Microsoft Corp. Thursday confirmed swirling rumors by announcing that it is extending the availability of Windows XP Home Edition until mid-2010 for a fast-emerging class of tiny, cheap laptops led by the Asus Eee.

But despite calls for Microsoft to offer a general reprieve for XP users, the company reiterated that June 30 remains the cutoff date for hardware makers and retailers to install XP on new computers other than the low-cost laptops.

Users can continue to use the Home or Professional editions of XP, which Microsoft introduced in October 2001, indefinitely, although Microsoft will discontinue free live and warranty-based technical support next April. Security fixes will continue to be free after that date. Extended support for XP, which costs users per call or incident, will continue until April 2014.

XP Home will continue to be made available to PC makers until June 30, 2010, or one year after the release of the follow-up to Windows Vista, which is currently being referred to as Windows 7.

Microsoft was initially disdainful of low-cost, lightweight laptops such as the One Laptop Per Child (OLPC) XO, the Intel Classmate and the Asus Eee, worried that they would cannibalize sales of conventional laptops running Vista as well as smart phones based on Windows Mobile. All of the lightweight laptops, which cost under US$400 and weigh about 2 lb., run the Linux operating system and other free, open-source applications to help keep their prices down.

However, Microsoft's announcement today was foreshadowed. The software vendor is co-developing a stripped-down version of Windows XP with the OLPC. And a new model of the Eee sporting is expected to hit U.S. stores such as Best Buy on April 9.

In an interview, Kevin Kutz, Windows client director at Microsoft, said the company's change of heart can be attributed to two things. "One, the category is interesting and growing in interesting ways, so we want to help lead it and shape it," he said. "Second, we got feedback from partners that customers wanted Windows on these devices. They wanted the familiarity and the access to the Windows ecosystem."

For example, Asustek Computer Inc. has already predicted that XP-based versions of its Eee system will outsell its Linux models by a 3-to-2 margin this year.

Kutz declined to comment on how much Microsoft will charge the laptop makers for XP Home. Forbes.com reported last November that Microsoft offered XP Home to Asus for $40 per Eee, or about one-third of the price it typically charges resellers.

The full version of XP Home Service Pack 2 will be offered to the hardware vendors, Kutz said. That takes up about 1.1GB before updates such as Service Pack 3, which will be made available later this year. Kutz declined to comment on whether the slimmed-down version of XP that Microsoft is co-developing with OLPC will be offered to other lightweight makers as well.

Earlier this month, Microsoft published a set of formal design guidelines for hardware makers interested in building what it is calling ultralow-cost PCs, or ULCPCs, for Windows XP. It recommends that the systems have a minimum processor speed of 500 MHz, with 1 GHz optimal, and at least 256MB of RAM, with 512MB optimal. Moreover, Microsoft says that XP should be compressed on ULCPCs, especially those with 2GB flash drives.

Kutz said the guidelines, which describe lightweight laptops with flash drives ranging from 2GB to 8GB, don't constitute restrictions on Microsoft's part. Thus, PC makers are free to build systems that use either a flash drive or a conventional hard drive, he said.

He declined to comment on what machine sizes, processors or price points would break the ULCPC barrier and prevent a hardware vendor from licensing XP Home for a system. Asustek and CloudBook maker Everex have both said they plan to supersize their laptops to include roomier keyboards and 9-in. screens, up from the 7-in. screens they now offer.

One firm restriction set by Microsoft is that cheap desktop computers, such as Everex's $199 Linux-based gPC, won't be eligible for continued installations of XP after June 30, Kutz said.