After taking the wraps off a Linux-based desktop computer this spring,

Hewlett-Packard

(HPQ) - Get Report

became the first big computer maker to debut a notebook computer with open-source software preinstalled. The Palo Alto, Calif.-based outfit rolled out the offering Tuesday at the LinuxWorld conference in San Francisco.

The announcement shows how far PC makers will go to score business in a hyper-competitive market. Even H-P acknowledges that Linux remains a mere blip in the PC software arena, accounting for an estimated 3% of the desktop market and until now, none of the notebook market.

"PC manufacturers are somewhat desperate for any opportunity to hook another piece of the market," said Meta Group Vice President Steve Kleynhans, who called H-P's offering "somewhat of a trial balloon."

Linux notebooks are "not something the corporate customer is clamoring for. But it doesn't cost much for H-P to set up and do," he said, noting the laptops rely on third-party software. The notebooks come loaded with

Novell's

(NOVL)

SUSE Linux operating system and the OpenOffice productivity suite with word processor and spreadsheet functions.

Priced at $1,140, the laptops will be marketed to on-the-go business travelers as well as small and medium businesses that don't have a legacy installed base of

Microsoft

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products. Jeffrey Wade, H-P's Linux marketing communications manager, said they'll be about $300 less expensive than notebooks preinstalled with Windows XP and Microsoft Office.

But industry analysts questioned whether the price advantage on a Linux notebook will be sufficient to attract many buyers, especially since corporate buyers are bound to be hypersensitive about any new software being interoperable with the existing Microsoft infrastructure. Corporations are wary about making changes in their operating systems because they need to ensure that even decades-old files can be accessed. "Price is a motivator in some cases, but it's trumped by utility," said Roger Kay, IDC's director of client computing, who called Linux-based notebooks an "an odd juxtaposition."

Wade said OpenOffice applications have proven to be fairly interoperable with Microsoft's Windows suite. "Exchanging data files is pretty simple,

other than a little bit of font correction and things like that," he said.

"There's a lot of stickiness

to existing Windows operating systems on the client side as opposed to servers," where Linux has caught on much more quickly, said Kay.

In 2002, the most recent year for which information is available, Linux accounted for a mere 2.5% of client operating system shipments, or 3.4 million shipments, according to IDC.

Linux's share of the total market should more than double to about 6% by 2007, assuming continued compound annual growth of 25% a year. At that point, it will "start to approach more of a mainstream solution," said Al Gillen, IDC's research director of systems software.

But for now, the Linux OS remains a niche market for PCs, he said, while Linux on laptops is "a subset of a niche."

Neither

Dell

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nor

IBM

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currently offer Linux laptops. Said Dell spokesperson Anne Camden: "We offer what the customer tells us is relevant. At this time there hasn't been an overwhelming desire from our customer base to offer Linux on a laptop." (Dell will, however, preinstall Red Hat or SUSE Linux at a customer's request for orders of 50 or more notebooks).

IBM said in June that it's working on a Linux mobile workstation pilot with

Intel

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, but the product will be aimed primarily at engineers.

Industry watchers say they're not surprised to see the first Linux notebook rolled out by H-P. The move accords the company's wish to be seen as "more than just another supplier of PCs," said Kleynhans. "All of the PC vendors, but especially H-P, don't want to be seen as being too tightly locked to Microsoft. So when they get the opportunity to do something small like this and say they're not in Microsoft's back pocket, they'll take the opportunity to do so."

Added Kleynhans, "The reality is that 98% of the machines they sell are Windows. But it's positive PR that they're not completely beholden to Microsoft."