Why Windows 7 Will Fail on Netbooks
Rumor has it that Microsoft has arbitrarily limited its definition of “netbook” to machines with screens smaller than 10.2 inches. This move is presumably intended to force more consumers to pay for the full version of Windows 7, rather than buying the less expensive (and less usable) “Starter” or “Home Basic” editions. But this strategy could backfire by driving sales of Linux-based netbooks, leaving Microsoft out in the cold.
The news follows reports last week that Microsoft has finally come to its senses and removed the ludicrous three-application limit imposed on Windows 7 Starter Edition (whether the privilege of changing the desktop background will also be restored remains unclear). But while the logic in that decision may have been sound, the notion that Microsoft will profit by forcing users to pay for the full version of Windows 7 on netbooks with larger screens is somewhat less founded.
Post-monopoly realities
In a world where Microsoft enjoys a total monopoly, a decree from Redmond that only the smallest and lowest-end netbooks qualify for Windows pricing discounts might work, since consumers and hardware manufacturers would have little choice but to comply–especially in the budget-laptop market, where Apple’s expensive product line-up offers no real competition to Windows.
But the netbook market, more than anything else, has made clear that the Pax Microsofta is no longer a sure thing. Although early predictions of Linux’s total domination of the netbook scene failed to pan out, Linux offerings from big-name netbook manufacturers like Asus, Dell and HP have done irreversible damage to the Microsoft monopoly by awaking consumers to the fact that they have a choice in operating systems.
Coverage of Ubuntu-based netbooks in mainstream media outlets like the New York Times and Wall Street Journal, even if it’s not always 100% positive, has further eroded Windows’ position as the only operating system that the masses take seriously.
Saying ‘No’ to Windows 7
When consumers have a choice and know it, they’re not going to blindly embrace whichever pricing schemes Microsoft decides to impose on the market. Rather than paying for Windows 7 Home Premium–which is likely to cost as much as a netbook itself–costumers will simply opt for Linux.
Neither will hardware manufacturers obediently acquiesce to Microsoft’s demands as they did in the past. If they find it difficult to sell netbooks whose price is doubled by being bundled with Windows, OEMs are likely to market Linux-based computers more vigorously–which will, in turn, increase public awareness of alternatives to Windows, fueling a cycle that ends with the collapse of Microsoft’s monopoly.
If Microsoft continues to operate under the delusion that consumers will choose Windows simply because they don’t know there’s an alternative that’s been embraced by mainstream users and hardware manufacturers, it’s in for a painful shock.
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Chris,
Who defines what the netbook form factor actually is? It’s just a buzzword. Why isn’t my laptop considered a netbook? Why don’t we just lump all the battery powered devices with full keyboards into the same category? Why not smart phones and my little nokia n810 wifi device running maemo? The definition of the netbook is arbitrary as it stands. Trying to point out that MS’s definition of netbook is relatively more arbitrary is sort of absurd. It’s like saying real circus clowns must have orange hair. Those clowns with green hair aren’t really circus clowns..they are really circus jesters.
I have a challenge for you. 6 months after Window 7 netbooks start appearing for purchase I would like you to make an effort to assess the market penetration of Window 7 and see if it matches up with your predictions and the underlying assumptions you’ve made about market conditions and what consumers are interested in paying for. Its real easy to get up on a soapbox and make glowing predictions. It’s much harder to assess the accuracy thereof. Are you in a position to make that assessment of where the netbook(however you define that) market stands when the time comes? If not, step off the soapbox and make room for someone else with the ability to do market analysis.
When you do the follow up article, I will expect to see an analysis which separates ARM adoption from Intel adoption. It may very well turn out that Window 7 adoption is hurt more by the introduction of competitively priced ARM hardware that competes with Intel atom chipsets than it is to Windows pricing alone. Will Windows 7 + Windows XP combined be pulled below the 90% market penetration that Windows XP currently enjoys on intel?
http://blogs.computerworld.com/study_windows_clobbers_linux_on_netbooks_with_over_90_share
That is the question I challenge you to answer with concrete and factual analysis after there have been a couple of quarters with Windows 7 sales on the books.
-jef
While I hope Windows 7 will not be a popular choice for netbooks, I think you make a flawed assumption. Microsoft will price w7 at whatever pricepoint they need to to get it preinstalled on most netbooks. They’ll slash the price to practically nothing, if they have to. They can afford that small ding to their bottom line. From MS’s perspective, the most important thing is to maintain the monopoly. Literally nothing else even comes close to mattering more to them.
