Of course, Microsoft’s not too happy with this development. So while the company had planned to discontinue sales of its Windows XP operating system by the end of June, 2008, Microsoft has made arrangements to continue selling and supporting its 6+ year old OS beyond that date. Because let’s face it, Windows Vista isn’t really designed for machines with slow processors and small hard drives.

But here’s the thing. Microsoft does want to continue pushing Windows Vista. So while the company is encouraging PC makers to install Windows XP on low-cost machines as an alternative to Linux by providing deep discounts, IDG News Service reports that manufacturers will need to meet a pretty strict definition of ULPC (Ultra low-cost PC) in order to qualify for their cheap XP licenses.

That definition includes a screen that’s less than 10.2 inches, 1GB of RAM or less, a hard drive with 80GB or less, and no touchscreen devices. You’ll also need a 1GHz or slower processor, although Via’s C7-M processors which run up to 1.6GHz are allowed, as will be Intel’s new Atom processor.

That rules most version of the HP Mini-Note out, since all but one model ships with a 120GB hard drive. But that’s probably fine with Microsoft, as the low-cost version of XP is really meant for PC makers who sell their computers in educational markets and developing nations. Computer makers will be able to get an XP Home Edition license for $26 if they sell their laptops in developing countries, while they’ll pay $32 to license XP for use in developed countries like the US.

The HP Mini-Note, on the other hand is targeted at US consumers (and in fact, ships with Windows Vista).