Microsoft Thursday said it would continue to offer Windows XP Home via OEMs for ultra-low-cost computers until 2010 or when the next version of the operating system ships.

Microsoft said the XP plan is consumer-focused only, and a company spokesman said, "As for impact on enterprise, this announcement reiterates Microsoft's plan of record, in that sales of other editions of Windows XP will end June 30, 2008."

"We are very proud of the progress that we have made with Windows Vista over the last sixteen months," Michael Dix, general manager of Windows client product management said in an article posted on Microsoft's Web site. The new end-of-sales date for Windows XP SP2 already represents a six-month extension, because Microsoft had intended to close sales Jan. 30.

As part of that announcement, Microsoft also said Windows XP Starter Edition, which targets emerging markets, would continue to be available until June 30, 2010. That edition of Windows is not as full-featured as Windows XP Home, however. It can run just three applications simultaneously, for example, and has no home-networking features.

There is a growing market for ultra-low-cost PCs that is being dominated by Linux, which has been improving device-driver support. Microsoft's announcement clearly shows it does not plan to ignore that market.

"The big question is how big this market really is,"says Richard Shim, an analyst with IDC. "And it is not really clear if the ULCPC form factor is a fad or is here to stay, but Microsoft decided it is not something they want to gamble with. They do not want to lose the opportunity to Linux."

Ultra-low-cost PCs are drawing interest from governments, schools, emerging markets and developing countries, according to experts. The recently released Vista operating system requires more horsepower than these machines have, but Windows XP Home could be a fit. For example, AsusTek sells four versions of its "barebones" Eee PC with a Linux-based operating system, but lists in the computer's spec sheet that they all are Windows XP compatible.

The market has seen the recent introduction by Everex of its $400 Linux-based CloudBook, but also the pullout of Wal-Mart, which stopped selling a $200 Linux laptop just last month.

Microsoft said OEMs will be able to preinstall Windows XP Home on ultra-low-cost PCs until June 30, 2010 or one year after the launch of Windows 7, whichever comes later.