The Asus Eee was noteworthy for its small size and low price, but it overshot on the former and underperformed on the latter. Originally designed to hit a $199 price point and bring an OLPC-like proposition to a wider audience, the first products retailed for twice that amount. Meanwhile, the 7″ screen, which helped the device reach its low price, proved cramped even for the Linux installation shipped by default.

(Note to companies playing in this space: if you want to reach a lower price point by shipping Linux on a 7-inch screen, take advantage of open source and invest some time in tailoring the applications for a smaller-screen experience. Simplify the user interfaces or buy or develop your own. Think Nokia Internet Tablet.)

In any case, Asus (and others) have clearly recognized that a couple of more diagonal inches can make a world of difference in the user experience. Including Windows for a premium will represent greater competition with budget laptops that typically have larger screens. Even at a higher price, these notebooks are more likely to open up the market for ultraportables, which are currently a very small part of the U.S. market, then set off a race to the bottom. It’s not cheap enough to be a second or third PC for many, but neither is the Eee at $400.

In terms of Asus’ planned revamp, it’s adding potential features that are starting to detract from its “volksbook” proposition. I’m less bullish on the addition of a touch screen and GPS to the Eee, although multi-touch gestures would be welcome addition (if a bit cramped on its small trackpad).