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Microsoft asks just $15 for each XP netbook

updated 10:35 pm EDT, Sun April 19, 2009

MS Asks 15 for XP Netbooks

Microsoft's determination to wrest control of netbooks from Linux has seen it drop the bulk price of Windows XP for the systems to under $15 per copy, according to a leak from an unnamed source. Although Microsoft has never publicly disclosed its pricing for netbook licenses, the Wall Street Journal now hears that a copy of XP Home for the budget portables is less than a third the price of a Windows Vista copy for a typical notebook, which costs the PC maker between $50 and $60 per copy in large batches. The price is well below the usual $30 asked for the Starter Edition of Windows, which is meant for PCs in the developing world.

The pricing level partly explains Microsoft's push to complete Windows 7 and use its Starter Edition as the foundation for netbooks. The newer OS release is expected to command a higher price and will also be the first to have a clear upgrade path to more expensive editions, as all versions should still run well on low-end hardware like Intel's Atom chip. Last fall, Microsoft posted significant declines in Windows revenues and attributed it largely to strong sales of netbooks that undercut its normally much more profitable business.

Cutting the price of Windows for PC builders has been virtually necessary for Microsoft to maintain control of the low-cost computer market in the past 1.5 years. For the first few months after the original ASUS Eee PC launched in late 2007, Linux was the dominant operating system on netbooks as the usually free license let companies drop the price significantly lower than usual. Windows appeared quickly, but was often considered a premium option due to a relatively very high license cost. Linux is still frequently seen on netbooks but is usually only pre-loaded for the most basic systems, where price remains an important factor.

However, PC makers like Acer are already expressing doubts about whether Windows 7 Starter will necessarily be popular. It officially only allows running 3 apps at once, and while it often allows multiple sessions of the same app (such as for Internet Explorer), Acer's product marketing VP Sumit Agnihotry tells the Journal that it may be a 'tough sell' when the app limit is a downgrade from XP. Linux also doesn't face the same restriction.

Despite Microsoft's official claims of a Windows 7 launch near the 3-year anniversary of Vista's early 2007 introduction, the company has sped up development and should have a release candidate in early May with a final version ready by the fall.



By Electronista Staff
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Comments

  1. dagamer34

    Fresh-Faced Recruit

    Joined: Apr 2007

    +6

    Starter Edition

    This means that Windows 7 netbooks are going to be pretty expensive, defeating the entire purpose of buying a netbook in the first place (it's cheap!)

    And if Microsoft things that Windows 7 Starter is going to fly, boy do they have another thing coming!

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    MS tactics

    1. lower the price
      2. corner the market
      3. jack up the price again
      4. profit

      Netbooks will be harder to conquer for MS, the company's producing them aren't dumb and every dollar counts. Low cost and limited functionality devices like netbooks are ideal to run Linux.

      This market looks a lot like the MP3 and phone market, we're all waiting for Apple to step in.

  1. chucker

    Fresh-Faced Recruit

    Joined: Mar 2007

    +4

    3 apps

    "3 apps at once" really? are they serious?

    Goodness, I'd hate to be the fool that bought one of those machines and then found it practically unusable - welcome back to the dark ages!

  1. jarod

    Fresh-Faced Recruit

    Joined: Apr 2005

    -4

    $15 too expensive

    Historically speaking, MicroSH*T should be paying YOU to use its garbage. Not the other way around. Still don't understand how so many people actually spend good money on this trash.

  1. Constable Odo

    Fresh-Faced Recruit

    Joined: Aug 2007

    -1

    Definitely out to

    corner the netbook market. Many companies work that way. Take losses to grab the market and once the other companies are squeezed out, then you own the market and charge as much as you like. Some people consider this an underhanded way of doing business, but that's the way to dominate a market. Your product would have to be terribly bad in order to lose out in the long run. Microsoft can afford to take big losses. They will eventually dominate the netbook market providing the netbook market has any staying power and makes it even worthwhile to dominate.

    I'd have no problem with a limitation of running three apps at once on a low-powered netbook. Especially if they can trim the OS's footprint down by size and keep it responsive. I'm counting on it if MS makes Windows 7 cheap and small. Make it like CrossOver Lite for all I care.

  1. nat

    Junior Member

    Joined: Mar 2002

    0

    oops

    they're getting stung by their same tactics. hard to compete with free. i'm surprised they haven't gone all in with a free xp. they still have one cash cow left.

  1. hayesk

    Professional Poster

    Joined: Sep 1999

    +1

    MS and the Apple tax

    With low prices like that, I don't understand why people wonder why a Mac of the same specs as a PC costs more. Does anyone really think it only costs $60 per Mac sold to develop MacOS?

  1. luckyday

    Fresh-Faced Recruit

    Joined: Apr 2008

    -4

    !

    I dont' see Apple offering their OS for $15.

  1. snork

    Fresh-Faced Recruit

    Joined: Feb 2008

    +3

    Re: Constable Odo

    I agree with Constable Odo, I don't necessarily see the 3 app limit a deal-breaker for most people. I do consider myself to be a "power user" but when I'm using my HP Mini, I rarely have more than IE or Firefox running 1 additional app running since the Atom CPU really can't handle it and the screen res is too low to multi-task effectively too.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -3

    Re: MS tactics

    They aren't trying to 'corner' the netbook market, in the sense you specify, because they have a reasonable challenger to the space, as opposed to many years ago.

    Plus, computers aren't as much about the OS as they are about the Internet. So there's less of a consumer push for Windows on the low-end.

    Netbooks will be harder to conquer for MS, the company's producing them aren't dumb and every dollar counts.

    Oh, that's funny! They aren't any smarter or dumber than before. They are all after their own best interest, which means "What will get me more money in". In the past, they all signed, willingly, agreements for cheap windows because it was cost beneficial for them at the time (and seriously, how many really wanted linux?). It was only when it no longer worked for them revenue-wise did they whine and complain.

    The same will happen here. If they can garner more revenue from including $15 windows on their system (even if it means jacking the price up $15-25), they will do it. If not, they won't. It is that simple.

    What would have been really interesting is to see where the netbook makers would lean if Apple came in and said "We'll offer you OS X for $15 to put on your netbooks".

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