Microsoft accidentally dominates the ultraportable PC market

August 01, 2008 9:06 PM EDT

SANTA BARBARA, CALIF. -- Years ago, Microsoft led a massive industry effort to define the future of ultra-mobile or ultraportable PCs. The future, according to the Microsoft vision, would be tiny, expensive "Ultra Mobile PCs" with exotic form factors running Windows Vista. It didn't turn out that way.

Fast-forward to today. After decades, the long-predicted dream of mainstreaming ultraportable systems has finally become a reality. A Taiwanese analyst called Market Intelligence Center, projects that ultraportable PC shipments will reach 8 million this year, and 18 million next year. But it's not the dream Microsoft envisioned.

Instead of whacky, expensive and proprietary UMPC form factors, the mainstream ultraportable is a standard laptop, but smaller and cheaper. And -- importantly -- instead of Windows Vista, the dominant operating system is Microsoft's 7-year-old Windows XP -- the operating system Microsoft wants to kill off entirely.

Microsoft stopped most sales of Windows XP June 30 -- about a month ago. Tellingly, the company announced in April that it would make one grudging exception to its termination of Windows XP: It would sell XP to OEMs that sold subnotebooks.

I believe the reason for that exception is that it became clear that Windows users were happy to dump Windows altogether in favor of Linux if the subnotebook was cheap enough, and the Linux UI was simple enough. The runaway success of the ASUS Eee PC proved that.

Because of Microsoft's butt-saving decision, a majority of subnotebooks now run Windows XP. Microsoft is actually dominating the market, but with an OS it wanted to kill off and on a form factor it hadn't promoted.

I just bought an ASUS Eee PC 901. It runs Windows XP. It's clear that Microsoft's old operating system, Intel's new Atom processor, and ASUS's cheap-but-solid hardware is a winning combination for casual mobile use. I couldn't imagine using one of those expensive, funky UMPC gadgets running Windows Vista.

The category is coming alive, and is about to explode. The Windows XP-based MSI Wind is getting a lot of attention. HP, Dell, Acer, Sony, Toshiba, Fujitsu and others are getting into the act as well.

This is a positive development for users. We can look forward to great ultraportable computers at fire-sale prices.

For Microsoft... not so good. The UMPC initiative has officially failed, and Vista has been rejected as an ultraportable platform. For the foreseeable future, it's a small, cheap and Windows XP world after all.

Microsoft rules the market. But this wasn't the plan at all.