More reasons netbooks are killing Microsoft

Replying to this

Replying to this exchange:

"There's very little margin on a machine selling for $200 or $300, and so Microsoft simply can't charge full freight for Windows on one." / "Now, this one just floors me. Preston, the MSRP of a netbook has little to do with what Microsoft decides to charge for its software."

I have to point out the obvious - if the manufacturer wants to sell a complete system for $200, they have to spend less than $100 on components (given typical consumer electronics margins for distribution, marketing, etc.).

So while it's true that Microsoft can charge whatever it wants for its software, it's also fairly obvious that if MS charges too much, manufacturers will use a less expensive (or free) alternative in order to hit their target cost of goods.

"7. Fact - A royalty OEM license, or any system builder license for a particular product or version on a netbook is the same license as the one on a laptop"

This is possibly technically correct, but given the realities of the software business is meaningless. For example, Microsoft currently sells XP for netbooks at a much lower price than XP for other computers. It's the same OS, but the licensing terms are restrictive - OEM's can only sell the cheap XP on slow PC's with limited storage and RAM. If an OEM wants to sell the same OS on a mainstream PC, they have to pay much more for the license to do so. Given that Microsoft has announced that Windows7 will run on netbooks, which means that it has to cost those OEMs small fraction of $100, and assuming that Microsoft would like to keep making $billions from mainstream PC OEM's, it seems pretty obvious that they will continue to do what they're already doing, and sell the OS for less for netbooks and more for mainstream PC's.

Don't forget that unlike hardware, software has no unit cost, so MS can package and price it any way that they like in order to make money; all they have to do is rename the product, or tack on a license term, and they can drop or raise the price all they want.

As for whether Microsoft loses money when people buy XP instead of Vista, well, at the very least they're losing sales of the higher-priced Vista to the lower-priced XP, which is costing them money. But what's probably more concerning to them is that Microsoft's market share is eroding. They used to be able to assume a virtual 100% market share, and optimize revenue based on maximizing revenue from a captive customer base. Now they have actual competition, with significant and growing percentages of computer users buying Apple and Linux systems, which means that Microsoft has to actually compete against a viable, not just theoretical, alternative. So compared to losing the entire netbook market, Microsoft is probably happy making a few dollars on XP licenses rather than having an entire generation of computer users trained in Linux. Heck, if they had to, they'd probably give XP away for free just to keep Linux from getting a foothold - they'd done that on a number of international deals, so it wouldn't be the first time.

Replying to this

Replying to this exchange:

"There's very little margin on a machine selling for $200 or $300, and so Microsoft simply can't charge full freight for Windows on one." / "Now, this one just floors me. Preston, the MSRP of a netbook has little to do with what Microsoft decides to charge for its software."

I have to point out the obvious - if the manufacturer wants to sell a complete system for $200, they have to spend less than $100 on components (given typical consumer electronics margins for distribution, marketing, etc.).

So while it's true that Microsoft can charge whatever it wants for its software, it's also fairly obvious that if MS charges too much, manufacturers will use a less expensive (or free) alternative in order to hit their target cost of goods.

"7. Fact - A royalty OEM license, or any system builder license for a particular product or version on a netbook is the same license as the one on a laptop"

This is possibly technically correct, but given the realities of the software business is meaningless. For example, Microsoft currently sells XP for netbooks at a much lower price than XP for other computers. It's the same OS, but the licensing terms are restrictive - OEM's can only sell the cheap XP on slow PC's with limited storage and RAM. If an OEM wants to sell the same OS on a mainstream PC, they have to pay much more for the license to do so. Given that Microsoft has announced that Windows7 will run on netbooks, which means that it has to cost those OEMs small fraction of $100, and assuming that Microsoft would like to keep making $billions from mainstream PC OEM's, it seems pretty obvious that they will continue to do what they're already doing, and sell the OS for less for netbooks and more for mainstream PC's.

Don't forget that unlike hardware, software has no unit cost, so MS can package and price it any way that they like in order to make money; all they have to do is rename the product, or tack on a license term, and they can drop or raise the price all they want.