So this will be the year of the Linux netbook? Suuuuure…
@Jef Spaleta: When you insist on allowing anything to be called a netbook (hey, why not call a tethered desktop tower a netbook?), then you can conclude anything you want and dispute any other conclusions you don’t like. But that’s kind of the point, isn’t it? Microsoft defines “netbook” to suit their assertions about netbook market share for their own operating systems. But remember, the first (recent) computers called netbooks only ran Linux and were incapable of running Vista. Microsoft had to bring Windows XP out of retirement just to gain a foothold in the netbook market. Linux users didn’t invent the term (it’s a disputed trademark), but the first systems, which ran Linux and came from Asus, defined it in terms of form factor, capabilities, and price. Since then, it has steadily been redefined by other vendors, including Microsoft, to mean any old laptop computer, just so they could claim to be riding the same wave.
Bill:
They might be able to do that for awhile, but they can’t do that forever. Unlike Shuttleworth, who is content on draining his personal wealth keeping Canonical and Ubuntu afloat for a decade or more without seeing any return on the investment and is accountable to noone but himself… Microsoft is accountable to shareholders and shareholders aren’t going to be keen on MS taking a loss for a substantial amount of time, even if its to protect a monopoly. An unprofitable monopoly isn’t worth protecting. In fact, the downward pricing pressure that linux alternatives is able to exert on MS as a competitor is indicative that MS isn’t that strong of a monopoly afterall. Monopolies are insulated from competitive pricing pressure. We could be getting to the point where its no longer really appropriate to call them a monopoly any longer. Even Apple’s marketshare in the desktop and laptop markets maybe indicative of that.
They can’t run at a loss for a significant amount of time. As netbooks become a bigger and bigger part of computer sales they’ll have to derive profit from them somehow..even if its not from the OS pre-install directly. Shuttleworth’s willingness to bleed cash to subsidize the cost of developing Ubuntu will most definitely cause MS to evolve its business practises. But its way to early to tell if MS is incapable of adapting and keeping a dominant marketshare based on merit. Just like its still to early to tell if Canonical can stand up as a self-sustaining business without continually being subsidized by Shuttleworth’s personal cashpile.
-jef
Scott:
Would you call the line of Asus EEE PC a netbook or a laptop?
Would you call the Dell mini 9 a netbook or a laptop?
It seems that even the Linux Journal readers can’t decide when to call a device a netbook and when to call it a laptop.
http://www.linuxjournal.com/article/10451
Favorite Linux Laptop
ASUS Eee PC (32%)
Honorable Mention
Lenovo T61p (16%)
Dell Inspiron Mini 9 (12%)
Acer Aspire One (10%)
How many of those listed there are actually “laptops” in your personal estimation? Who gets to decide that the Mini 9 isn’t a “laptop” or is a “netbook”?
The term “netbook” as used colloquially as no clear meaning. Nit picking one MS’s attempt to concretely define it, compared to anyone else’s is just a shallow excuse to throw dirt at MS.
There’s no consensus definition of where the line is between “netbook” and “laptop”.. there’s nothing distinctive about a “netbook” that you can point to. There is a spectrum of devices.
Okay maybe there is one thing you can point to. If the keyboard is uncomfortably small to use by an NFL lineman, its potentially a netbook and definitely not a laptop. But other than that, you are going to be hardpressed to point to a clear boundary between “laptop” and “netbook” that is not arbitrary.
-jef
In my earlier comment, I meant that they’d price Windows for Netbooks at discount prices. Regular computers would retain their regular pricing. Even though the netbook market gets all the buzz, it’s not really that big. For the price of a netbook, you can get a full size notebook. Most consumers would rather have the bigger screen. So the vast majority of computer sales will never be netbooks, so MS can afford to lose money in that area. They would still have laptops, desktops, servers, and Office as huge cash cows.
I also wouldn’t count MS out in using every possible underhanded tactic available to keep Linux out, including campaign contributions, and outright illegal activity.
Linux on netbooks only has a few real advantages:
1. It’s free and netbook margins are so thin that any cost savings should be taken.
2. MS doesn’t seem to want to customize the Windows UI for a small screen, so any distro that can figure out an awesome UI for a small screen has a good shot at success. (Ubuntu Netbook Remix isn’t good enough; Moblin looks promising)
Microsoft still has the bigger advantages though:
1. Monopoly
2. Windows only software
One last point. I wouldn’t count on shareholders taking anyone to task. MS hasn’t made them any money in years and they don’t seem to care. Balmer’s running the company into the ground, but he’s still in charge. Nobody wants to see MS crash more than me, but I wouldn’t bet on Linux dominating netbooks. At least not anytime soon.
