The emergence of ultracheap netbook computers has been one of a few bright spots for the PC industry over recent months. Last year, some 14 million netbooks were sold against forecasts of 5.3 million, according to research company Gartner. And at this week’s Computex industry conference in Taipei, Taiwan, computer makers and hardware manufacturers will demonstrate a host of new models and netbook-specific hardware.

But the battle to provide the software that runs these streamlined computer systems is becoming increasingly interesting. The first netbooks, released in 2007, provided a rare opportunity for the Linux operating system to reach a wider audience. Since then, however, Microsoft has reasserted its dominance, pushing Windows XP and its next major operating-system release, Windows 7, for netbook computers.

The latest version of a Linux-based netbook OS called Moblin could be set to challenge this dominance. Originally developed by Intel and optimized to run on its Atom netbook processors, Moblin version 2 beta was released last month.

Several lightweight Linux OSes exist already. One is Fluxbuntu, which features just a Web browser, media player, and word processor and runs efficiently even on older PCs. Another is Google’s Android, a smart-phone OS that has already been ported to some netbooks.

The difference with Moblin is that it taps into the Atom processor used in many netbooks. It provides support for chip features including Streaming SIMD Extensions 3 (for smoother video playback), multithreading (for more-efficient programming), and power-management features.

In April, Intel handed over Moblin to the Linux Foundation, a careful move designed to boost the operating system’s potential without souring Intel’s relationship with Microsoft.

According to Ezra Gottheil, an analyst with Technology Business Research, Intel does not want to be so stringently tied to using Windows. “Intel wants to free itself from the Microsoft monopoly,” says Gottheil. “With most Intel processors coupled with the OS, Microsoft implicitly controls the total cost of the processor; as a result, the entry price for Intel-based systems is higher than it otherwise would be, and the market is therefore smaller.”

So how does Moblin measure up?

We installed and tested Moblin on three netbooks: a Lenovo S10, an Acer AspireOne, and an Asus Eee 901. All three worked well and were snappy for most tasks.

The Lenovo S10 and Asus Eee 901 both ship with Windows XP preinstalled, while the Acer AspireOne comes preloaded with Windows Vista. Installing Moblin was, however, relatively simple: just download the latest image file and copy it to a USB key. All current netbooks support booting from a USB drive.

The Moblin V2 user interface is built on Clutter, an open-source software library that provides easy access to several Web services. This means that it’s possible to update your Twitter status or send instant messages directly from the desktop. Moblin also has a browser built on Google Chrome, plus a rudimentary music, photo, and video player.

The user interface still needs some work, though. One glitch is that, whenever a tool with a data-entry field was started, the cursor did not automatically move to that field–the user had to click it first. The Web browser also crashed repeatedly on all three systems and could not process a script in Gmail, which would sometimes cause an all-out system failure. On the Acer AspireOne, there was another problem: the netbook just could not resume after going into a sleep state. The screen would flash and appear for a moment but then go blank again.

The desktop shows a network icon in a drop-down task bar so that a user can select between a wired or wireless network connection. For some reason, Moblin did not support Wi-Fi on the Lenovo S10. (Intel says that the company is investigating the matter.) None of the Moblin installs on the three systems could recognize its built-in webcam, but audio, photo, and video playback worked flawlessly on all three systems.

Moblin supports a data-sync service; you can use Funambol, Memotoo, ScheduleWorld, or Synthesis to back up data, sync your calendar, and store contacts. Moblin V2 beta also includes three simple games (none of which use 3-D graphics), a calculator, a file browser, a terminal app, and a text editor.

There are a few oddities that might surprise Windows users. For example, in Moblin you can’t just minimize a window. Instead, a user has to move apps to “zones” and switch between them.

But despite a few quirks and issues, the beta shows great promise. It’s extremely fast, and it’s one of the most up-to-date Linux distributions out there. It’s certainly a good match for the netbook market, and it could yet become a popular OS.