We looked at Philips' last small home entertainment computer, the LX1000, at the end of 2006 and it's fair to say that things have changed a fair bit since then.

The main difference is the price: while the LX1000 cost £1,000, its successor, the LRPC7500, costs less than a third of that.

That's an enormously impressive price drop, even if the LX1000 was a bit smaller and shorter. The new one contains an Intel Core 2 Duo T5250 processor running at 1.6GHz, which is reasonably fast, if not among the fastest we've seen recently.

Such slim PCs are designed to sit alongside your DVD player, amplifier and cable, Freeview or Sky box – or, in this case, in the same stack as those boxes, because it can stand upright or flat. In fact, flat is probably better, because otherwise it's liable to topple over (a stand is supplied, which will limit that likelihood).

The point of having a PC under the TV is that you can use the Media Center software (supplied here as part of the pre-loaded Windows Vista Home Premium) to watch and record digital (Freeview) television, along with pausing and rewinding live broadcasts.

You can also use it to watch DVDs and downloaded internet movies. It includes standard and optical outputs for connection to stereo or surround-sound speakers or an amplifier, as well as a Firewire socket for connecting a digital camcorder.

There's a DVI connection for a computer monitor (some newer flat-panel TVs can accept DVI connections) and it's supplied with an adapter that allows it to output either S-video or component video should your television set accept either of those.

While the component output looks very good, it's remiss of Philips not to include an HDMI port, the easiest kind of connection to a high-definition television. Another annoyance is that you have to supply your own S-video or component cables.

While there is a Freeview TV tuner included, it's a little annoying that Microsoft still haven't fixed the technical problems that stop Sky and Virgin Media subscribers from connecting their boxes to Media Center PCs.

It's possible in the USA but various things mean it's practically impossible here, and that limits the potential. We'd be extremely happy to be able to view and record cable channels from the PC, but for the moment Freeview has to suffice.

The 160GB hard disk is adequate, although it's a little on the small side. Given that users will be recording television, which takes loads of space, a larger hard disk would have been better.

The same goes for the memory – 1GB is less than we'd expect to see from a PC such as this, and it means that the computer can get very slow, particularly if a couple of programs are open at once. Since memory is cheap at the moment we'd recommend any buyers of this PC also invest in at least a 1GB memory upgrade.

There's no mouse, but the keyboard has a trackball built in. We'd recommend a mouse such as the Logitech MX Air if you wish to make the most out of this as a media centre computer. It does come with a good remote control, though.

Although the LRPC7500's predecessor was shorter, smaller and lighter, we can't complain about the slightly larger form of this computer, particularly given its low price. At just £320 it's a bargain, and if you're after the complete package it's also available in a bundle with a flatscreen television.