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I watched the video review/litl CEO interview on techcrunch a while ago.

Honestly I think it's pretty useless.

That channel thing doesn't make any sense (or at least I'm sure nobody is really going to use it)

The litl is pretty much good only to browse the web but $699 just to browse the web is pretty expensive.

Your money will be better spent on a netbook that cost half the price and is two times more reliable.

Pretty, but hideously expensive for what it does. I would pay US$ 200 at most.

Reminds me too much the Palm Foleo for me to bet on its future.

A good point- no matter how high quality it is, without enough advertising to establish a premium brand, hardly anyone will be willing to pay a premium price.
Advertising's one part to establishing a brand, but it isn't everything. Didn't the Flip video recorder take off without much advertising? (Of course it has a lot of advertising now.)

I like the litl's name and website, but I'm not going to bet on whether it has broad appeal. But if it does, if it's high quality, I could see it selling well, once the price goes down a bit.

Well, judging from the pictures in the background, litl targets a more wealthy audience than the yc crowd.

Regardless of what you find appropriate, there are people, that spend 100000$ on,say, a home stereo without blinking an eye.

Designed products, that do not hit the mainstream, still has a market. If you doubt it, try sneaking in at DCOTA and find any item under <$5000 ?

A more wealthy audience would tend to buy Macs, since Apple is an established premium brand or, lacking good taste, one of those Alienware monstrosities.

There are indeed brands that never hit the mainstream, but each one of them has something behind it, be it history or an outstanding commitment to quality.

Mind you the Palm Foleo I mentioned came out in a time Palm still had some glam associated with it.

This is just a computer.

Yeah, for $700 you'd get a pretty decent laptop. One can do everything the litl can and more.
I think the strength, and angle, is that it doesn't do everything a laptop does. Kind of like the Kindle of netbooks. Kindle does one thing well, and seems to be selling alright. By removing complicated functionality, it's the perfect device for my mom or aunt. Is $700 the price for simplicity? I dunno. All this is based on watching a video and reading through their web site. An accurate critique would come only after demoing the actual product.
But you won't get a laptop as nice and sleek as this one for $700.
I really like where it's heading and what it does already. I wouldn't spend $700, but for $500 you MIGHT have me buying it for my mom. Odds are, this is just the first version and costs will go down over time. It's good to see others building tight software+hardware integration for purpose specific computing.