Recently, Steve Ballmer, CEO of Microsoft, said PC's should be cheaper. He thinks PC's can be engineered to cost around $100.
Two things entered my mind reading this: 1) I welcome Microsoft to lead the charge and drop the price of their XBOX to $100, and 2) he can't be serious.
I build my own PC's - I haven't bought an assembled system in over a decade - and there is no way to make a $100 PC using parts that are for sale. That sounds odd, what I mean is, components get cheaper and cheaper, but the bottom of the technology just disappears.
For example, a 100 GB hard drive might cost $200, and then $100, and eventually drop to $50. (These numbers are not exact, just showing a trend). What happens to the smaller hard drive that originally cost $50, say a 20 GB drive? They should drop to $25 and then to $10, right? Well yes... except at a certain point, the hard drive manufacturer will quit making 20 GB drives. Your dollar goes further, but that doesn't mean you can buy the low end for even cheaper over time.
At NewEgg, the cheapest hard drive for sale is a 50 GB drive for $55. The cheapest AMD CPU is $15. If you then buy 128 MB of memory for $25, and a CDROM for $20, that already adds up to $115. Without a case, power supply, or mainboard... so not quite a computer yet.
On the other hand, Microsoft makes a stripped down PC, specially targetted towards playing games. This is the XBOX. I'm thinking, if they can't manufacture that and sell it for a profit at $100, then Mr. Ballmer is seriously deluded that other hardware companies can do it, or want to. The XBOX is a 733 MHz Pentium III with 64 MB of memory, and an 8 GB hard drive. It has specialized hardware for graphics, but otherwise, is very low end compared to what PC's are sold for. By all accounts, Microsoft is taking a major loss on each XBOX. Basically, a company like Dell isn't going to want to make a $100 PC, for many reasons: 1) difficulty acquiring low end parts from other manufacturers, 2) no profit margin on a device that cheap.
Also, it isn't clear anybody would buy such a low end machine. Even if all you want to do is run a web browser and check email, Microsoft doesn't make an OS anymore that would run acceptably on such a machine! I don't see Microsoft re-issuing Win95 or Win98, and they would have to - the min spec for WinXP is a 300 MHz CPU, and it runs like a slug on that. It would be barely acceptable to customers using a 733 MHz Pentium III.