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Summary:

I’m starting to believe that the fight for the netbook operating system simply won’t go the full 10 rounds. In case you haven’t yet managed to score a ringside seat, let me offer you a blow-by-blow recap. Round One – ASUS offers a custom Xandros Linux […]

netbookI’m starting to believe that the fight for the netbook operating system simply won’t go the full 10 rounds. In case you haven’t yet managed to score a ringside seat, let me offer you a blow-by-blow recap.

So here we are at the beginning of the next round, which would get us halfway to the full 10. There’s only one problem, and it has to do with how Microsoft plans to position Windows 7 for netbooks. The company has already stumbled once, when it limited the Starter Edition to three concurrent apps, only to backtrack on such a constraint later on. The version had other limitations as well, such as minimal personalization and a lack of Aero support and DVD-playback, but the knockout blow may actually come in the pricing.

Although Microsoft isn’t expected to confirm Windows 7 pricing until later this month, word on the street is that OEMs will pay between $45 and $55 for a Windows 7 license on a netbook. Bear in mind that some netbooks cost as little as $279 in today’s market where it’s believed that a Windows XP license is no more than $15 of the overall device price. As Mary Jo Foley astutely points out:

“In order to thwart Linux, Microsoft has chopped the per-copy price it charges for Windows XP for netbooks to an estimated $15 per copy, according to various sources.”

If true, and I suspect it is, why abandon the successful strategy halfway through the fight? Did the manager step away from the corner?

Complicating the situation even more is that the pricing challenge that has everyone’s attention just might be a wind-up of the left while the real hook is coming from the right. According to Microsoft’s initial introduction of the various Windows 7 editions, it’s the price of Windows 7 Home Premium that might bring a TKO:

“All SKUs of Windows 7 will work on many of these devices, with Windows 7 Home Premium as the recommend SKU on small notebook PCs with sufficient hardware.”

The netbook market is, first and foremost, a low-cost market — price has been key to it success. I believe that if a netbook is offered in both a Linux and a Windows version, most consumers will choose the Windows version if the price premium is within 10-15 percent over the Linux model. If Microsoft wants to make it to round six, they need to keep this in mind during round five. That’s when I expect Google’s Android to make an appearance, and I don’t mean as the ring-girl.

  1. the netbooks markeplace will be adjacent and eventually merge with the smart/superphones…see Acer launching smartphones/touchphones:

    http://www.ft.com/cms/s/0/d30ec99a-5a9d-11de-8c14-00144feabdc0.html?referrer_id=yahoofinance&ft_ref=yahoo1&segid=03058

    Android will be a bigger factor – Microsoft may be forced to asymptotically approach zero dollar pricing on the OS / Win Mobile…

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    1. I disagree – phones are great for light facebooking – but netbooks can function as computers – I will even pop open photoshop in a pinch – they need to bump the keyboards up a bit though.

      My acer is awesome – 6 cell battery burns me out – I have been using it all the time.

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      1. Greg: actually I meant that the UI, presentation, rendering engine/layout engine and most of the Apps will be common across the two platforms. a palm sized “super”phone and a 10 inch or larger size netbook. I see distinct usage scenarios for both and would love to have the same iApple OR Android Apps on both devices (potentially w/ Sync-ed ‘state’)…

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  2. I agree with rohit. Windows mobile will be free by December. Windows 7 will be $25 by next June if not Dec.

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  3. Windows 7 starter edition will be $25 by next June if not Dec.

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  4. Or, Microsoft goes one better and offers a multi-device license/discounts for Windows 7

    Device one – list
    Devices 2-4, if mobile/netbook, lower…

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  5. I think you can predict that given the price compression of netbook will happen to go from current $279 ASP to perhaps $150 over time, there is no room for a >$5 OS on it.

    I think netbook will force a fork in the relationship between INTEL and Microsoft – because Intel needs to get to the smartphone eventually and Netbook is the beginning for them.

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  6. yes indeed, windows 7 is cheap and good enough.

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  7. it kind of funny. i put XP on a 2G eeePC as kind of a challange to see how easy it would be(i am much more a linux guy). but on all the more recent netbooks i have purchased I had no choice but to buy with windows and than reformat with linux. i really do wish they would offer the identical hardware with and without windows; allowing me to save the liscense fee. i own a few retail copies of XP and could allways install one that i am no longer using on another machine if needed; but i certainly do not need anymore OEM windows.

    another thing that i have noticed is that when any netbook vendor releases both a windows and a linux version of a miachine the linux versions is a very barebones.limited functionality distro and comes with a lesser hardware configurations. the windows version is the higher end machine. i wish they would ship with identical hardware and that a full blown linux distro that can really show off the great possiblities was included on the linux version.

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    1. Thats not quite true.
      the EEEPC 901 was the reverse of what you just mentioned.
      It was priced the same for both Windows & Linux model BUT the Linux model comes with MORE storage.
      Remember the EEEPC 901 12G with XP Home & the EEEPC 901 20G with Linux.
      The HP Mini 2133 came in similar specs between their Vista(sic) and Suse Linux models with the linux model priced lower.

      However I do concur with your lament that netbooks these days don’t seem to come without Windows anymore.

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  8. [...] Gigaom has a good update on netbook operating systems.        [...]

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  9. what we are seeing is the interplay of oligopolistic collusion, aka cartels. The introduction of linux netbooks was just a bargaining ploy against MS, and it worked. So now linux is relegated to the also-ran status it prevously held. Personally, I’m to the point that I’d rather build my own linux box than deal with MS. But most people won’t want to go thru the effort. Linux would compete better if linux devlopers would concentrate more on pretty interface and ease of use.

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  10. i like this design :D Asus rox

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