As I’ve previously mentioned, Portugal is getting into netbooks big time. The country’s government is subsidizing the cost of about half a million computers based on the Intel Classmate PC design and making them available to students for just about 50 Euros or $70. It costs about 285 Euroes of nearly $400 to pick up a retail version of the same netbook.

The country is also exporting a million laptops to Venezuala.

Microsoft is sweetening the pot a bit by making a low cost version of Windows XP and Microsoft Office available. The Portuguese netbooks are known as “Magellan” laptops, and so Microsoft has labeled it software package the Magellan suite. It’s not clear how much Microsoft is charging for the netbooks, but it’s probably safe to say not very much.

There’s certainly some altruism in play here. But it’s also worth noting that Microsoft has a vested interest in getting Windows and Office software into the hands of as many students as possible. As the OLPC project and netbook makers like Asus and Acer have demonstrated, you don’t need Windows to run a computer and you don’t need MS Office to edit a text document. But it’s not hard to compete with free software when you’re the market leader and you’re willing to practically give your software away to some clients.

While mainstream netbooks like the Asus Eee PC, MSI Wind, and Dell Inspiron Mini continue to capture the imagination (and cash) of consumers, it’s nice to see that low cost laptops are  also fulfilling one of their original purposes, and getting into the hands of children in developing countries. Venezuelan President Hugo Chavez this weekend announced that his country would purchase a million laptops from Portugal. The laptops are based on Intel’s Classmate PC design. 

The exact price hasn’t been disclosed, but each laptop costs “several hundred dollars,” which is far less than the cost of a conventional laptop computer.

The government of Portugal will also be manufacturing half a million Classmate PC-based netbooks for schoolchildren in its owwn country.

As Ars Technica points out, Venezuela’s order is not only the largest single purchase of Classmate PCs to date, the entire OLPC project has yet to sell a million laptops. While the OLPC XO Laptop may have gotten the ball rolling on low cost laptops, it hasn’t proved as popular as the Intel-based Classmate which is capable of running Windows XP. It should be interesting to see if OLPC sales pick up now that the XO Laptop can also run Windows by booting from an SD card.