MS's problems run a little deeper here. Probably no one buying a mini-notebook will ever upgrade the operating system. They will also probably buy very few desktop applications. Instead they will just run the browser and web based applications. So the best case for MS is to sell WinXP Home, the worst case is to sell nothing. The problem is only going to get worse as the price of netbook computers drops to probably well under $100. Even if MS keeps a monopoly position with WinXP Home here, this will cause a huge drop in their revenues as all their customer base moves down-sku.

Another problem is that besides some early hype Win7 is still quite bloated and won't run well on these computers (it is just based on Vista after all) and is riddled with even more DRM that Vista was. Again a bit of a dead end for MS.

Even worse, business users are going to start adopting these for travel, if nothing else, they are really light and their batteries last a long time. So then MS loses all that lucrative corporate laptop market also. After all these netbooks can run terminal services client just fine.

On a technical note, the new ARM based netbooks and hybrids are a very real problem for Microsoft.

http://www.eetimes.eu/213402291

Windows does not run on ARM so it is not even in the running to be the primary operating system on these devices.

Windows will be relegated to only running on the hybrids, and being the slow power-sapping part of the duo. ARM-only devices will likely retail for around the same price as 7 Ultimate.

I think that in the next few years PC manufacturers will develop their Linux OS so that they offer a unique experience for their device. At the moment all laptops are just rated on their hardware, but soon they will be rated on their usability and UI much like phones are.

HP is already doing it with their Mi OS and it is getting good reviews.

When Dell put the Inspiron Mini 9 on sale Monday for $199 with Ubuntu 8.04 (step by step directions to upgrade to 8.10 are posted on ubuntumini.com), I decided I'd waited long enough for prices to drop. That was the price point and feature set I was waiting for. Sure, prices will drop further, probably, as others have noted, to about $100 within a year - that's just Moore's Law restated, you know - but I'm looking forward to throwing this baby in the glove box of my pickup when I go on weekend ski trips or in a carry-on when I fly, instead of carrying a heavy, bulky, separate laptop bag. For checking e-mail, weather, snow reports, watching with amazement at unsecured airport access points as packets stream by on WireShark, and such, this is all I need. At this price, I will get my money's worth quickly without needing to wait until prices drop further. The same netbook with XP was $50 more.

I am neither a zealot nor Windows-free. My desktop and luggable are dual boot, there are programs, primarily electrical engineering apps I still run under XP, and my 13" Pentium M laptop, formerly my main travel laptop, still runs XP Pro. That's what came on it and I've never felt a need to change. However, for 80 percent of the cost of the XP version, the Ubuntu version of the Mini should, more safely and more quickly, do the tasks, e-mail, web, and, erm, WiFi hacking that I want a mini to do. I am eagerly looking forward to its arrival and to seeing if it lives up to my expectations.

Even more about netbooks:
The biggest threat to Microsoft’s bottom line isn’t Mac or Linux - it’s netbooks!
http://blogs.zdnet.com/hardware/?p=3544
Quote:
The problem isn’t that netbooks are cannibalizing Windows sales (they aren’t, especially when you take into account that Windows-powered netbooks out-sell Linux models by a significant margin), the problem is down to the fact that Moore’s Law has finally caught up with Microsoft and the OS is rapidly becoming one of the most expensive components of a new PC. And as hardware prices continue to fall (which they will), this is only going to get worse for Microsoft.

Could this be true?

Draconian DRM Revealed In Windows 7
http://tech.slashdot.org/article.pl?sid=09/02/16/2259257
TechForensics writes :
"A few days' testing of Windows 7 has already disclosed some draconian DRM, some of it unrelated to media files. A legitimate copy of Photoshop CS4 stopped functioning after we clobbered a nagging registration screen by replacing a DLL with a hacked version. With regard to media files, the days of capturing an audio program on your PC seem to be over (if the program originated on that PC). The inputs of your sound card are severely degraded in software if the card is also playing an audio program (tested here with Grooveshark). This may be the tip of the iceberg. Being in bed with the RIAA is bad enough, but locking your own files away from you is a tactic so outrageous it may kill the OS for many persons. Many users will not want to experiment with a second sound card or computer just to record from online sources, or boot up under a Linux that supports ntfs-3g just to control their files." Read on for more details of this user's findings.

