Asustek Computer's $199 Eee PC is turning out to be one of the stars at Computex 2007, grabbing attention for its small size and even smaller price.

Asustek gave me the chance to use an engineering prototype of the Eee PC 701 on Wednesday, one day after it was announced by Jonney Shih, the company's chairman, and Sean Maloney, executive vice president and general manager of Intel's sales and marketing group.

Since Shih revealed few details of the machine's specifications, I was looking forward to a closer look. And I came away impressed: this little notebook has a shot at making a big impact on the market for ultraportable computers. And competitors such as Palm, which recently announced its $599 Foleo ultraportable notebook, should pay attention.

Jointly developed by Intel and Asustek, the Eee PC will hit the market during the third quarter, most likely in August or September. The notebook will be aimed at education users, but it should also be available more widely.

Prices are going to start at $199, rising based on the amount of flash memory that comes with the machine instead of a hard disk. Currently, Asustek plans to sell models with 4GB, 8GB, and 16GB of flash, but that may change between now and when the first Eee PCs go on sale.

Measuring 22.5 centimeters wide by 16.5 cm deep, the Eee PC 701 is 3.5 cm thick with the screen closed and weighs just 890 grams. Other specifications include a 7-inch monitor, a 300,000-pixel camera, 512MB of DDR2 (double data rate 2) memory, and Wi-Fi. Next year, Asustek plans to introduce a second Eee PC model, the 1001, which will have a 10-inch screen.

Asustek isn't disclosing what processor is used inside the device, except to say it's an Intel mobile chip. One possibility is that the Eee PC is based on Intel's McCaslin ultramobile PC platform, which includes either the A100 or A110 processors, formerly codenamed Steeley. Or it could be something else.

Whatever chip it's using, the Eee PC doesn't run hot. The prototype I tested had been running continuously for at least six hours when I picked it up, and the machine was barely warm to the touch. Asustek said the notebook can run for three hours on battery, which is sufficient for surfing the Web or checking e-mail, but I would like more. Unfortunately, Asustek doesn't have plans to offer an extended-life battery for the Eee PC. Hopefully it will offer extra batteries as an option.

The keyboard and trackpad are slightly small due to the Eee PC's size, but I was able to type comfortably. The keyboard felt fine for typing out e-mails or surfing the Web, but I prefer a full-size keyboard for typing for an extended period of time.

Like Palm's upcoming Foleo notebook, the Eee PC runs Linux instead of the Windows operating system. In the case of the Eee PC, Asustek chose to use Xandros for the operating system, the Open Office applications suite, and a Firefox browser. This helps to keep costs down and means the Eee PC boots in about 15 seconds.

The Eee PC's user interface, which is still being developed, uses tabs for navigation. The prototype I tested had tabs labelled Internet, Work, Learn, Play, Settings and Favorites, which contained icons for related applications and Web sites. For example, the Internet tab offered icons for surfing the Web, connecting to Wikipedia, and the Skype VoIP service.

Overall, the Eee PC prototype showed a lot of promise. In terms of its size and capabilities, there appeared to be no obvious tradeoffs for a device that could function well as a second notebook PC for busy executives.