Recent developments in hardware have me pondering a developing market niche that should produce good news for software developers and consumers alike. The trick is getting a handle on such disparate items as the success of a tiny laptop from Taiwan, new computer chips from Intel and the release of a set of tools for Apple's iPhone.

If these are harbingers of a change in our computing climate, as I think they are, the final shoe should drop in the form of a change in hardware pricing strategies.

Let's begin there, with a provocative assessment by science fiction writer Charles Stross. Ever prescient, Stross thinks that the computer business is overdue for commoditization, or making products that are more widely available and interchangeable. Why should a few pounds of plastic and metal with a couple of silicon chips inside cost its weight in silver?

The fact is this: Moore's Law says that everything inside your PC is cheaper by half within 18 months. Which is how you get ever-increasing power, or if you choose, drastically lower costs.

With so much power moving onto the Net, do we always need the most powerful processors, or can we start making computing much cheaper and ubiquitous?

Cut to Intel, which announced this month a family of computer chips, Intel Atom. Measuring less than 25 square millimeters, this is the company's most compact and lowest-power processor. It is intended for mobile devices that operate with little power and cost little, such as hand-held gadgets and the small, lightweight notebook PCs that Intel refers to as "netbooks."

That term speaks volumes. A netbook is inexpensive because rather than offering high-speed processors and huge amounts of disk space, it taps the Internet for many basic functions. We are clearly moving into the era of the mobile Internet device but just how that era plays out depends on the concept that manufacturers have in mind.

Ride Moore's Law as hard as possible: Would it lead to powerful hand-held devices whose next generation trumps the last? Or should makers cut costs drastically and aim at a baseline computing capability as we flesh out a wireless infrastructure to support the inexpensive machines?

The U.S. industry has clearly favored the first course until recently, but Intel's announcement says it is waking up to the fact that Moore's Law cuts both ways. Cheap and ubiquitous makes sense.

Intel had to have been looking at the striking success of the Asus Eee PC. The little notebook with the 7-inch screen is the product of a Taiwanese company with vision. It is a tiny machine that taps flash memory for local storage instead of hard disks and offers easy Net connectivity. The Eee PC comes with preinstalled Linux and is compatible with Windows XP, if you're so inclined. You can get 4 gigabytes of storage onboard and wireless or Ethernet capabilities. Buy the top of the line model and you're just over $400 on Amazon. You're looking at one of the best-selling laptops that Amazon has offered.

No wonder that AsusTek is coming out with a slightly larger model with 9-inch higher resolution screen and more storage. The little PC is selling like hotcakes; AsusTek expects millions of them to go out the door this year.

It's not a MacBook Pro, but as a second machine for travel, the Eee PC gets the job done. If you lose it, you don't need a bank loan to replace it.

I mention Apple deliberately here, because how it moves in the next year will be quite interesting. The company recently released a software development kit that will allow third-party programs to run on the ever-more-popular iPhone. This is a welcome development, even though there are restrictions that are troublesome. Firefox, for example, can't use plug ins, and programs aren't allowed to run in the background, among other things.

But third-party innovation is still the ticket for gaining marketshare.

Every time I look at an iPhone, I'm reminded of how superb Apple's software engineers are at constructing an interface. The iPhone offers not just visual beauty but provocative and useful programs ranging from photo manipulation to ingenious mapping. The iTouch speaks to those of us who don't necessarily want the phone but would like to take advantage of the interface.

So what's next for Apple? Is the iTouch to become the platform for a tablet-style device, an always connected media reader and electronic book?

I think we're headed in this direction because of Steve Jobs' outrageous comment at the last MacWorld. He said Amazon's Kindle would fail because most Americans no longer read.

Many in the industry see this as a smoke screen for Apple's development of a device that would bring iPhone interface power to a tablet that becomes the world's best Net-connected reading device, the electronic book that trumps Amazon and reinvents the category the way the iPod reinvented digital music. We'll see.

We'll also see how Apple plays the low end in the mobile, always-connected device contest, now entering a new phase.

How powerful is this phase? Consider: Kleiner Perkins Caufield & Byers has begun a $100 million fund to invest in companies developing programs for the iPhone and iTouch platforms.

The next generation of startups should be paying attention.