It’s obvious enough that Microsoft wants us to upgrade all of our main computers to Vista, but they don’t have too much of a problem with running Windows XP on our el cheapo subnotebooks. In order to help keep costs down for low-cost PCs like the Asus Eee PC, Microsoft is getting ready to offer a budget version of Windows XP for just $25. But it comes with a few restrictions.

First off, the $25 version of Windows XP is said to be “somewhat crippled”, though we’re not sure what sort of limitations the smaller build of XP will be. The other hurdle, which could prove to be even more problematic, comes from the imposing of arbitrary hardware limitations by Microsoft. They’re not willing to sell the limited XP to just any old laptop.

[T]he PC vendors that make ULPCs must limit screen sizes to 10.2 inches and hard drives to 80G bytes, and they cannot offer touch-screen PCs…the systems can have no more than 1G byte of RAM and a single-core processor running at no more than 1GHz.

No touchscreens. No dual core. No big displays. Are they really concerned that the $25 XP will cannibalize sales of the much more expensive Vista?