Print 78 comment(s) - last by Pirks.. on Apr 22 at 12:37 PM

Customers may love netbooks, but with Microsoft forced to sell netbook licenses for less than $15, it could find its revenue falling by more than two thirds if netbooks were to continue their wild growth and come to dominate the market.  (Source: CrunchGear)
Microsoft is winning more marketshare at the expense of its sales prices

One classic debate in the computer industry is the importance of volume versus price.  A company like Apple Inc. revels in high-priced offerings, and even though its volume has suffered of late, its stock has been soaring due to its high sticker prices, as PC sticker prices fall. 

Microsoft, on the other hand, takes the opposite approach, shooting for volume despite sinking prices, something other analysts favor.  Microsoft is aiming to conquer the ultra-low and low-cost markets, which primarily revolves around the netbook and MID (mobile internet devices) industry.

After netbooks flirted with bringing Linux adoption to the masses, Microsoft quickly pounced on the opportunity, pushing copies of its lean, proven Windows XP operating system onto the market.  Today, over 96 percent of netbooks ship with a Windows-based operating system.  And the move couldn't have come too soon, if Microsoft wants to retain its dominant position.  Estimates by leading market researcher Gartner Inc. predicts that 21 million netbooks will ship in 2009, growth of 80 percent, while overall PC sales sink 11.9 percent.

What is impressive, according to a recent Wall Street Journal report, is just how low Microsoft is willing to price its OS's to stay in the netbook game.  The report cites that Microsoft is offering netbook manufacturers licenses for $15, far less than the standard OEM price of $50 to $60 per Windows Vista license.  The estimate even falls far below Microsoft typical Vista Starter Edition prices of approximately $30 per license.

Microsoft faces a real dilemma as it tries to market the Windows 7 Starter Edition to the netbook market.  Not only will it be priced higher than Windows XP, but it will have a three program limitation, which could prove very constricting.  And upgrading to a more functional Windows 7 version might be desirable but would further raise the cost.

On the other hand, Microsoft only plans on continuing to sell Windows XP licenses to netbook manufacturers until 2010.  However, when the cutoff comes in 2010, it risks losing manufacturers to Linux distributions, if it doesn't offer cheaper licenses.

Thus Microsoft finds itself in the same mess that hardware manufacturers find themselves in when it comes to netbooks.  They have created a monster, which consumers love, but one that doesn't love the manufacturers back, with razor-thin profit margins. 

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By Chiisuchianu on 4/20/09, Rating: 0
RE: Awesome!
By Moishe on 4/20/2009 2:39:53 PM , Rating: 5
I like Windows, but I have a netbook with Xandros and it's so similar, so easy to use.

The only issue I've had has been upgrading OpenOffice from 2 to 3.

RE: Awesome!
By TomZ on 4/20/2009 3:09:50 PM , Rating: 2
Because it doesn't run all my Windows apps. :o)

And besides, why would I want something "so similar, so easy to use" when I can have the real thing, Windows, instead of some kind of close approximation?

Linux is great if you can't afford Windows, but if your time is of any value to you or you just want to get some things done, then Windows is where it's at.

RE: Awesome!
By mondo1234 on 4/20/2009 3:17:44 PM , Rating: 5
Linux is great if you can't afford Windows

You do realize that you are slow pitching for Pirks, don't you?

RE: Awesome!
By TomZ on 4/20/09, Rating: 0
RE: Awesome!
By Pirks on 4/20/2009 10:41:14 PM , Rating: 2
Who cares what you think about OS X. What matters is what MARKET thinks about it. See ya on April 22nd, Tom :o)

RE: Awesome!
By dflynchimp on 4/21/2009 1:29:21 AM , Rating: 2
RE: Awesome!
By Pirks on 4/21/2009 5:41:10 PM , Rating: 2
Marketing can sell ANYTHING
Except Vista :P

RE: Awesome!
By theapparition on 4/21/2009 6:15:31 PM , Rating: 2
Interesting you should say that, because Vista has far outsold OSX. Add to it that Apple also lost market share.

