A company is now selling what it calls the "world's cheapest laptop," but the $130 (£65) price tag reflects some hardware limitations with the machine.

The Impulse NPX-9000 laptop has a 7-inch screen and comes with a Linux operating system (although it doesn't say which one). It has a 400MHz processor, 128MB of RAM, 1GB of flash storage and an optional wireless networking dongle. It includes office productivity software, a web browser and multimedia software.

There's a caveat though - it has to be purchased in bulk, in units of 100. The laptop is available on Alibaba.com through the online store of Taiwanese company Carapelli.

The cheapest laptop to date was known to be One Laptop Per Child's XO laptop, available at $188 for a limited time late last year. While a technological landmark, it had some hardware limitations like a slow processor and limited graphics capabilities.

The laptop hints towards a trend of lowering PC prices. Last week, a company called CherryPal introduced a $249 (£125) mini-desktop, also running a 400MHz processor, with 256MB of RAM and 4GB of internal flash storage.

In a recent interview with the IDG News Service, former OLPC CTO Mary Lou Jepsen said she would bring out a $75 (£37) laptop by 2010. Now running her own company, Pixel Qi, she cited the falling prices of RAM and components as a way to bring down laptop prices.

The best known low-cost laptop is Asustek Computer's Eee PC, which was introduced last year and sold 350,000 PCs in its first quarter. The cheapest Eee PC, for $300 (£151), has an 800MHz Intel processor, 512MB of RAM and 2GB of flash storage.