Acer has announced an ultra-mobile PC which it calls a 'netbook' rather than a laptop in an attempt to revive flagging sales in the computer market.

The Aspire One is a low cost computer designed to compete with the Asus Eee PC and the OLPC.

The sub-1Kg device runs Linux, and offers Wi-Fi and an 8GB solid state drive. It will be in the shops by 10 July.

Aspire One is designed to open a new front in the computer industry with a low-spec laptop aimed at internet users who do not generate their own content but view internet sites from home or on the move.

"These devices are more for consuming content than creating it," said Graham Palmer, UK general manager at Intel. "If you are into photo and video editing then these devices are not for you."

The Aspire One will launch with Linux but will also be available using 3G or WiMax as separate models by the end of the year.

3G versions are expected to be sold by mobile operators while the WiMax versions will be available once the spectrum is available later this year.

Acer is planning versions of the Aspire One using Linux and the solid state hard drive to be available for £199, with a version running Windows XP and using an 80GB platter hard drive going on sale for £249 later in the year.

The company said that PC sales are flat and, while laptop sales are growing, this could not continue for ever.

While it is anticipated that laptops will become the main computer in most households, 'netbooks' will act as usable mobile devices.

"The handheld market is now bigger than the laptop market," said David Drummond, managing director of Acer UK.

"It will be bigger than the entire PC market by 2011, growing most rapidly in the EU and the US."

Drummond claimed that Acer has already sold its entire first quarter's production to its retail and channel partners, and would ramp up production if it could get more Intel Atom processors to power the device.