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The model that will go on sale in the US and Europe will be the second-generation version of the Classmate PC, and will retail for between $250 to $350, though specifications have yet to be unveiled.

Asus' Eee PC has already had significant success, and analysts say the Classmate will add further momentum to the burgeoning low-clost laptop market, possibly driving prices down even further.

"Particularly in a recession year, quality

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low-cost products are going to move well," says Rob Enderle, an analyst with the Enderle Group. "But the key is for them to be quality."

Unlike the Eee PC, which initially ran solely on a Linux platform, the second generation Classmate is likely to run on Windows, which Enderle believes will make it a more attractive proposition for consumers put off by an unfamiliar operating system.

Intel has, so far, targetted its Classmates at emerging markets, selling around 100,000 units, though it plans to ramp up production in 2008.

Intel declined to discuss the features of the second-generation machine, though it says there'll be flexibility for third party PC manufacturers to add RAM, storage, offer differing screen sizes and peripheral devices.

Intel also claims it's already begun work on a third model.

The low-cost laptop market was one of the surprise successes of 2007, even leading a Sony executive to admit that if the Eee PC caught on, "we are all be in trouble".