@Marco:
nice links and scary future for windows users with DRM/Seven.
----------------------------------------------------

Netbooks killing off sickly Windows PC sales

http://www.appleinsider.com/articles/09/02/16/netbooks_killing_off_sickly_windows_pc_sales.html

"
According to an IDC report issued last week, worldwide PC processor unit shipments in the fourth quarter of 2008 declined –17.0% quarter over quarter and –11.4% year over year. Those tragic numbers were buoyed somewhat by sales of mini-laptop netbooks running low powered processors. Take out Intel's Atom chips that power netbooks, and processor unit shipments declined by –21.7% over the previous September quarter and –21.6% over last year's holiday quarter. sickly PC sales have also been blamed upon weak interest in Windows Vista, which only runs well on desktops and full powered laptops.

That has hit Microsoft particularly hard, resulting in an 11% drop in profits over its year ago quarter and plans to cut 5,000 jobs over the next year and a half. On the other hand, Apple posted its best quarterly results ever, with 9% growth in its Mac sales over the previous year

That's killing Microsoft's model for advancing Windows Vista on the sheer volume of new PC sales, because netbooks are making a large chunk of the low end market for new PCs obsolete, and replacing them with a low powered device that not only can't run Vista, but can run Linux. If netbooks continue to grow as predicted, they will cause a major erosion of the low end of PC market, forcing Microsoft to either scale down Vista to something closer to Windows XP, or to continue to develop the older XP code base."

@ Marco

Thanks for posting the info about the DRM crap. For me, this will be a deal killer for Windows 7. I have a record collection which I been converting to MP3.

I can do this in XP and in Linux. But if Windows 7 prevents me from converting me record collection. What is the point in using it? I guess MSFT didn't learn their mistakes with Vista.

As I stated in my previous posts, there is no compelling reason for upgrading to windows 7. Now there is a valid reason for onr not even considering Windows 7.

Some things never change. Windows 7....a Linux killer? Bullspit. From what I read so far, Windows 7 starter edition might be the only edition of 7 that could run on the netbooks.

I say Great! Who would want a crippled "starter edition" that can only run three programs on their netbook when Linux can run 20 or more effortlessly on the same netbook.

A Linux killer? More like Windows 7 will be a Windows killer....on netbooks.

@Marco Problem is your quote isn't true. "The problem isn’t that netbooks are cannibalizing Windows sales (they aren’t, especially when you take into account that Windows-powered netbooks out-sell Linux models by a significant margin)". They don't.

The Guardian recently published the figures for worldwide netbook sales and Linux had 40% vs 60% for XP. XP has more to be sure, but the 40% figure for Linux is impressive and I would imagine in Europe that it is even higher.

@Joe:

You are not exactly correct when you say that the TELCOS subsidize netbooks: it is very often the shops who decide to transform the subside from the Telco into a huge rebate on the netbook. Some shops even bundle totally unrelated items like a game console and a mobile suscription renewal, giving you the console for practically free.

Chips, Ralph: This (if it's ratified) about DRM is incredibly stupid, even for Microsoft parameters. Could it be that MS will never learn?

Avro;I hope that netbook sales with Linux will be growing even more.
The interesting thing with this article is that even if Linux doesn't do very well, the market will be punishing towards Microsoft anyway.

Since man is a creature of habit, only a total change in our ecosystem-customs- will change a set habit. And it will be coming from the internet (the cloud), cheap hardware (and its implications) thus software will become free/cheap.

The appropriate analogy could be 'the meteor that landed 65 million years ago near Mexico's Yucatan Peninsula was to the dinosaurs like the three things I mentioned above will be to Ms.

Ah, yes, man is a creature of habit. This is the one HUGE impediment when moving someone from Windows to Mac or Linux. Mac is very different, very uncomfortable, and makes most long-time windows users try to get back. Linux is more like Windows but still has enough little quirks that it's deemed unfit for "Joe Sixpack" and "Grandma".

So, what sort of crack cocaine was Microsoft smoking when they made Vista as different from XP (in both use and resources) as Mac or Linux is from XP? They violated one of the only valid reasons that Joe Sixpack and Grandma and all the other hate-to-change people stay blindly and willingly with Windows.

It's like watching the Fire Safety officer fall asleep while smoking and burn down his own house.

It's like watching the Fire Safety officer fall asleep while smoking and burn down his own house.

Nice sentence (in both meanings)

Probably no one buying a mini notebook will ever upgrade the operating system. They will also probably buy very few desktop applications. Instead they will just run the browser and web based applications. So the best case for MS is to sell WinXP Home, the worst case is to sell nothing. The problem is only going to get worse as the price of netbook computers drops to probably well under $100. Even if MS keeps a monopoly position with WinXP Home here, this will cause a huge drop in their revenues as all their customer base moves down sku.