But I'm sure your blinders are on too tight to see that.

RE: Awesome!
By Pirks on 4/22/2009 12:37:04 PM , Rating: 2
Chevy far outsold Lexus, so what? Is Chevy better or just more cheap? Not that will open your blinders, I'm sure.

RE: Awesome!
By Iger on 4/21/2009 4:14:17 AM , Rating: 3
Ahh, Lenin's birthday is celebrated across the puddle too?

RE: Awesome!
By mindless1 on 4/20/2009 5:06:17 PM , Rating: 4
At $15 the idea that "Linux is great if you can't afford Windows", just flew out the window.

RE: Awesome!
By pugz3d on 4/21/2009 1:26:45 PM , Rating: 3
Wow the posts here really escalated off into madness...
"Can't afford" is a bit off, but close enough.

The real point of the story is that without COMPETITION from Linux, your precious Windows XP netbook would cost you more for no other reason than they can get away with it.

So for the Linux haters - eat it, grow up, and show a little class.
Linux fanboys - settle down, it's getting closer, but you only get so much for "free".

I for one am starting to love Linux, and open source overall. I'm not a developer or programmer, just a Desktop Support type who doesn't like getting fleeced.

Great experience I had recently with my HP laptop running glorious XP. Tried to install HP Photosmart printer software, as my desktop mobo croaked. A 600MB package so I can use the stupid scanner and print... (I know the basic package is only 150MB, but thats still RIDICULOUS.) Same manufacturer for the 2 devices.... Software just stalls 5-10 mins in, hangs for at least half an hour, and then just blue screens the laptop, can't get in to safe mode, and eventually just reinstalled the monster.

Load up Ubuntu 8.10 live disc, and it doesn't ask me a single question, just works. Now, I didn't get the fancy multi-scan features of HPs bloatfish Photosmart Suite, but I could at least print and scan into some pretty useful apps that again didn't ask me a single question - JUST worked. I was friggin floored... Wireless drivers is another story for another time however :)

RE: Awesome!
By PrezWeezy on 4/20/2009 9:08:20 PM , Rating: 2
I've been using Fedora, granted it's not Xandros, but just to get Java to run was a 20 minute process. It only took 5 minutes to get the right package, then 5 to follow the instructions. But getting the link to work as a plugin for Firefox took at least 10 minutes to figure out I had typed an underscore instead of a hyphen. It was my fault, but it's still a hell of a lot harder than double-clicking an exe. Not to mention Flash still doesn't work. As easy it is not, not even close.

RE: Awesome!
By Shawn on 4/20/2009 2:57:18 PM , Rating: 5
It's not like it's difficult to install windows on one.

RE: Awesome!
By kamel5547 on 4/20/09, Rating: 0
RE: Awesome!
By Alexstarfire on 4/20/09, Rating: 0
RE: Awesome!
By Marlonsm on 4/20/2009 6:11:01 PM , Rating: 3
Linux can do everything 90%(or more) of the users need.
They just need to spend a few mins learning how to use it.
I've already seem people using Linux Mint (based on Ubuntu) and only realizing they were not running Windows when I told them, and that was after they checked the email, edited some docs on OpenOffice...

People just need to stop being afraid of Linux.

RE: Awesome!
By Reclaimer77 on 4/20/2009 6:17:50 PM , Rating: 2
Linux can do everything 90%(or more) of the users need. They just need to spend a few mins learning how to use it.

That's a load of crap and you know it. I wish you Linux guys would crawl back under your rocks and stop spewing BS. Linux is NOT ready for prime time for the desktop. I'll use your 90% BS number and tell you why, because Linux can't run 90% of the apps and games that those 90% USE.

WOW people saw a GUI that copies off Windows and thought it was WIndows !!?? Well I'm sold !! Typical Linux user, so smug and superior you think the GUI is the only reason people use Windows..

People just need to stop being afraid of Linux.

And OS is NOT a belief system. People are not "afraid" of Linux, it's just inferior to Windows for PERSONAL COMPUTING.

