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Dubbed the Personal Internet Communicator or PIC, the machine is targeted at emerging markets such as India, Brazil, China and Russia. Based around AMD's Geode x86 range of chips, the machine would be equipped with a 10GB Seagate drive and 128Mb of RAM. The machine is also expected to include a built in modem and a keyboard.

The plan is for AMD to provide the reference design and then local manufacturers would build the machines for their markets.

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As the markets in the first world are now pretty well saturated with computers, manufacturers are looking to other parts of the world to fuel the next spurt of growth.

The biggest hurdle in getting the price down would be the operating system. According to CNet, the PIC will be supplied with a version of Windows CE with enough XP extensions included to run e-mail, a web browser, instant messaging and word processing. According to the reports the computers will be able to run multimedia files and display PDF and PowerPoint files. This does not seem to be the same stripped down 'entry level' version of Windows XP that Microsoft expects to start bundling with low cost PCs in emerging markets at the beginning of next year.

For Microsoft though, anxious to beat off the challenge of low cost Linux, it is important to get a foothold in these markets and get users used to the Redmond way of doing things. Already, the company has done deals around the world, notably in India and Thailand, for stripped down versions of Windows.