The first netbooks to hit the market in 2007 shipped with Linux. Microsoft wanted in on the action, and began offering low cost Windows XP licenses to netbook makers, and today the vast majority of mini-laptops ships with Windows. And from Microsoft’s standpoint, that’s probably better than watching one of the fastest-growing segments of the PC industry be dominated by Linux (although you could probably debate whether netbooks would have become as popular as they have if they weren’t shipping with Windows).
But Microsoft isn’t making nearly as much money off of these low cost Windows XP licenses as it does from pricier versions of Windows including Vista Home Premium or Ultimate Editions. And that makes a lot of sense, because you can’t exactly get away with charging $100 for the operating system on a netbook that sells for $300.
But with Microsoft poised to report its quarterly numbers next week, some analysts are looking closely at Microsoft’s “OEM Premium Mix,” which is basically the percentage of OEM computers shipping with higher priced versions of Windows pre-installed. A year ago it was 76. Now it’s closer to 62 percent.
Windows 7 could change things significantly. While some netbooks may ship with a low cost version called Windows 7 Starter Edition, the operating system has been designed from the ground up to work well on PCs with relatively slow processors, small amounts of RAM, and limited storage space. In other words, while many netbooks struggle to run Windows Vista, most should have no problem running even the fanciest versions of Windows 7. And that will let PC makers offer customers a choice of a dirt cheap netbook running Linux, Google Chrome, or a similar free and open source operating system, a slightly higher priced version with Windows 7 Starter. If you’re willing to shell out more cash for additional bells and whistles you can either upgrade to Windows 7 Home Premium or Ultimate on your own, or some computer makers may even decide to offer netbooks with these versions of Windows preloaded. So while next week’s financial results from Microsoft might not be the brightest, I wouldn’t exactly count the company out in the long run.