Windows 7 $tarter Edition?

By  |  Monday, June 15, 2009 at 10:25 am

I’m not an expert on how to price operating systems for maximum sales and profit. Microsoft is. So I hesitate to jump in here, but a DigiTimes story (as covered by Ars Technica) is suggesting that Microsoft may want about twice as much money from PC manufacturers to put Windows 7 Starter Edition on a netbook as it currently charges for Windows XP. Says Ars:

This translates to at least a $50 increase in price if netbook makers want to offer Windows 7 as opposed to Windows XP. That typically isn’t a big deal, but for netbooks, $50 is a very big difference, so it’s no wonder OEMs are still trying to negotiate with Microsoft. Most laptops currently offer Windows Vista, which should have a much smoother price change going to Windows 7.

Regardless of Windows 7 Starter’s pricetag, the whole boom in under $400 netbooks presents Microsoft with one of its biggest challenges ever. There simply isn’t enough profit built into netbook prices for it to charge PC manufacturers what it’s used to getting for a copy of Windows. So far, it’s managed to keep Linux from getting much of a toehold by selling Windows XP for cheap. But the situation presents the best opportunity for alternative operating systems that’s come along in a long time, and as contenders from Android to Jolicloud jump into the netbook market, it’ll be fascinating to see if they catch on…and how Microsoft responds.

 
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5 Comments For This Post

  1. Dave Says:

    Microsoft needs to learn from the iTunes App store effect. More volume at a lower price can mean equal or even greater profits (especially when dealing with digital distribution). We used to have two computers in our house… a desktop and a notebook. Now we have 5: a new desktop, the same notebook, a media center PC and two new netbooks. We would have never considered "his and hers" computers before netbooks came on the scene. Now both my wife and I each have our own because they are so cheap. If you reverse the cheap, we won't keep that up. Cheaper=more value and a higher quantity of purchase in my household.

  2. MTH Says:

    Windows 7. After the Vista failure is anybody taking Microsoft seriously anymore?

  3. Marc Says:

    I suppose it depends on whether Netbooks, like other PCs keep getting better specifications. If people are happy to keep buying 2GB RAM with Atom processor, and Windows 7 runs fine on them, then the falling cost of hardware will balance out the extra cost of Windows 7. Of course Linux is free, but Windows 7 has better hardware support, is more familiar to most users, and is of overall better quality (I say that as someone who uses Ubuntu daily, and has used Fedora and RedHat since 2000, the quality at the UI level isn’t as polished as Windows) so you can see why they stick with it.

  4. WHH Says:

    @MTH

    i don’t understand why vista is considered a “failure”, i have had is since it came out and have not had a single problem with it. i would choose it any day over xp, and although i will upgrade to windows 7 it is only because the new features seem like a great add-on to vista.

  5. JDoors Says:

    I’ve seen a lower estimated pricing difference between Windows 7 Starter Edition and XP for netbooks (that $50 price is the TOTAL cost of 7SE, so if XP costs $20-$30 then the price difference is only $20-$30). Is $20-$30 too much for a brand new OS with more features, more functions and more future-proofing? (How much longer is XP going to be supported?) Is $50 too much for an essentially new OS?

    And how many people are going to be affected by this anyway? How many people REALLY want a limited-function netbook vs. a 100% fully functional computer that happens to be small and relatively inexpensive? There’s a market for the absolute cheapest possible netbook regardless of limitations (and netbooks that have “free” OS’s installed fulfill that market), but SO WHAT if MS aims a touch higher? Why SHOULD they supply a product that will never make money for them?

    What is this, the EU? (Ba-da-BING!)

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