Yes, that's the cost of Windows, and this is why MS HATES netbooks, and is putting maximum specifications on them. After all, think about it, a netbook (hardware+software) sells for less than a full copy of Windows, so they have to sell Windows VERY cheap to get netbook makers to use it, instead of Linux. They're terrified that people will start using netbooks for a primary computing device (and, really, if all you do is browse the web, send/read email, and work on documents, you could... though it wouldn't be too fast, yet. Give it a year or two of processor improvements, and they would be.)
But hey, this is GREAT. See, with Microsoft's netbook limitations, you can't put more than 1 GB on a netbook. So, HP has the non-MS netbook. The cost between 1 and 2 GB isn't that much, for RAM, and, since they save on the Windows license, and are putting Linux on it, they are passing the savings onto the users. Is this the first major company to actually do that? I mean, wow... THANK YOU HP!