MS Loves Netbooks, but not XP Netbooks

If a company produces a product and then sells it, said company would expect to see their profits increase with each sale. When Microsoft attempts to follow this concept, the specifics on which product is being sold gets taken into account. In some cases, each sale could actually decrease their profits.

Such is the case with Microsoft's long-standing love-hate relationship with netbook computers.

On one hand, Microsoft loves being recognized as the leading operating system provider for most netbook models. Microsoft was given "alpha" distinction after stealing the title away from Linux, which had been the earlier operating system of choice in this field because Windows Vista would not run on smaller machines. (Source: pcworld.com)

Microsoft now enjoys a 97% attach rate (the percentage of systems that run Windows).

While an increase in netbook sales means more copies of Windows are being sold, the versions suitable for smaller systems (the now-ancient Windows XP Home edition) is at its lowest-priced available.

XP-Installed Netbook Sales Cost MS a "Premium"

For every XP-installed netbook sale, the chance for that person to pick up one of the "premium" Windows editions is lost.

Of course, more powerful and traditional laptops will now run Windows 7 Home Premium, Professional or Enterprise, all of which Microsoft markets as part of a "premium" line of products that lead to more money being pocketed by the company.

What changes has Microsoft done to help their situation?

One options is to limit Windows 7 on computers with small screens and single-core processors. Many expect this to leave the paying populace bitter and resentful for having picked up a Microsoft-infused system in the first place.

Still, Microsoft is in dire need to boost client revenues. The company recently saw Windows first-quarter profits plunge 16% compared to the year before.

A number of corporate executives are blaming increased netbooks sales (as a low-cost substitute to standard laptops) being the main reason for these poor figures. Their case is supported by the fact that the "premium mix" (the percentage of Windows sales attributed to the higher-priced editions) fell 14 percentage points compared to the year before. (Source: cio.com)

While the reaction to netbook sales is mixed, almost all would agree that Microsoft personnel will sleep a whole lot better at night if people started treating netbook computers as the low-powered, accessory PC that they were intended for, instead of as a full-out substitute for a standard laptop computer.