Ironically, I think many people in the Linux community are underestimating Windows 7. Both Chris and I blog for WorksWithU, and we’re thrilled to have his contributions on this site.
But in this case I think Microsoft will figure out a way to regain at least some momentum with Windows 7. I sense that the learned quite a bit from the Windows Vista mess, and buzz is generally positive on Windows 7.
I do, however, agree with Chris on a key point: If Windows 7 for netbooks really does ship with the simultaneous application limit, Microsoft is going to face customer and OEM concerns.
-jp
Editorial Director
WorksWithU
Bill:
A complete MS crash would actually be a huge problem for a lot of people if it came suddenly. I would expect a federal bailout if that was imminent just to keep the lights on for a major restructuring and some breathing space to give everybody on the planet time to implement a real migration strategy. I’d rather see a more graceful transition of business practises where customers start paying MS to provide paths out of the application and data format lock-in we’ve allow ourselves to get into upto this point.
You point about actually designing an interface for the smaller form factor is a good one though. The HP mi interface that HP runs on its customized Ubuntu offering is also different enough for a traditional laptop to be compelling as a differentiated UI for small displays. I’m sort of surprised they didn’t get more buzz about the work they did on that. It’s definitely not a traditional desktop.
Maybe because the HP mi interface was done sort of behind closed doors whereas moblin is really trying hard to push the open to contribution project perspective of moblin version 2.
But then again Android gets a crap load of buzz and its not exactly a community effort either so I don’t really have a self-consistent explanation. If I wanted to be extremely sensational I could just say the HP mi interface failed to gain traction for the same reason the Moblin version 1 interface did…because Canonical’s involvement hampered its potential. But that’s probably too sensationalistic even for me. So I won’t say it. Oops I just said it…shame on me.
-jef
Jef: my intention wasn’t to ridicule Microsoft for imposing an arbitrary definition on the term ‘netbook’. The definition of netbook, as you point out, is quite nebulous anyway, and Microsoft’s specifications are no less valid than anyone else’s.
What’s really at stake, however, isn’t the definition of netbook; it’s which versions of Windows 7 will be (pre)installable on which laptops. By eliminating the less expensive editions of Windows as a choice on all but the smallest devices, Microsoft drives up the cost of Windows-based, low-end laptops with screens larger than 10.2 inches. It seems likely that many consumers looking for a cheap portable PC, whether it’s officially defined as a netbook or not, will be more inclined to consider Linux-based offerings when they realize that the cost of bundling a cheap laptop with Windows 7 Home Premium doubles its price.
In other words, if a customer is shopping for a low-end laptop whose Linux version costs $300 but whose Windows version is more like $550 due to the cost of Windows 7 Home Premium (Vista Home Premium retails at $260, so ~$250 for the Windows 7 equivalent is not unrealistic), the Linux offering becomes much more attractive. And I think Microsoft has arrogantly assumed that customers will choose the Windows version of the laptop just because they won’t realize there’s an alternative; this may have been true two years ago, but it’s increasingly false now as the viability of Linux gains recognition among normal end users.
Of course, Microsoft’s other option, as you mention, is to lower the cost of Windows 7 Home Premium to make it more competitive against Linux on low-end computers. But then Microsoft loses money on more expensive PCs.
Granted, this is all just speculation based on what seems to make sense to me; whether customers purchasing inexpensive laptops will actually be turned off by the comparatively high price of Windows 7-based offerings when XP is phased out remains to be seen. The ARM vs. Atom issue will also likely be an important factor, as will the user-interface considerations that Bill raises.
We’ll see what happens when Windows 7 has actually been out for a while.
[…] 7 – Why Windows 7 Will Fail on Netbooks | WorksWithU […]
Netbooks are low-powered laptops designed for browsing the web and doing light work. It doesn’t matter how big or small they really are.
Unless of course you’re a Microsoft executive watching your profit margin shrink to the point where you’re forced to lay-off staff for the first time ever and then “issue paper” to guarantee the company has the funds it needs to continue to strong arm the industry.
Windows 7 is on the way and Linux is just a bargaining chip for manufacturers to broker a better deal with Microsoft. The likes of Asus, Acer, HP and Dell used Linux to force extensions to XPs shelf life. I think it’s likely the policy u-turn on the three applications limit was not taken by Microsoft. It was taken by the OEMs.
OEMs turned to Microsoft and said “Why should we sell Windows 7 Starter Edition when we can sell Linux, get more from it and better access to the source code to make our own adjustments”. Microsoft buckled under the pressure and said “Fine we’ll lift the three applications limit”.
