It's already selling a smartphone, so why not a netbook? The specs you ask: around 10" touchscreen, snapdragon or other ARM processor, Chrome OS. They will sell this like they are currently selling the phone: standalone without contract and costing more, or bundled with a contract from a wireless carrier. I wouldn't be surprised if there were some way they could further bring down the price by putting in advertising directly into the browser, but I doubt that.
I expect this to happen in time for the holiday season 2010. I'll be watching.
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