Microsoft announced that it would allow computer manufacturers to preinstall Windows XP Home on low-cost desktops through June 30, 2010 at the Computex trade show in Taipei, Taiwan. Blogger Steven J. Vaughan-Nichols writes convincingly that what really drove Microsoft’s magnanimous gesture toward its XP users — was the unlooked-for success of the popular, Linux-powered UMPC market.

It turned out people wanted inexpensive, hard-working Linux laptops rather than overpriced, underpowered Vista PCs.

If anyone thought this was a flash in the pan, that Asus just hit it lucky once, they haven’t been paying attention. Intel is putting big bucks into its Atom family of processors, which have been designed for UMPCs, or as Intel would have it, MIDs. Intel has encouraged both the computer makers and the Linux companies in its Moblin initiative to run desktop Linux.

To that point, Ubuntu is releasing a UMPC-only version of Ubuntu 8.04 called Ubuntu Netbook Remix for Intel Atom-based netbooks and UMPCs. Because many current users of Linux-powered UMPCs may not even know they’re using open source, the hope is that more obvious “branding” will result in more people willing to run Linux on their primary PCs.

Ryan Paul at Ars Technica has posted some screenshots and a lot more detail about the Remix strategy, which you might want to check out.