As for whether Microsoft loses money when people buy XP instead of Vista, well, at the very least they're losing sales of the higher-priced Vista to the lower-priced XP, which is costing them money. But what's probably more concerning to them is that Microsoft's market share is eroding. They used to be able to assume a virtual 100% market share, and optimize revenue based on maximizing revenue from a captive customer base. Now they have actual competition, with significant and growing percentages of computer users buying Apple and Linux systems, which means that Microsoft has to actually compete against a viable, not just theoretical, alternative. So compared to losing the entire netbook market, Microsoft is probably happy making a few dollars on XP licenses rather than having an entire generation of computer users trained in Linux. Heck, if they had to, they'd probably give XP away for free just to keep Linux from getting a foothold - they'd done that on a number of international deals, so it wouldn't be the first time.

why do you care?

I'm inta keeping up to date with what microsoft and more apple (cause it' just more interesting) are doing, but how the hell long did you spend writing this spitefull list. Get a life man. Microsoft doesn't care what you think, or how many facts you know and neither does anyone else.

Fair Profit

"The Netbooks licenses still sold at nice markup and a fair profit."

Key point. MS can't survive as it is on a 'fair profit'. The entire company is structured on gouging locked in customers for every penny they can get. How will they pay for their bloated infrastructure and numerous money-losing side bets?

Linux in all its flavors

Linux in all its flavors still isn't user-friendly enough to make me want to switch

To each his own. I find that Ubuntu isn't half bad in this regard. There are a lot of apps that aren't particularly user friendly, but there are plenty of apps that are, and the unfriendly ones tend to be very powerful. That said, Linux still isn't for everyone, and there are plenty of reasons for this.

And if I were as rabidly anti-Microsoft as all the Linux fanboyz are, I would certainly proclaim it to be the only reasonable OS for users who are (a) willing to struggle with an unfriendly and software-deficient operating system, or (b) in need of a cheap or free operating system that gives them only limited capabilities such as email, watching DVDs, listening to mp3s, surfing the Net, and writing basic word processor documents.

I'm going to have to call BS on this one. There is not a lack of good software for Linux, it's just different (in interface, name, or whatever) from the software people are used to on Windows. Also, your list of uses for Linux seems to cover everything most people use a computer for except for games (which do suck on Linux). And there are good, easy to use applications that fill these roles on Linux.

I honestly don't think Linux is going to be replacing Windows any time soon, no matter how easy to use it becomes. People tend to stick with what they already know, and for most people that's Windows or Mac.

I do get fed up with the people who think everyone should switch to Linux. On the other hand, I also get fed up with people who think that nobody should use Linux.

Your ignorance is showing

"And if I were as rabidly anti-Microsoft as all the Linux fanboyz are, I would certainly proclaim it to be the only reasonable OS for users who are (a) willing to struggle with an unfriendly and software-deficient operating system, or (b) in need of a cheap or free operating system that gives them only limited capabilities such as email, watching DVDs, listening to mp3s, surfing the Net, and writing basic word processor documents."

More than two-thirds of all servers on the Internet are running Linux. The most powerful graphics editing software available runs on Linux. Even MS Office will run on Linux (although that's rather like buying a Turbo Porsche and putting a horse trailer behind it).

Fact is, MS can't compete in terms of price, innovation, or reliability, and *that* is why MS is hurting. And every person who buys a netbook with Linux installed is one more person who discovers that MS doesn't actually make computers; they only make computers slow, expensive, and crash-prone.

And I get paid to keep those computers running.

Problem is...MS Office

Problem is...MS Office 2007's ribbon takes a lot of vertical screen real-estate, just what the netbook format lacks...I guess MS never saw the netbook avalanche coming when they decided to redesign Office's user interface. So what's MS to do about it? rollback the ribbon? offer a small-screen friendly version? revive Office 2003 for netbooks?? I think MS is very screwed, caught between this market shift with peculiar limitations and a product lineup that suffer from assumptions during their design stage,and that no longer remain valid.

Just wait a bit and you'll be able to run Google Apps offline with the help of Google Gears and Google Chrome, and you also won't have to worry about your files stored in the Google Cloud, since they'll be in Sync with your hard drive.