Dell is latest to plan a $400 laptop

It was only a matter of time before Dell jumped on the low-cost laptop bandwagon. The Wall Street Journal reported this morning that Compal, a major contract manufacturer, will build a low-cost laptop for Dell that will go on sale in the second quarter. Like others in this category, the Dell version will have an 8.9-inch display and cost between $400 and $500.

A few weeks ago I met with Compal in Taiwan, and it was clear that the company believes these low-cost laptops--along with related products such as ultra-mobile PCs (UMPCs) and mobile Internet devices (MIDs)--will grow rapidly starting this year. The company predicts total low-cost laptop shipments this year will be about 6 million units. That would be a little less than 5% of the total notebook market in 2008.

The category has its roots in the One Laptop Per Child project, but it was Asus that really broke it open with the release last year of its Eee PC. Intel's new Centrino Atom platform is also helping this category evolve, though AMD and Via also offer low-power, low-cost chips that should appear in some of these. Acer, HP and Intel all have plans for new products in the same sub-$500, 8.9-inch category.