When netbooks first came along, they almost all ran Linux. Microsoft, which was stuck with the resource pig known as Windows Vista, simply couldn’t compete. So, reluctantly, Microsoft gave Windows XP Home a new lease on life and sold it below cost to OEMs (original equipment manufacturers) to kill the Linux desktop at the root. For this cost, Microsoft was successful, but now Microsoft is about to blow it by replacing XP Home with Windows 7 Starter Edition, which is crippleware by any other name.
Microsoft has been selling crippleware, software that’s deliberately had features removed, for some time. The only real difference, for example, between XP Home and XP Pro, besides the price-tag, was that XP Home couldn’t handle business domain or AD (Active Directory) networking. To get this one feature activated, millions of business users paid an average of $80 more per PC.
Today, Microsoft continues to sell XP, but the company really, really doesn’t want to do this. Why? Because Microsoft is losing money, especially on netbooks, when you buy XP. According to the Wall Street Journal, “the company takes in less than $15 per netbook for Windows XP once marketing rebates are taken into account — far less than the estimated $50 to $60 it receives for PCs running Windows Vista.”
Actually, my friends at the OEMs tell me that it’s not even $15. Try about $7 a copy. At either price, Microsoft is losing money every time you buy a copy of XP. Is it any wonder that Microsoft is laying off employees and admitting that its client (Windows desktop) revenue declined 8% as a result of PC market weakness and a continued shift to lower priced netbooks?”
