HP has announced plans to launch a low cost PC in China. At $483, HP hopes the PC will be cheap enough to keep it active in a high competition, high growth market. The PC matches the price of a similar basic PC introduced by Lenovo earlier this year.
Keeping costs low, HP has chosen to ship the computer with FreeDOS, and is using AMD for chips rather than Intel. The decision to ship the PC with FreeDOS is an interesting one; not shipping with Windows is obvious due to the high costs involved with the OS. Not shipping with Linux is perhaps less obvious. One answer: piracy in the Asian market is massive; although HP would never admit it, it would seem that there is an expectancy that users will replace FreeDOS for something else (read: pirated Windows) after purchase.
China is massively important to PC makers. It recently surpassed Japan as the world's second biggest market for PCs and is expected to see 20% growth in 2004. HP needs to make this venture work and make it work well. It faces stiff competition from other companies like Lenovo; Lenovo recently announced that it would purchase IBM's PC unit. HP's currently only has ~5% of the PC market in China, and will no doubt hope that their low cost solution will improve this figure.