It's interesting that the limited specs don't mention RAM or processor speed, and don't rule out solid-state drives. A small screen and 40-80 GB storage could be a pretty sweet machine, with or without a touchscreen -- the price for these laptops could just as easily drop to $99, where the cost of Windows is a serious problem, or rocket up to $800, adding wild custom hardware and tweaking the OS significantly to accommodate it. This looks like a move that could have a ton of unintended consequences.
Besides limits on the screens and hard drives, to be eligible, the systems can have no more than 1G byte of RAM and a single-core processor running at no more than 1GHz.