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Intel is applying a LOT of pressure. With Windows, it's easy. Intel tells Microsoft to make their product not so nice on netbooks and Microsoft complies. Btw, this is done to make sure that the netbook market does not destroy the lower end notebook market where Intel's margins are considerably higher.
As I have told many, the Atom is not that much different from the low end Pentium-M that most were using as little as 4-5 years ago on their laptops. Which means that there's a LOT more horse power inside of a netbook that most people realize.
Linux distros are uncontrollable. Therefore, putting a Linux variant on a netbook gets you pretty much a NOTEBOOK like experience. Intel can't control that terribly well (there no arm to twist). Intel's Moblin Linux distro is an attempt to "control" the netbook experience somewhat to keep the experience from being too NOTEBOOK like... which again, is the issue.
You can see the problem, right? I mean an 8G or 16G SSD based netbook with 512M is not a great Windows experience (unless you run a very hampered version), but a Linux distro is quite comfortable with those numbers and thus you can get a notebook like experience for $100-200 right now (especially as all the Windows users are retuning their netbooks... massive refurb market forming).
Don't get me wrong, Intel's margins are certainly still there. They'd just rather get 2-3x that margin, which is what they get with a low end notebook when compared to a netbook.
I just gave away an Asire One A110 model with 8G (refurb) with openSUSE 11.1 (KDE 4.2.4 + compiz). The thing works VERY well. Would satisfy most Wal-mart style laptop shoppers.
I did the HCL for the HP2140 which had 2G memory and a 160G (I think) HD, it was awesome. A real powerhouse. I used it for about a week as my desktop for accessing my virtualized desktop at the office. Even using the weird low res screen. Everything worked surprisingly well.
And, of course, these units will drive higher external resolutions, even 1920x1200. But at some performance penalty (esp. if using accelerated 3d stuff).