It weighs less than a bottle of Coke, is smaller than an A5 pad and is so cheap the odd one left on a bus wouldn't break the bank. A lightweight laptop, hailed by self-confessed techno-geek Stephen Fry as the future of computing, has found an unexpected market: schools.

The computers, inspired by attempts to design a cheap laptop for the developing world, are being plugged into school networks, then given to pupils to take home in their satchels to do their homework. Ministers have backed a pilot scheme in which the laptops are sold to year groups in eight schools; 1,600 pupils are taking part, with parents contributing to the cost of the computers, and discounts for children who receive free school meals.

RM, the company supplying the Minibook computer to schools, sold out its first order of 6,000 within weeks, and is now projecting school sales of 30,000 by the end of the year. They are attracting the attention of IT teachers, and with them a multimillion-pound market in school computing so far dominated by Microsoft, the Goliath to RM's David.

"The kids like them just because they are small. There's a cute factor," said Noel Potter, IT technician at St Mary's primary school in Grangetown, Middlesbrough. The school brought in 25 Minibooks when its ICT suite was lost to a fire last autumn, and has decided to stick with them. "They are small and portable, but robust. They feel solid and not like a toy. They are certainly a laptop. We thought about getting them Palm Pilots but they are too different and wouldn't help the kids learn to use other PCs. They've even got some games - but educational games, basic maths and literacy." Hardware is VAT-free to schools, which get each Minibook at the knockdown price of £169. Some are signing multi-purchase deals, paying them off at £1.60 a week per laptop. Secondary schools typically spend £90,000 a year on ICT.

For the price of a computer suite, whole year groups could be given their own laptop. They can handle internet, simple word files and email but their memory is too small at 4GB for children to load them up with computer games. Crucially, they slip inside a schoolbag and are less likely to make a child the target of muggers on the way home from school. The government is separately seeking deals with companies to make internet access available in every child's home and has met Microsoft, BT, Sky, Virgin and RM to discuss proposals. A home internet access taskforce is due to report this spring.

Last year the government spent £801m on IT equipment for schools. Microsoft has the lion's share of the market, but the Minibooks circumvent this iron grip by using Linux open source software instead of Microsoft Windows Vista.

However, the David and Goliath battle with Microsoft will end in a few months' time when RM produces a new Minibook with its software.

"The product is an exciting new format. It's clearly ultra-portable, low-cost and it will soon be available in Microsoft software," said Steve Beswick, head of education at Microsoft. "There's significant demand out there. They want the device but with Windows on it."