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 4/20/2009 2:30:12 PM , Rating: 0
This is great news. I can't stand to see Linux on netbooks. So many good deals on netbooks but having Linux on them kills it for me.

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.

"We are going to continue to work with them to make sure they understand the reality of the Internet.  A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis

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