Acer unveiled its much-anticipated Aspire One "Eee PC killer" ultra-mobile today in what was effectively also the UK launch of Intel's new Atom mobile processor.

The Atom-powered Aspire looks even better value than the ground-breaking Eee PC. The entry level model comes in with the same £199 inc Vat price tag but has a bigger 8.9in screen and more Flash memory at 8GB.

Like the Eee PC this base model is Linux powered, with 11bg Wifi, and a webcam, but you also get a choice of built-in Wimax or HSDPA 3g links. Both machines also have an SD slot but the Acer people were not sure whether their model matches the Eee PC's support of SDHC, with capacities up to 32GB.

A version with Windows XP, 1GB of Ram (twice that of the entry level), and an 80GB hard disk, costs £299. Both use Intel's new 1.GHz N270 Atom processor, which was launched at much the same time at Computex in Taiwan.

Acer UK managing director David Drummond insisted that the Aspire One is not a laptop but a new class of device called a "netbook". But whether the market will take such a clear-cut view is another matter, and there are fears in the industry that these low-cost machines will cut into notebook sales.

Nick Palmer, Intel's UK country manager, showed journalists an N270 die about a third the size of a 1st-class stamp. It packs 48 million transistors shrunk to 45nm and has a thermal design power of just 2.5watts – that is the maximum heat that an Atom-powered machine must be designed to dissipate.

It packs 512KB of L2 cache and uses a 533MHz, and a 32-bit front-side bus. Palmer said the processor could be used for netbooks or even cheaper devices called Nettops designed for the desktop.