RE: Awesome!
By stromgald30 on 4/20/2009 6:34:05 PM , Rating: 3
I think you missed a key phrase: the users need. You can't run the exact apps, but for the important apps, there are viable alternatives that are also very easy to use, just like the OS GUI. OpenOffice, Pidgin, and a ton of other software on Linux mimics their Windows counterparts very well.

The biggest things missing are probably games, but you could say the same about any OS that isn't Windows.

RE: Awesome!
By Pirks on 4/20/2009 10:47:12 PM , Rating: 3
The biggest things missing are probably games
Games are totally irrelevant argument for netbooks.

RE: Awesome!
By theapparition on 4/21/2009 6:19:46 PM , Rating: 2
And I think you miss the key point: the users need to....

Asking the majority of tech-unsavy computer users to learn something new is the problem. Try teaching soccer mom's and grandpa's the "new" way to get thier email. You'll understand how quickly people want to avoid change.

RE: Awesome!
By BZDTemp on 4/21/2009 3:53:20 AM , Rating: 2
That is totally wrong. And by the way you do sound like the choice of OS is a belief system!

Most people need their netbook for:

- surfing which Firefox does great.
- Modest office stuff and OpenOffice will do nicely.
- Watching movies and again that does not require Windows.

It is only games and people which are force to use IE to access certain websites that makes Windows an requirement.

RE: Awesome!
By fishman on 4/21/09, Rating: 0
RE: Awesome!
By Zoomer on 4/21/2009 8:24:08 AM , Rating: 2
In actuality, I used Ubuntu for a development job and I must say I thought it let me develop faster and more efficiently.

And Amarok just rocks. Nothing else comes close.

RE: Awesome!
By stromgald30 on 4/20/2009 6:29:04 PM , Rating: 2
I don't think the problem with Linux is the GUI anymore. Ubuntu and many other groups have made great progress in that area. The issue comes up when you want to plug in a new printer, all-in-one machine, wireless keyboard, or install a new video or network card.

Odds are that >80% of the time, things go off without much of a problem. However, the rest of the time, the user is forced to dig through forums for driver bugs/fixes. The common user probably shouldn't and won't put up with that. Even with my fair amount of Linux knowledge, it still too me almost an hour to get a new wireless network card working in my brother's old IBM P3 machine (running Ubuntu).

I'll agree that the perception of Linux is also holding it back, but I think the technical knowledge required for managing Linux drivers/compatibility is still a huge obstacle.

RE: Awesome!
By nayy on 4/20/2009 9:20:10 PM , Rating: 2
At first I thought that Linux had a chance in the netbook market, but now is obvious that it was meant to fail.

Netbooks have an already thin margins, if you sell them with a free OS you are losing a cut of the OS markup.
Also you can't load them with crapware, and that has to cost something.
Also you requiere tech support for an OS that most user haven't use before
Finally add the X times higher return rate (too lazy to look for the number) and selling linux turns in to a very bad deal.

I don't think Microsoft needed to lower XP prices, maybe is just their way to help manufactures improve the margins on the category, for them XP is mostly profit at this poit anyway.

It's going to be interesting to see how they play the Win7 ball, I'm betting very cheap Starter Licence and super easy upgarde mechanism for $30 to $50 bucks, the nice thing about this is that they don't need to share the upgrade fee with anyone.

By smackababy on 4/20/2009 2:35:59 PM , Rating: 2
I highly doubt the majority of netbook users want to relearn an OS. Even when Windows 7 gets the push, consumers will probably go the ease of use route and rather stick with a windows based machine, even if the cost is $50 higher. I just don't see Linux gaining a huge marketshare from this.

RE: linux
By sprockkets on 4/20/2009 2:49:15 PM , Rating: 2
Soooooooooo when people whined and complained about how Vista sucked and wanted to downgrade back to XP, what makes you so confident that people will go to Windows Vista 2 and not stick to XP forever?

Don't get me wrong, I got used to Vista and like it better than XP. The vast majority of people I service in the field do not share my opinion.

