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.
quote: Linux is great if you can't afford Windows
quote: Marketing can sell ANYTHING
quote: Linux can do everything 90%(or more) of the users need. They just need to spend a few mins learning how to use it.
quote: People just need to stop being afraid of Linux.
quote: The biggest things missing are probably games
quote: WOW people saw a GUI that copies off Windows and thought it was WIndows !!?? Well I'm sold !!
quote: The vast majority of people I service in the field do not share my opinion.
quote: reduce battery life
quote: 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.
quote: But looking at this,$15 bucks (for MS) for a phased out product isn't a bad thing.
quote: 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.
quote: 12", Atom 330, GN40 chipset, 2GB memory and XP for $350 should be their target.
quote: This is what they want to stop, a snowball effect that increases the 'nix user base from zealots to average people.
quote: 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.