Windows Starter Is a Non-Starter on Netbooks
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News Analysis. Rumors that HP may use Google's Android on some netbooks are proof enough that Microsoft shouldn't position Windows 7 Starter Edition for them. |
Late yesterday, HP confirmed that it is testing Android for netbooks. There is yet no decision to do so. Wall Street Journal first reported HP's Android flirting. Google's smartphone OS is a sensible choice for netbooks, as much for the business model as anything else. I'll get to that later.
For now, I must express my exasperation with all the cajoling and speculating about Windows Starter 7 going on netbooks, or mininotebooks, as analysts refer to them. It is an absolutely lame-ass idea. Any Microsoft executive even remotely considering some kind of Starter Edition on netbooks scheme should be fired.
Background: Windows Starter Edition had been available only in some countries, and most certainly not the United States. With Windows 7, Microsoft announced that Starter Edition would be available worldwide, but Windows Home Basic would be pulled from most geographies and distribution largely limited to some emerging markets. The licensing change led to rampant speculation that Microsoft would position Starter Edition for netbooks, or OEMs would simply choose it. One reason: cost. Right now, most mininotebooks ship with Windows XP Home.
Starter Edition is the wrong operating system for netbooks—and for even more reasons than I'll put forth here. Some reasons:
Business model. Netbooks and smartphones are soon to intersect. According to IDC, about 80 percent of mininotebooks are sold to Europe, where wireless carriers typically subsidize the portables. The business model is similar to cell phones and reminiscent of 1999-2000, when ISPs subsidized desktop PCs with one-to-three-year contractual commitment. In December I asked: Are ISP subsidies coming back? "Yes" is the answer.
But the subsidies aren't just motivated by the weak economy, as they were during the last recession. ISPs weren't in the business of subsidies more than eight years ago. That was a new and short-term enterprise. Wireless carriers, at least those in Europe and the United States, commonly subsidize cell phones. Netbook subsidies are merely an extension of what they already do. Netbook subsidies are coming to the United States. During the last week, AT&T and Verizon were both rumored to be planning subsidized netbooks for as low as $99. Today, AT&T announced testing in two markets.
Given where netbooks are going, it's reasonable enough to expect robust mobile operating systems to move upmarket, particularly those capable of background, multitasking operations, such as Android and Symbian (Apple's iPhone OS doesn't allow background operations). Nokia already is exploring a Symbian-based mininotebook.
Starter Edition is too hobbled to compete with these other operating systems, or to offer the kind of experience Windows users have come to expect. Microsoft needs to offer more, not less, if it wants to stay ahead of Android and Symbian. Windows XP Home isn't enough, and Starter Edition is even less.
Three-application limit. Starter Edition's biggest handicap is deliberate and unnecessary: Microsoft's so-called three-application limit. There's something arbitrary about how it works. Multiple instances of one application won't trip the limit, which is good for Internet Explorer 8 and some other Microsoft applications/services. Otherwise, the handicaps are too many. The three-app limit:
- Makes Starter Edition less functional than even Windows XP Home.
- Will give many users a bad experience, particularly if apps loading at startup trip the limit.
- Is a great reason for smart OEMs to look at alternatives like Android, where there is no imposed limit on the number of running applications.
- Will put the "Net" in netbook. If users can't run applications locally, they will do so in a browser. Does Microsoft really want to co-opt Windows for Google Apps, for example?
The three-app limit would make Windows Starter netbooks less functional than smartphones running Windows Mobile. What kind of user experience is that?
Something else: Android and Nokia Ovi stores should make mobile applications available for netbooks running the Google OS or Symbian. Meanwhile, the three-app limit would reduce Starter netbooks.
Revenue and margins. I've spoken with some financial analysts who wrongly believe that Windows Starter is inevitable on netbooks because of the high cost of Windows licensing versus the low cost of the portables. As hardware price goes down, operating system as total percentage cost of the computer goes up. The prevailing theory: Microsoft would later upsell netbook users to Windows 7 Home Premium. This is wrong-way thinking. Why? The subsidized netbook can sell to consumers for much less, obscuring some of the higher OS cost.