At this point in time Linux is a bargaining chip for the large OEMs. But we should be proud of the fact that Linux has come so far that even with supposedly only 1% market share. Linux has Microsoft running for it’s cheque book to buy reviews and issue “marketing dollars” and OEMs now have the power to shape Microsoft policy.
Windows on netbooks are a downgrade to the quality of life that users are accustomed. Which demographic comprises the netbook market. I think everyone is taking shots in the dark hoping that whatever the dart strikes will define the elusive target market. Once upon a time people used to write software to fit customer requirements. Interestingly Microsoft is defining requirements post hoc, and even then makes little effort to customize for fitness of purpose. Its pointless to have any operating system that barely runs before an application is launched. Internet browsers are resource hogs especially when it comes to rich presentation media like flash video. Perhaps the greatest benefit of Microsoft pushing up the lower limits defined for netbooks is that we get better netbook hardware to install Linux.
What are you guys talking about?
Netbook are small laptops (6 to 12 inch) which consume a lot less engery than normal laptops and usually don’t have an optical drive.
So, that wasn’t so hard, wasn’t it?
And for M$ going bankrupt?? Hello? They loose billions on Online Search and Xbox/Zune and still make billions each quarter.
No bailout necessary.
Very interesting discussion but I think some folks are missing some trends.
A) In the Oceania market that includes Oz and Nz ASUS no longer has a Linux based netbook in the lineup. Its all WinXP. I have not found out if that is ASUS’s global strategy as yet.
B) In the latest govt bid out of Oz, ASUS did NOT bid a Linux based laptop. Even though the price point might have made them the low bidder.
C) W7 has an issue that has nothing to do with technology. If the IT world is headed for a Atom like lowpower environment then W7 and by consequence Microsoft is locked out.
D) Not only that but Microsoft cannot spend billions on OS development only to sell the products at 75% off margin. That is a road to ruin in the channel.
Linux is taking some lumps right now (hate that). But Microsoft is going to take a larger dive over the next 5 years. What’s worse, much of Microsoft’s backend product is dependent on a Microsoft frontend environment. Oh they can interoperate with other OS’s but the RAD like development cycle disappears when you do that.
Long term we are looking at a multipolar OS world. One which will be unfavorable to Microsoft till they adjust.
This looks a little too candy-coated cheery.
I think this is underestimating Microsoft who, despite making some really dumb moves, is still the “king of the hill” of systems and it will take a lot to topple them.
On the other hand, though, is the kernel of truth that Linux has been getting the word out about itself and the public *is* becoming aware that there are alternatives! It may not sway the masses, but it at least is attracting the attention of people who would otherwise not have known there were alternatives.
A “netbook” is the device I’ve been desperately searching for for five years, which is small and full-featured and runs everything as well as my desktops do. That is, the Advent 4211 (rebranded MSI Wind U100) running Ubuntu 9.04 Netbook Remix that I’m typing this on and which is my real, honest-to-God, main computer now.
A couple of points.
Linux global installed base is likely greater than 1%, probably more like 6%. One factoid: GNU-Linux is 1/3 of sales of Dell Inspiron Mini 9s netbooks http://is.gd/kHWM .
Even XP netbooks come w Free Open Source Softwr pre-installed http://is.gd/JrYM .
HP is planning to offer Linux netbooks at $50.00 below the XP netbooks: http://www.theinquirer.net/inquirer/news/1137494/hp-strikes-netbooks
Intel makes the Atom processors that are so prevalent on netbooks, and OSstatic reported before on the fact that Microsoft has attributed some of its recent revenue shortfalls to the success of netbooks. In a recent 10-Q filing that came just before the software giant laid off 5,000 employees, there was this quote:
“The decline in OEM revenue reflects an 11 percentage point decrease in the OEM premium mix to 64%, primarily driven by growth of licenses related to sales of netbook PCs, as well as changes in the geographic and product mixes.”
http://ostatic.com/blog/intel-netbooks-continue-to-cannibalize-notebook-sales
There is still a huge, long competition before GNU-Linux reaches 50% install base, but Microsoft has some huge challenges in front of it, as is shown from the above-referenced mandatory investor disclosure in its recent US SEC annual 10K filing. If you want to know what worries a US corporation, look at its SEC 10k filing. Microsoft has been talking about Linux, Free Open Source Software and OpenOffice.org in its 10k annual filing for years.
Oh, and BTW, Microsoft’s stock has been flat since at least 2003, and perhaps Nov. 2002.