RE: linux
By TomZ on 4/20/2009 3:11:09 PM , Rating: 4
The vast majority of people I service in the field do not share my opinion.
Hopefully those "sheeple" will warm up to Windows 7. Windows XP is getting a bit long in the tooth.

RE: linux
By mindless1 on 4/20/2009 5:09:54 PM , Rating: 2
Not at all, XP is simply more suitable for a Netbook. It's always strange to see the idea that people should change because someone else wants them to.

RE: linux
By TomZ on 4/20/2009 5:29:44 PM , Rating: 1
...more suitable than Windows 7? How so?

Windows 7 combines the security benefits of Vista with the efficiency of XP as well as a more streamlined user experience than both. XP doesn't even come close.

RE: linux
By stromgald30 on 4/20/2009 6:41:15 PM , Rating: 1
I'm not sure about the efficiency part. Windows 7 is more resource hungry than XP by far. For netbooks where you want small and cheap hardware, Windows 7 would tax the hardware much more, which can also reduce battery life.

RE: linux
By TomZ on 4/20/2009 6:52:24 PM , Rating: 1
We'll the benchmarks...

RE: linux
By mindless1 on 4/20/2009 11:15:34 PM , Rating: 2
The ones deliberately designed to highlight where Win7 is faster and ignore where XP is? Remember a benchmark has to be applicable to the use.

As someone who has installed the last Win7 beta on a notebook far faster than a Netbook and immediately noted it's sluggishness, there is no doubt XP is faster for the general purpose uses a netbook is intended for, as well as reducing cost via lower OS footprint, smaller SSD needed to run it.

RE: linux
By TomZ on 4/20/2009 11:17:19 PM , Rating: 2
I'm going to have to call BS on that. I've got Windows 7 running on a few machines, and there is nothing sluggish about it.

RE: linux
By bupkus on 4/20/2009 8:00:50 PM , Rating: 2
reduce battery life

Worse than XP?

RE: linux
By stromgald30 on 4/20/2009 8:21:09 PM , Rating: 2
The minimum system requirements of Vista/Win7 are significantly higher than XP. Whether that translates into more power consumption by background processes . . . we shall see when the benchmarks come out.

I'm not saying that most netbooks will have XP or should have XP. I'm convinced that Win7 is a much better OS. Better security, more user-friendly, etc. I just think it'll cost the consumer something in terms of raw performance and battery.

RE: linux
By smackababy on 4/20/2009 3:12:09 PM , Rating: 2
XP will be gone. My point was when given a choice between a new OS (Windows 7) and an OS the average user has heard little if anything at all about (Linux). I know people who've used computers for the last 10 years, but couldn't answer what Linux is besides a strange cat with funny years. I doubt they'll lose a lot of marketshare when the switch happens. Especially, if Windows 7 can run smoothly and look pretty.

RE: linux
By sprockkets on 4/20/2009 3:17:37 PM , Rating: 2
It seems nowadays that people are trying a new OS and liking it, OSX. More frightening is people are trying the iphone who would never get a pda phone ever, and are liking it.

RE: linux
By smackababy on 4/20/2009 3:31:06 PM , Rating: 2
Much more frightening is I see a slew of 14 year olds with Blackberries and such. Who needs phones like that? Not high schoolers. Why do you think the iPhone is such a popular smart phone? It isn't made for people who would need one.

RE: linux
By Alexstarfire on 4/20/2009 10:38:28 PM , Rating: 2
Because it's becoming the Ngage, and it's doing a far better job too.

Even At 100 bucks its cheaper than Linux
By sapiens74 on 4/20/2009 2:24:15 PM , Rating: 3
Time and effort does cost money with Linux

RE: Even At 100 bucks its cheaper than Linux
By mondo1234 on 4/20/2009 2:54:04 PM , Rating: 2
I think MS has more competition from Linux than they claim, because, why the price cut? What surprises me is the price reduction MS is willing to take to stay in the game. MS says 90% saturation on netbooks and dell claims 1/3 are linux. If you have 90% of the market, you dont need to drop prices. So, somewhere in between is the facts.