Good products aren't cheap. AT&T just started selling unsubsidized, contract-free iPhones for $599 and $699, for 8GB and 16GB capacities, respectively. AT&T will soon sell the Nokia E71x for $99 after rebates. Nokia sells the unsubsidized E71 for $359. Subsidy pricing makes a big difference to the buyer. Carriers are used to offering these subsidies for which they reap ongoing data service fees, which typically are higher for computers than cell phones.
Microsoft should work with OEMs and wireless carriers to offer better-configured mininotebooks that sell for less subsidized than those that sell through typical retail channels unsubsidized. There could even be some revenue sharing for Microsoft and the OEM if Windows is discounted. Microsoft's U.S. antitrust settlement mandates that all major OEMs receive the same pricing terms. So Microsoft might need to create a special netbook SKU, but based on Premium rather than Starter.
Carrier subsidies are uncommon in many markets outside the West, such as China and India, where carrier churn also is high. Subsidized netbooks could—should—be a way for carriers to lock in customers and in a product category where they're not conditioned against subsidies or expect to switch carriers on a whim. In many emerging markets, cell phones are the first connected computing devices most people buy. Microsoft has more to gain from subsidized mininotebooks running Windows.
Missed opportunity. Mininotebooks could be a huge subscription opportunity for Microsoft and carriers in both established and emerging markets. If people are willing to pay X dollars a month for data, why not offer them more? It's too bad Microsoft abandoned Equipt; it would be an ideal product for a netbook running Windows 7 Home Premium Edition.
Office Web, if Microsoft ever really releases it, would be another subscription opportunity. In emerging markets, why shouldn't Microsoft and local carriers offer Office Online services—Exchange anyway—with subsidized netbooks? Heck, they could offer the hardware for free and recoup the subsidy from increased services fees.
Bottom line: I think Windows Starter Edition can only cause Microsoft problems over time. It's better to do it right when Windows 7 launches, rather than fix the problem later on, whether adjusting the licensing or upselling customers to Home Premium Edition. Microsoft will lose margins upfront, while risking revenues if more OEMs go to Android. HP is Microsoft's most loyal OEM partner. If HP goes Android on even some SKUs, who will go next?
[Please send your tips or rumors to watchtips at gmail.com.]
Related Posts:
- Apple, Don't Buy Into the Netbook Hype, Apple Watch, March 9, 2009
- The Problem with Netbooks, March 5, 2009
- Grim Reaper Gartner Taunts Windows 7, Microsoft Watch, March 2, 2009
- Netbook Sales Soar in Europe, Microsoft Watch, Feb. 17, 2009
- Netbook Sales Lift Windows XP Home Share, Microsoft Watch, Feb. 5, 2009
- Can Microsoft Blame Netbooks?, Microsoft Watch, Jan. 26, 2009
- Are Telco Subsidies Coming Back?, Microsoft Watch, Dec. 9, 2008
- Does Windows Have a Future on Netbooks?, Microsoft Watch, Dec. 7, 2008
- Origami: Flattened by Netbooks?, Microsoft Watch, Sept. 29, 2008
- XP Pro Execution Set, Home Gets Reprieve, Microsoft Watch, April 3, 2008
- Microsoft's Big Problem in a Small Box, Microsoft Watch, Dec. 7, 2007
Comments (28)
"the three app limit"
As a practical matter, isn't Windows 7 Starter Edition designed for bottom-of-the-line netbooks that don't have enough "power" to run more than that anyway?
Posted by JohnJ | April 1, 2009 6:41 PM
Customers are too smart to fall for the subsidy ploy any more. They can spot vendor lock-in a mile away.
Face it, there’s no way for Microsoft to shore up its sagging profit margins while hiding that from the customers. The time of fat margins selling software is past.
Microsoft’s only way forward is to radically revampt its business model—become an open-source company. But of course Steve Ballmer would rather shoot himself first.
Posted by Lawrence D'Oliveiro | April 1, 2009 7:55 PM
"But of course Steve Ballmer would rather shoot himself first."