[…] Why Windows 7 Will Fail on Netbooks When consumers have a choice and know it, they’re not going to blindly embrace whichever pricing […]
I’m running Windows 7 RC on a 1 month-old Acer One-Note. It has 1 gb Ram. It’s noticably faster than my three year-old full-size “desktop replacement” laptop running XP with 1GB RAM, weighs 1/4 as much and has 3 times the battery life. If the official release of Windows 7 runs anything like this Linux stands no chance in the netbook market. The Acer is so convenient and pleasant to use, I don’t feel like I’ve given up anything going to a netbook (but I did go for the 10.1 inch model, my thick fingers could not handle anything smaller).
popurls.com // popular today…
story has entered the popular today section on popurls.com…
What this article doesn’t say and what no one here seems to know is that Microsoft is working with manufacturers such as Asus to define what a netbook is and therefore what version of the OS they will sell on it. The hardware manufacturers don’t like netbooks since they make much less profit on them than full sized laptops. If the people who write and sell the OS and the people who make the hardware it runs on agree on these arbitrary limits then you are stuck. Asus is also on an anti-linux campaign with Microsoft thereby completely reversing course on Linux.
http://www.itsbetterwithwindows.com/
I think Linux is too complex for the average Netbook user to grasp. Not saying Linux is complex but the average Netbook user is really an appliance operator, save the few geeks that can make them do anything they want.
The key issue here is whether or not MS will keep discounting Windows on netbooks. The market has already proven that it will not tolerate full pricing for windows on a netbook. If anything, MS’s missteps here will lead to OEMS’s continuing to develop out better consumer versions of linux, and possibly Android. I would be really interested to MS’s data on XP usage on netbooks, to see if people are really using them for anything else than web and email…
I think this article hits it right on the head. Why should a consumer that is buying a notebook even be worried about the operating system being crippled? Personally, I think this is wrong to hold back functionality on purpose. I can’t see how this will help the Windows 7 campaign. I have migrated all of my computers to Fedora Linux anyway, as I’m tired of dealing with the Microsoft pricing and political games. And, I couldn’t be happier.
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First off, your an idiot. Microsoft could care less if they make any money on their netbook OS. MS could even loose every single home user it has and be just fine. Most of their money doesn’t come from those sources, it comes from business’s that run windows servers and windows clients. If you think its gonna be the year of the Linux your dead wrong. Ya a lot of people are buying net books that come with Linux on it but guess what… They are taking Linux off and putting XP on! I am not a MS fanboy, I actually run a Linux server and a Linux client for my self. I am a big fan of Linux but its not to the point where its for the everyday computer user. Yes it has come a long way but the day when the command line is no longer needed is the day I will consider Linux a big competitor in the OS market. Till then it just a excellent OS that is meant for more advanced users.
I also hear stories about many people taking Windows off netbooks and notebooks and replacing it with Ubuntu. Linux is certainly ready for mainstream desktop evidenced by it’s worldwide popularity. We use Ubuntu desktops on all pc for personal and business. I know plenty of less advanced users who can use it. The only reason more aren’t is that people don’t like to invest in learning new things. This will change as Linux gets more exposure. Google’s Android, Moblin, Ubuntu and others are going to have a big impact in my opinion.
Two things may make W7 life a living hell —
1) ARM processors. The new chips that are coming out are very low power and imminently suited for the netbook lifestyle. They are also cheaper than their Intel equivalents. And MS does not support ARM. The price disparity between an ARM powered netbook running Linux will be glaring compared to its Intel W7 brothern.
2) The moves that Intel is making is that they are no longer placing all their bets on WinTel. Moblin is the indicator. But Google is in the act as well. Android can play in the netbook space quite well and ASE will provide plenty of demand to use it.
It figures that a linux website would sit here and bash windows 7 lol.
Being someone who uses a netbook more or less exclusively (like right now), I can tell you that all of these netbooks pretty much ARE the same. Whether you have an 8.9″ screen or a 10.2″ screen, a 2 hour battery or a 10 hour battery, an Acer or an HP, you’re still getting a 1.6 GHz processor with 1 gig of memory. And almost exclusively now, it comes with Windows XP Home. All of these stats mean that these things are so cheap because essentially you’re paying for a 7-year-old computer. With the cheap version of the operating system, that doesn’t even come with a word processor on it. Which in itself means you’re almost forced to get OpenOffice and other open source software.
I really want Linux on this (Acer) netbook, because it’s so damn slow. I’ve had it only about 1 year, and it’s aged considerably. I don’t know anybody with Windows 7, and I’ve barely used Linux, but I have trouble believing that 7 is the faster of the two. One thing is for sure: it’s got to be free!