Their target markets are cost- and power-conscious small and medium businesses, schools and developing countries where fully-fledged PCs are prohibitively expensive, impractical or draw too much power. In a telephone interview, Nicholls, a commercial pilot until the collapse of Ansett in 2001, said his company, ThinLinX, had just partnered with a "major, global company" that predominantly made software.

He would not give further details or comment on whether the company in question was Microsoft, saying he was bound by a non-disclosure agreement. The company would be making its own announcement within the next month. Formed in 2003 with money from an angel investor and two Commonwealth Government grants, ThinLinX has spent the past five years undertaking research and development and "perfecting the design". Nicholls released his first thin computers 2½ years ago and began selling them through the ThinLinX website for $250 each. He is now on the verge of launching a new, faster range, with the entry-level model selling for "just under $US100".

"We just reached the break-even point recently ... It's been a very long, bumpy road to say the least, and a lot of money," said Nicholls, who has been involved with IT since the early 1980s when he developed a modem for his Atari computer. Cloud computing has become a hot topic this year as broadband connections improve and companies such as Google and Microsoft release software applications that live on the internet instead of locally on the user's PC.

The main benefit of storing data online is that it can then be accessed from any device with an internet connection and, since most of the processing is done on a remote server, the device can be extremely cheap and underpowered. Seeing promise in the trend, companies such as HP, Dell and Sun Microsystems are increasingly investing in the development of simple, low-end machines capable of doing little more than hooking into the cloud and browsing the web. Nicholls said that, despite all the recent buzz, he had been experimenting with cloud computing for a while, able to access his Linux desktop on any computer around the world for the past five years. That tinkering gave him the idea for the Hot-E computers.

"It's just a really cut-down single board computer and what we've done is try to reduce the cost as much as possible by reducing the number of chips in it," he said. "The developing world was the focus inititally but this thing has got a practical use anywhere ... you could put 50 of them in a classroom and they're only using 3 watts each instead of 200 or 300 watts that normal PCs use."

Nicholls said he envisioned future revisions of the Hot-E being used as extra PCs in the home. "If you had a media centre running in the lounge and it's got a TV tuner built into it plus a hard drive that stores DVDs and movies ... I could see kids sitting in the bedroom being able to watch TV, movies and play MP3s using the Hot-E," he said.