As a MSFT shareholder, I'd buy a ticket for that PPV special event.
Posted by Jeff C | April 1, 2009 9:01 PM
I see a lot of articles around the web of business's adopting netbooks to save money as well. I think MS has been blindsided by the death of Moore's law. Computer's aren't getting twice as fast every 18 months anymore. People find computers generally fast enough and are looking for light, compact inexpensive computers. Really much more of a commodity item now. Business's also realize they don't need to pay a premium price for PCs and can use these NetBooks as well.
MS was caught flatfooted by releasing Vista ahead of the hardware curve and then never having the hardware catch up. Now they are stuck with a giant bloated operating system as the world moves to more compact, efficient offerings.
Posted by smist08 | April 1, 2009 10:03 PM
I agree with the article but not for all the same reasons. The 3 app limit is crazy.
JohnJ:I don't know what you mean by bottom-of-the-line, but if you need to copy past from one program to another with email and a web browser open your screwed, and honestly you could do that on some pretty crap hardware from 3 generations ago so I'm not sure what you mean by "bottom-of-the-line", but I don't think they sell net-books that are that "bottom-of-the-line".
Chances are if you are not gaming or doing development of some kind or another a net-book has more than enough power to handle the apps you would run, and many more than 3 at a time at that.
If it was an OS for phones then I could understand the limit a little more but a net-book is still a PC even if the screen is a little smaller.
Posted by JMB | April 2, 2009 12:25 AM
Joe you are even more RETARDED than i thought. Seriously dude, go get a real job you stupid idiot. Oh I forgot you have no skills!!!! Some people are just a waste of air, you Joe are one of them. You friggin Microsoft SHILL. !!!!!
Posted by koppypoppy | April 2, 2009 5:21 AM
@JohnJ :
Nah. It's just MS marketing department fucking up again. If OEM's are smart they'll avoid starter like the frikken plague.
I ran 7 beta on a 4 year old toshiba ultra thin laptop, with a P3 processor and 512 megs or RAM. 7 only used 256 megs of that Ram and was sinfully fast with several web pages up, office applications open and watching WMA video in high res. Most netbooks have more juice than that.
I'm with Joe on this one. Starter is full of fail.
Posted by CC.Torment | April 2, 2009 6:24 AM
When you factor in necessary programs like a 3rd party security product then you are really only left with a browser and an email session at best for the Windows Starter OS.
Posted by AndresFreeLaptop | April 2, 2009 8:54 AM
"If OEM's are smart they'll avoid starter like the frikken plague."
Yes, I think OEMs are smart.
Posted by JohnJ | April 2, 2009 12:45 PM
I trust Ballmer, he will be doing that is best for Linux...herr... Microsoft.
Posted by Marco | April 2, 2009 1:21 PM
Ha,ha.
koppypoppy :
Really,do you think that you are cheating to somebody?
your reaction (completely misplaced), obviously is attributable to two purposes:
1-Trying that Joe (due your abuse) would has a negative react against Open Source (stupid idea in itself)
2-Trying to discredit people with opinions open source propitious (stupid thing in itself too).
And why are you doing that? elemental my dear, you are one of MS'defender (Do I have to named who is?) completely discredited due that insult is his/your single weapon of dialogue.
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Really I don't care about you or your ideas(=insults,vitriol), but please don't insult our intelligence (seeming to be someone else)
Posted by Marco | April 2, 2009 2:52 PM
Marco,
Completely agree. Our MS shill posters have found out that theres no argument to counter a Linux choice so they now seek to pretend to be Linux users and discredit themselves ergo Linux.
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If it wasnt so transparent I might be impressed at their original thinking.
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Moving on to the topic at hand, I think the three app limit is to disguise the fact that Win7 is not suited for Netbooks. Why? Because the whole selling point of the netbook is price, a "standard" Win7 install IMO will stop the netbook being cheap, however if MS bundle a cheap 3 app hobbled version, they can keep the price down (and people will probably upgrade it anyway) thus giving the illusion of a cheap netbook.