Price wise, the oems are making alot more on XP than $15. The difference between XP and Linux is close to $100 on some netbook purchase. But looking at this,$15 bucks (for MS) for a phased out product isn't a bad thing. The bigger picture will be when MS ships Win7 and the price premium they get for it. If it is still $15 (which I doubt) MS earnings will be down about 2/3 for each license (assuming they are in the $50 range currently for the oems). MS would have to sell 3 times the licenses. Margins on notebooks (and netbooks) are falling anyway and at this rate, it will be a cut throat year for everyone - well except the buyer - we win.

RE: Even At 100 bucks its cheaper than Linux
By atlmann10 on 4/20/2009 3:15:54 PM , Rating: 2
All this talk about price cut is pretty funny. They are cutting the price of an op sys that in many ways no longer exists. What I am saying is XP has been developed active on the market for what more than 5 years and there still making 15 bucks on every Netbook. That sounds like a very stable and high performing investment to me that has paid itself off in triplicate, and there still getting paid for it. There is no comparison between Windows and this version of Linux as the version as no material worth. The only worth it has is in loyalty, and that loyalty is to Microsoft. Really if you find a investment that costs me nothing and has a 150% return let me know, as I want at least a million shares.

RE: Even At 100 bucks its cheaper than Linux
By segerstein on 4/20/2009 3:44:42 PM , Rating: 2
Why sell XP for $15, when you can sell Vista/7 for $60?

One way to differentiate the sales price for MSFT would be to offer a cheaper license for Atom/Via powered devices . $30 is not too much, but 3 program limitation is a no go.

I like Aero, new GPUs with hardware h.264 acceleration should run it well, but it is not essential on a netbook. But gee, I had more than 3 open windows since I started using Windows in 3.1 era... And that was a 40MHz 386 with 4MB RAM. Even on DOS I had several TSRs beside the main application and a DOS Shell.

By Fritzr on 4/21/2009 3:52:57 AM , Rating: 2
The target market for "Starter Edition" will be countries with a low per capita income. The starter edtion for countries like US and EU will be Home Basic.

Starter Edition with a 3 foreground program limit has a proven track record with Windows XP Starter Edition.

Microsoft has a mix of OS packages that are tailored to identified markets. The bottom end will not be available in wealthy countries and they expect very limited sales of the top end in poorer markets. Starter Edition is just part of the plan that ensures a Microsoft monopoly by offering options that fit 90%+ of the market for computers.

RE: Even At 100 bucks its cheaper than Linux
By shazbotron on 4/20/2009 3:52:26 PM , Rating: 3
An investment that costs nothing (input of $0) and leads to a 150% return ($0 x 1.5) would result in a profit of nothing...

By mondo1234 on 4/20/2009 3:54:54 PM , Rating: 2
Its called welfare

By twhittet on 4/20/2009 4:19:08 PM , Rating: 4
Sorry, only Chuck Norris can multiply something by 0 and get anything other than zero.

It's far more fun to watch when he divides by zero though.

By mondo1234 on 4/20/2009 3:52:25 PM , Rating: 2
What I am saying is XP has been developed active on the market for what more than 5 years and there still making 15 bucks on every Netbook.

That was pretty much my view on the price cut when I said above that:
But looking at this,$15 bucks (for MS) for a phased out product isn't a bad thing.

Its not about the "what", its about the "why". Why drop the price if you are not feeling any pressure for a price drop? Anything with 90% marketshare doesn't need a price drop. Are you saying that you would drop your price by 2/3 across the board, to pick up a few more percentage points? If you are making $45 on 9/10 copies, why go for $15 on 10/10?

9 x $45 = $405
10 x $15 = $150

It isn't always about the money they make on a product, it might be about the money they didn't make on a product.

Really if you find a investment that costs me nothing and has a 150% return let me know, as I want at least a million shares.

Sure, Its called welfare....

