Steve Jobs: "We don't know how to make a $500 computer that's not a piece of junk."

Steve Jobs is either lying or lazy. I'm guessing he just doesn't want to play in that space. Of course, you probably already knew that.

Here's how to make a really, really nice $500 computer. All prices are from Newegg.

Intel Atom 330 motherboard/CPU combo: $82
Kingston or Crucial 2 GB DIMM: $20
OCZ Vertex 30 GB SSD: $129
2.5"-3.5" HDD adapter: $19
Lite-on 22X SATA DVD burner: $23
Foxconn MicroATX case with 300W power supply: $40
Windows XP Home OEM $90

So there you have it. $403 before shipping. You still need a keyboard and mouse, but there should be enough after shipping to get something, assuming you don't already have one. While this system won't burn the house down, the dual-core Atoms are surprisingly quick and more than adequate unless you're heavily into gaming or media production. But if you're into those things you aren't in the market for a $500 computer anyway.

The Intel board is unglamorous but very dependable. It also draws very little power and runs very quietly. It's great for word processing and e-mail, adequate for multimedia, and it'll play non-3D games just fine. Other companies are making Atom boards, but I'd stick with Intel this time. ECS doesn't have a history of producing top-quality boards, and I've never heard of the outfit making the other Atom boards Newegg sells. Plus, I think the non-Intel boards have Atom 230 (single-core) CPUs in them. It's worth paying the extra $15-$20 to get that second core.

The SSD will make this computer outperform many more expensive computers. But more importantly, it won't crash. Anyone who's gotten an untimely phone call from a relative wondering why the computer won't start up and where all those digital pictures went will appreciate that. A conventional hard drive would cost as little as $40 and gives more space, but 30 gigs will last a while with a casual user. And the lack of disk crashes is probably worth the extra money. Between the SSD and the Intel board, the system will be very quiet, which is probably worth something. In this era of PCs that sound like wind tunnels, you don't really appreciate whisper-quiet PCs until you have one.

The memory probably isn't totally critical, but when you can get Kingston or Crucial for 20 bucks, it makes sense to do it. They've both been around forever and have a long history of making quality memory. There's no reason to put anything other than a 2-gig stick in this board's single DIMM slot. The system will take 2 gigs, and 2 gigs is cheap.

The rest of the parts are nothing special. Lite-on makes reasonably good optical drives and has been for some time now, but if something else happens to be on sale for under $20, or something else happens to be available with free shipping, that's fine. You won't lose anything by using it. Foxconn cases look reasonably professional without costing a lot of money, and their power supplies are decent enough. An Atom board with an SSD won't tax any power supply very hard anyway. You can buy a cheaper case if you want, but be sure to read the reviews. Some cheap cases are made of really light-gauge metal and are prone to cut you. I've never had that problem with Foxconns.

The other trick with cases is to watch shipping prices. For whatever reason, Newegg charges more to ship some cases than others, so it could very well be worth your while to look at cases that cost $5-$10 more. Shipping could actually make them cheaper.

You can get the proper mini-ITX case for boards like this, but you'll pay more for it. Unless you need the really small form factor, it makes sense to just use a cheap and common micro-ATX case. The bonus is that you get some expansion space if you want to add another optical drive, card readers for your digital camera memory, or stuff like that.

And XP Home is XP Home. Vista may run on this system with 2 GB of RAM and an SSD, but seriously, does Vista do anything that XP doesn't? Especially Vista Home vs. XP Home? I'll stick with the old reliable. I happen to know from experience that XP Home runs very nicely on a system with 2 GB of RAM and an SSD.

This particular system will perform nicely, will be extremely reliable (it wouldn't surprise me if it still functioned perfectly fine 5 or 10 years from now), and depending on the case, can be easy on the eyes. And if you want to get swanky, you can skip the cheap case, get an $80 Lian-Li and a separate sale power supply, and have a great-looking PC while still staying south of $600.

Any way you do it, this system will cost more than a $399 mass-market PC. But I think it's more than worth the $50-$70 premium.