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I think this has the potential to go very wrong for Microsoft. I am quite willing to believe that Win7 will be a solid OS on a netbook. Whats from stopping the average user from downloading a patch "hacking" the 3 app limit put on their cheap copy of Win 7? We know there will be one, if pirates are willing to develop software/hardware to allow piracy of cartridges for Nintendo DS games, Im damn sure they will release a simple patch to remove the restrictions MS imposes on Win7.
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Just an idea. Maybe one that shareholders should consider when thinking about the netbook issue.
Posted by Goblin | April 2, 2009 3:05 PM
FYI, we're seeing 100% subsidies on notebooks in New Zealand, from Vodafone with 2 or 3 year contracts:
http://www.vodafone.co.nz/shop/mobileInternetDetails.jsp?skuId=sku3910016&hardwareSkuId=&menuKey=&selectedView=&selectedTab=&selectedPlanSkuId=sku3910018
Posted by Hamish | April 2, 2009 3:33 PM
It's not a firm 3 app limit
If you had bothered to read a real blog like Paul Thurrott's Winsupersite, you'd know that.
http://community.winsupersite.com/blogs/paul/archive/2009/03/30/the-mystery-of-the-3-app-limit-in-windows-7-starter.aspx
Posted by TA | April 2, 2009 4:10 PM
It's not a firm 3 app limit
If you had bothered to read a real blog like Paul Thurrott's Winsupersite, you'd know that.
http://community.winsupersite.com/blogs/paul/archive/2009/03/30/the-mystery-of-the-3-app-limit-in-windows-7-starter.aspx
Posted by TA | April 2, 2009 4:12 PM
It's not a firm 3 app limit
If you had bothered to read a real blog like Paul Thurrott's Winsupersite, you'd know that.
http://community.winsupersite.com/blogs/paul/archive/2009/03/30/the-mystery-of-the-3-app-limit-in-windows-7-starter.aspx
Posted by TA | April 2, 2009 4:15 PM
"It's not a firm 3 app limit
If you had bothered to read a real blog like Paul Thurrott's Winsupersite, you'd know that."
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If that was directed at me, I never claimed to state what the limit involved nor the functionality of it on a netbook. I merely pointed out that if there was a cheap 3 app version, it would be likely that a patch would be released to remove the hobbling WITHOUT the user needing to upgrade. There must be some reason for the user to upgrade from the 3 app limit. I expect we will have to wait and see exactly what is released onto the public in respect of this (much as I trust impartial IT advice from a site called Winsupersite)
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Its a little accademic for me anyway since I chose the Linux flavor, which has faster operation (IMO), longer battery life and no hobbling of any kind. I then look over to my collegue who's struggling with a Vista netbook......
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Remind me, what is Win7 on a netbook offering that cant be done (without restriction) on a Linux netbook?
Posted by Goblin | April 2, 2009 4:43 PM
Linux isn't something Microsoft needs to be concerned about....(for the moment).
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Rather it is the manufacturers of the computers that MSFT needs to be concerned about, and they need to be concerned with some company called Google.
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Do I hear another chair thrown in Redmond?
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http://vista.blorge.com/2009/04/02/hp-may-ditch-windows-from-netbooks/
"HP may ditch Windows from netbooks HP has confirmed it is looking into the idea of using Google’s Android system for its products, likely in netbooks. Such a move would be a major blow to Microsoft, particularly given its claims that Windows 7 works fine on such machines"
Posted by Ralph | April 2, 2009 6:36 PM
"Linux isn't something Microsoft needs to be concerned about....(for the moment). "
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Very true Ralph, although IMO MS have been looking for scraps falling from tables (i.e TOMTOM case) and maybe the Redmond theory is now "If we cant make software people want to buy, we'll use our patent portfolio to get money out of people that do" (IMO)
Posted by Goblin | April 2, 2009 7:41 PM
So it is not a 3 app limit it is a 'random number somewhere around 3' limit. That would probably be more frustrating since you would constantly being trying to second guess how many applications Windows has registered you having open.
