On Thursday, Microsoft (MSFT) extended XP’s oft-extended stay-of-execution, saying it will continue to sell Windows XP Home for ultra low-cost PCs (ULCPCs) — budget machines like the Asus Eee PC that would likely spontaneously combust during a Vista install. XP Home will be available for OEM installation on ULCPCs until June 30, 2010, or one year after general availability of the next Windows version, whichever is later. But its availability for all other machines will end on June 30, 2008.

Such a limited extension of XP’s availability will no doubt irk those users who would love to continue using the OS indefinitely. That said, it’s a savvy move for Microsoft which, had it pulled XP from the shelves entirely, might have ceded the ULPC market to Linux. “This is yet another proof point that Windows Vista is just too big to cover everything that everyone wants to do with it,” said Gartner analyst Michael Silver. “You need something smaller, more modular.”