HP plans to fight Chinese on their own turf

Hewlett-Packard (HPQ) has been faced with an onslaught of netbooks from manufacturers in Taiwan and China, led by Asus and followed by Acer and Lenovo. The netbooks cost only $300, and when they use Linux instead of Windows, the price is often even less.

Netbooks do not carry big margins the way desktops and higher-end notebooks do. The option of buying smaller machines from China squeezes HP's sales and net.