Working around it seems just like working around UAC, you just find an application which does not have to obey the rules and then piggyback on it.
Posted by billybob | April 2, 2009 8:29 PM
Subsidies stifle innovation.
http://www.theregister.co.uk/2009/04/02/subsidized_netbooks/
Posted by Lawrence D'Oliveiro | April 3, 2009 1:53 AM
@Goblin :
PUHLEEZE.
Theres no reason to counter a Linux choice.
If someone wants to put up with that garbage it's purely their choice.
Posted by cc.torment | April 3, 2009 9:41 AM
My take on the Starter Edition of is mostly different than most users would expect. I sort of like it, as MS will almost have to give it away, and make little profit on it. I would almost consider actually buying a laptop with a 17" LCD, if it came with the "Starter" edition. Because, I will not use windows anyway, Linux will go on it. But I guess I could "reinstall" the "starter" edition in a virtual machine inside of linux at a later time, just for one online game that I play less and less. But I would rather use my older Windows licence than a new Windows Vista7 bloatware. See, I don't use windows to do much anymore, so no needto really multitask in windows either, so the 3 apps at a time do not bother me. What bothers me is given even one dollar to M$ for a product that I will never use most likely. But at least Starter is less of a M$ Tax for those of use who plan on wiping M$ products off the computer.
But since it will (starter) only be coming on Netbooks, and not on 17" laptops, I need not bother, as I will never give M$ that much money for a "full" version which I will never use, or do not need.
Posted by chips b malroy | April 3, 2009 1:21 PM
Hi Chips, Goblin.
Chips; Good idea.
Additionally if the trend continues as it is currently, within a few years it(7) will be free.
Of course, with Ballmer as CEO.
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Posted by Marco | April 3, 2009 3:50 PM
Quote CC.Torment"PUHLEEZE.
Theres no reason to counter a Linux choice.
If someone wants to put up with that garbage it's purely their choice."
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I think thats point proven.
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Although if I wanted to get picky Id point out that your post is not phrased correctly (IMO)
It reads to me like you support Linux and a counter choice to it is garbage. Its only because I know you as a foul mouthed MS supporter that I understood the meaning you were trying to put across not the inference others may take. Maybe thats just my poor understanding of my first language because I use Linux and am alleged to live in a basement.
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Great to see you still posting here CC.torment. I wonder if you could help me? Im trying to highlight the benefits of Linux on other Windows forums (hence why Ive been absent a while) I wonder, would you mind coming over and posting on some of those aswell?
Posted by Goblin | April 3, 2009 4:59 PM
Linux desktop IS garbage.
Of course that's my opinion. If you're happy with it good on ya.
I'd as soon stick my tasty bits in a fucking toaster as put up with that Duct taped together pile of crud.
I just take issue with the idea that people post here just to downplay Linux.
Linux-Watch--------->
If I gave a flying fuck about downplaying Linux as a choice I'd be over there bashing it, or hanging out on the Ubuntu forums or somesuch.
Posted by CC.Torment | April 3, 2009 6:29 PM
Quote CC.Torment "Linux desktop IS garbage."
After your vulgar little tirade, Im sure there are many people who youve convinced. I dont think Ill ever be able to look at a toaster the same way again now.
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Moving on.
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Chips made a very good point. Its often leveled at Microsoft that some people are paying for a pre-installed OS which they will never use. The Windows-Starter seems a good idea. As chips says MS nearly giving it away will make machines more cost effective for those people who dont want Windows in the first place.
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Of course I am aware that it is possible to get a refund on an unwanted Windows install , however I have read that it is not an easy task to do, and I dont believe I have read anyone claiming to have actually succeeded. (please anyone correct me)
Posted by Goblin | April 3, 2009 8:34 PM
The fact that Microsoft views a $300 netbook no differently than it views a $2000 high-end desktop computer, in terms of how much profit it should make from an OS on either, serves as yet another excellent example of why the United States should have broken up Microsoft up 10 years ago.
Posted by FatBastard | April 20, 2009 12:24 PM