Asus preparing uber cheap notebooks - as cheap as $199

Asus has plans to introduce five very cheap laptop computers in the second half of this year.

These budget notebooks will be available for as low as $199, with the most expensive model costing only $549.

However, there's a catch of course, the hardware specifications will be very low-end. Asus plans to use tiny 7-inch LCD panels from AU Optronics and will use Intel Solid State disks with a capacity from 1GB to 40GB, instead of regular HDDs. And instead of Windows they will provide Linux as the standard operating system.

"Although profit margins for these low-end PCs will not be as good as its other notebook computer series, Asustek will immediately benefit from the scale," Daniel Chang, an analyst with Macquarie Research Equities, said in a research note yesterday.

Asustek's component costs could also drop as its sourcing expands with the additional volume from these budget laptops, he said.

"Asustek's technology strength will help it penetrate various PC segments ... Its global notebook market share will continue to rise at a fast rate," Chang said.