By Hacp on 4/20/2009 3:30:48 PM , Rating: 2
The big problem here is intel. It requires certain sizes for netbooks. At sizes of 10 inches or less, the netbook makers can't charge a premium. If these netbook guys were able to freely experiment and offer Ion+Aton+3gb+12.1+DVDRW for around 550-600 dollars, I'm sure people will jump to buy them.

I've always wanted an ultraportable 4 pounder, but since Intel charges so much for their ULV chips, I'm not able to afford one. But if I see a lower powered equivalent, I'll jump to buy one.

By TomZ on 4/20/2009 3:35:20 PM , Rating: 4
There's no way I would pay $600 for an Atom-based machine. They are great processors, but far slower than Core 2, and not to mention they are single-core compared to most Core 2's being used today in laptops which are dual-core.

I personally don't see a market for traditional netbooks at that price point.

By Taft12 on 4/20/2009 3:48:20 PM , Rating: 2
Bang on regarding Intel's worries. Dell will be offering a system with the features you list at that price point in no time.

How much does Intel wish they had never let the Atom genie out of the bottle? A dirt cheap good-enough CPU released just in time for a recession. The timing flat-out demolished the low-to-mid range CPU market.

Small steps like raising the price and "shortages" aren't going to help. If they slay the goose that laid these very inexpensive golden eggs, ARM-based devices will rush right in to take their place.

By jcbond on 4/20/2009 4:03:09 PM , Rating: 2
At 5lbs, you can get an HP with 14 in screen + DVDRW for $600. But you're right about one 4lbs. You'll pay another $150, and would then need to purchase an external optical drive.
I'm not sure I see the attraction. With something that has that tiny of a screen, I wouldn't use it for much, and I would definitely want a primary PC.
What is it that you are looking for? And would an external optical/netbook combo reach it?

By mindless1 on 4/20/2009 5:22:54 PM , Rating: 2
12", Atom 330, GN40 chipset, 2GB memory and XP for $350 should be their target.

It'd be even more interesting if SSD controller manufacturers can get their act together and come up with a cost-sensitive higher performance solution so a smallish on-board SSD would raise the price by only $50 more. Right now there are 32GB PCIe SSDs for $70, then subtract the cost of the HDD it replaces, so when flash chip density doubles again that might be an attainable target.

Leave out the DVDRW to reduce cost and size, most people won't need to burn discs on the go and won't expect a netbook to be the only computer they own so they already have another means of burning discs.

By noirsoft on 4/20/2009 10:33:47 PM , Rating: 2
12", Atom 330, GN40 chipset, 2GB memory and XP for $350 should be their target.

With 2 GB of RAM, it would easily run Vista with no noticeable degradation in performance from XP, and in some cases improved performance over XP. 7 would be an even better choice, but either way netbook manufacturers should really start moving off of XP and onto newer/better versions of Windows.

By mindless1 on 4/20/2009 11:22:07 PM , Rating: 2
False. With Vista where is less memory left over for the filecache.

With 2GB, and 4GB in a laptop with higher performance than a netbook, both Vista and Win7 are noticeably laggy compared to XP.

XP is the better version of windows in this context, newer means very little when the changes aren't central to the typical needs of a netbook user, rather contrary to them.

Here's a shocker: Win2k, were it not for minor abandonment of newer applications and drivers, would be even better still.

Your needs are not most people's needs, apparently, as they have chosen XP over Vista even when 2GB of memory can be had for under $20.

By noirsoft on 4/21/2009 11:30:47 AM , Rating: 2
Not at all.

I run Vista on a netbook with 1.5 gb of Ram, and it runs without any noticeable lags. With Aero, the machine is less laggy in some cases because drawing of screen items doesn't compete for the CPU as much.

I would say that the main chages in Vista (better security, better stability) are appropriate for everyone, especially on a machine that is portable. I wouldn't take an expensive laptop overseas, but I take my Netbook, so having it run properly all the time, even if connected to the internet via a dodgy Russian internet cafe, is important.

