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April 20, 2009

Windows 7 To Be Limited On Netbooks

Microsoft sees the netbook craze as a threat to profits on the Windows side of the business.  The company is forced to offer XP, where it makes $15 a copy, as opposed to Vista, which brings in around $55 a copy.  Vista doesn't work on netbooks as it is requires more power than these machines carry.  Enter Windows 7, which runs fine on netbooks.  The world is saved and another revenue stream is preserved, except that Microsoft wants to sell a deliberately crippled version of Windows 7 that can only run 3 simultaneous applications.  The consumer can upgrade to the full version of Windows 7 for an additional fee. 

I wonder if Microsoft has considered the implication of selling a product that can easily be labeled as artificially limited in a market where price point matters to consumers.  These machines sell at $300 or so for a reason, and it's not purely the convenience of running an unrestricted version of XP that keeps prices low.  People can use them as Internet capable machines and for simpler tasks given the power for the cost.  Perhaps that was what Microsoft is thinking in the pricing for the OS.  Who can use more than three applications at a time without taxing the system.  However, the potential is there for these machines to become more powerful over time.  Look at how inexpensive laptops can match most desktops for power these days.  The premium for portability is slight compared to costs from even five years ago.

Microsoft may be seen as gouging the customer under these circumstances.  It's earlier pricing plans with XP and Vista went to features which some classes of users never needed to pay for.  This is different.  The move may play into the hands of those promoting Linux as a mainstream consumer operating system.  Consumers may care about buying a machine that doesn't charge them a premium after purchase to unlock capability.  More in the Wall Street Journal.

April 20, 2009 | Permalink

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