microsoft also announced that a version of Windows XP Home will continue to be available until June 30, 2010, following the release of its next-generation Windows 7 OS.

Given that low-cost machines such as the Asus Eee PC are unable to meet some of the demanding technical specs demanded by Windows Vista, XP's extended availability reflects Microsoft's decision not to cede a potential high-growth market segment to the rival Linux platform.

Microsoft says it sees ULCPCs as an important stepping stone for customers to move up to the latest edition of Windows on higher-priced machines. It has already issued general recommendations to help ULCPC manufacturers build flash-based machines that can run the 32-bit version of Windows XP.