The netbook manufactureres have chosen XP over Vista because they want to make the bottom-line price as little as possible, so the extra money spent on the RAM and Vista license may make the difference between a sale and a miss. That and the FUD spread by people like you who think that Vista won't work (or is somehow inferior) on a netbook.

By Hacp on 4/21/2009 2:14:58 AM , Rating: 2
Why would you leave out the DVD-RW when you have a 12 inch frame? They can design a dvd-rw that slides out to reduce the weight, but a dvd-rw should be default.

By SameOld on 4/20/2009 3:14:41 PM , Rating: 1
Microsoft... takes the opposite approach, shooting for volume despite sinking prices,...

Nope. Microsoft isn't approaching anything. They are being pushed hard. It's not that they want high volume - low margin products but that they have to. After all, what's the alternative. They walk away and Linux takes the entire market. People get used to Linux and decide they can live without a free operating system. Free OS! That is what makes Ballmer wake up in a cold sweat in the middle of the night.

RE: volume
By TomZ on 4/20/2009 3:17:57 PM , Rating: 2
I think you're right about that. The reality is that on a $300 computer Windows is worth less than on a $1000 computer. The market knows this, and now Microsoft knows this, too.

RE: volume
By jcbond on 4/20/2009 3:44:30 PM , Rating: 2
I'm curious about this. Let's say that you're Microsoft (OMG! My pockets are suddenly full o' cash). Windows 7 looks so far like it's going to be significantly more successful than Vista. What happens if you cut off XP after 7 is introduced and appears to be doing well? What if you set the netbook price for Win7 at $30 to the distributors?
Will that $30 dollar difference lose all that much marketshare? If I were MS, I think I would at least try this for a year or so before throwing in the towel.

RE: volume
By mindless1 on 4/20/2009 5:36:09 PM , Rating: 2
What made you think they would "throw in the towel"? Surely this is similar to what they are going to do, offering Win7 for netbooks, but not yet as the factor of finishing Win7 streamlining, and having Netbook performance levels go up, are both ongoing projects.

As for losing marketshare, obviously they have already demonstrated they don't want to do it. The real question is what they perceive the customer experience to be running Vista or Win7 on a netbook, they certainly don't want it to feel sluggish even when brand new, then add the expectation it becomes even more bogged down after use.

MS does not want to lose market share and they recognize that even the 'nix put on netbooks is fairly bloated. Build up a distro that's smaller like Puppy Linux and it would run entirely from ram making even the low quality SSD drive performance much less of an issue. This is what they want to stop, a snowball effect that increases the 'nix user base from zealots to average people.

RE: volume
By mafart on 4/20/2009 6:06:22 PM , Rating: 2
This is what they want to stop, a snowball effect that increases the 'nix user base from zealots to average people.

I agree. This is definitely what Microsoft were worried about. People were/are buying netbooks based on price. The last thing they needed was the average Walmart or Target customer getting comfortable with Linux.

Looks like they have been spectacularly successful (again!) at gaining control of an emerging market. They could probably argue that the growth in netbook sales only really occurred once Windows versions were widely available.

RE: volume
By LumbergTech on 4/20/2009 7:40:14 PM , Rating: 2
its not going to happen...i've been using kubuntu for the last few weeks for the first time (im taking a C & unix class)

and i can say without a doubt that linux is a MAJOR PITA in comparison to windows..

there is no way in hell i would recommend it to a novice computer user

RE: volume
By mindless1 on 4/20/2009 11:28:08 PM , Rating: 2
But novice users are the most easily migrated, because they're buying it preinstalled, drivers too, and they're not into hacking away tweaked settings, etc.

They just need applications they recognize like their email, browser, office.

RE: volume
By jcbond on 4/21/2009 8:59:27 AM , Rating: 2
The article above implies that MS was throwing in the towel and selling XP home licenses to netbook manufacturers at $15 per copy. I got the impression that MS had to price the OS at $15 to sell and MS OS. It's one thing to do it on an obsolete OS. It's quite another on a new OS (7) where you need to get ROI. I'm not sure I would even sell the cut-down version of Win7 for $15.

