Chromebooks are rapidly becoming popular, but Microsoft is not giving up the low-cost laptop market without a fight.

Microsoft chief operating officer Kevin Turner announced at the company's Worldwide Partner Conference on Monday that the PC maker is all set to release a sub-$200 Windows 8.1 notebook later in the year just in time for the holiday sales rush. Turner did not provide any other details about the device, other than it is going to be named Stream and it will be manufactured by HP.

However, he did mention other low-cost notebooks running on Windows 8.1 and already available in the market, such as the $379 Acer Aspire Switch 10, a laptop-tablet hybrid powered by an Intel Atom processor, 2GB of RAM and a 64GB Solid State Drive. Turner also referred to a number of Toshiba devices running on Intel Celeron processors that are priced below $250. All of these feature Microsoft's full suite of Office apps, desktop apps and native Windows apps.

Turner also announced that HP will release two smaller versions of its upcoming Windows 8.1 Stream notebook later in the year. Both the 7-inch and 8-inch variants will debut for $99.

"We are going to participate at the low end," says Turner. "We've got a great value proposition against Chromebooks, we are not ceding the market to anyone."

After dismissing early speculations that Google's web-based Chrome OS might just boot out the long-standing Windows platform for the last few years, Microsoft is finally heeding the Chromebook threat, beginning with an anti-Chromebook campaign marked by TV commercials where a Microsoft man picks people on the streets and asks loaded questions about whether they prefer the PC to a Chromebook.

Last year, research group NPD released a report saying Chromebooks enjoyed the fastest surge of sales in the laptop department, while most other brands including Apple's line of expensive MacBook computers suffered a dip in numbers. The report says Chromebooks owned 21% of the share of computer sold to commercial channels, which means the study does not account for direct sales to end consumers.

All in all, Google sold 1.76 million units from January to November 2013, a mere fraction of the 14.4 million laptops sold last year. However, Chromebooks saw a 9.4% increase in market share compared to the previous year, which saw Google selling only 400,000 units in the same period.

For its part, Google is beefing up for the upcoming laptop clash with Microsoft, announcing a slew of Intel-powered Chromebooks to arrive from manufacturers such as Acer, HP and Lenovo later this year, which should be something to watch out for as the low-cost Chromebooks haven't been exactly known for fast processing power.