The hypocrasy of Windows vs Linux, and Apple
By sapiens74 on 4/20/2009 2:51:24 PM , Rating: 2
Microsoft argues that MACS are too expensive, but notebooks, a large portion of the cost is OS, AV and Office suites all of which have free alternatives.

I would love to see a Linux commercial challenge this

By mondo1234 on 4/20/2009 2:59:24 PM , Rating: 2
I was also wondering if MS had given Canonical any ideas for a Ubuntu advertising campaign (funded by Google)

By stromgald30 on 4/20/2009 3:15:30 PM , Rating: 2
Linux commercial? And how would Linux distros pay for the air time? I think Red Hat might be able to advertise, but I doubt they'd want to for the general population. Ubuntu should, but I'm not sure if they could afford it.

Cost isn't the real issue. It's value. The value of having Microsoft software with "decent" support is important for the typical netbook buyer even if it adds $100-150 to the cost. With Apple, you're getting less bang for your buck because they increase the price by $800 while only giving you maybe $300 more in improvements.

By omnicronx on 4/20/2009 4:01:18 PM , Rating: 2
Microsoft argues that MACS are too expensive, but notebooks, a large portion of the cost is OS, AV and Office suites all of which have free alternatives.
OS = 15$
Office Suite = Most netbooks don't come with one
AV = Most netbooks don't come with one.

End result: Use free software just as you would with linux.
Perhaps Open Office and AVG.

Total cost for more functionality than Linux = 15$.

Nothing wrong with nix, I always have at least one box with the latest and greatest just to keep up with the times, but this is the smartest move MS has ever made. Expect prices to fall $50+ on netbooks within the next year. Thats the great thing about PC's, competition between PC manufacturers drive the costs down.

By mindless1 on 4/20/2009 5:25:24 PM , Rating: 2
Many sub-$800 notebooks (highest selling category) don't come with expensive Office or AV, they offer limited period trialware versions of these which "might" even make more money for the laptop seller than if nothing were on it.

This is exactly why the EU is targeting Microsoft
By BZDTemp on 4/21/2009 3:42:57 AM , Rating: 1
Why is it that buying XP for any other sort of computer cost more bucks!?

This clearly shows that Microsoft makes money enough on their software for them to do much lower price. If Linux was not taking market shares they would charge the same as on none-netbooks.

Imagine some company made an grat OS especially for Netbooks costing lets say 60-70$. With Microsoft doing crap like that it would put that company out of business not because XP is better but because Microsoft has deeper pockets. That is what happened with Netscape, Stacker and whole bunch of other companies.

If Microsoft was doing their business fairly we would have more choice, overall lower prices and faster technological progress.

By TomZ on 4/21/2009 3:33:04 PM , Rating: 2
I don't see anything unfair - in fact, Microsoft is just responding to competitive pressure and lowering their prices.

Also, where is it written in stone that an OS should cost the same regardless of what kind of computer it is running on or how it is used? That makes no sense.

By Darkk on 4/20/2009 10:16:50 PM , Rating: 2
I think Microsoft is getting desperate about keeping stronghold with all devices these days.

Honestly, Microsoft should offer desktop versions of Windows for FREE!
They still can make money on stupid CAL licenses for the server
products. I have a feeling this may happen eventually as more and more
people are finding out the free stuff of Linux for both OS and
productivity software.

Come on, this isn't a good thing.
By nubie on 4/21/2009 4:18:55 PM , Rating: 2
On the surface this seems like a good thing, until you realize that this means the 1GB memory will continue to be standard.

So the entire industry will be held back because of this ridiculous requirement to only ship the Netbooks with 1GB Ram.

I don't know about you, but I have had some time with a Toshiba Portege with a 13" screen that I would much rather use, it was as light as a netbook (lighter than most even).

Will Microsoft allow 13" netbooks with 4GB of ram?

I don't know. Will Windows 7 be reasonably priced without ridiculous stipulations for Netbooks, as well as being quick and light enough for actual use?

MS needs to come up with the answers, although most customers don't care and wouldn't know that the industry is being held back.

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