Netbook Scoop

Brooke Crothers recently interviewed Intel executive Noury Al-Khaledy, general manager of Nettop and Netbook Computing.  While much of Brooke’s article describes how the explosion of demand for netbooks caught Intel (and the rest of the computer industry) by surprise, Al-Khaledy’s comments about Windows 7 on netbooks was more interesting to me.

Here are some key quotes from the article:

Unless Windows 7 is priced aggressively, Al-Khaledy doesn’t see it as a catalyst necessarily for a spike in Netbook sales. “I don’t see it as a big tipping point. It’s all about pricing. If you have to pay $30 more for Windows 7, it might make (consumers) pause.

There’s just not a lot of margin in the box,” he said. “(But) if Microsoft prices Starter and Basic aggressively, why wouldn’t you?”

“I would expect most (PC makers) will launch a Netbook with Windows 7,” Al-Khaledy continued. “The Starter, Basic (versions) should run well.”

I think this is a very realistic assessment of the situation facing Microsoft.

In the beginning, all netbooks ran on Linux.  When their popularity began to soar, Microsoft saw a threat to their OS monopoly.  They responded as they always do, by raising fear, uncertainty and doubt about their competitor and cutting their prices to the bone until the competitor is vanquished.

Offering XP Home Edition at bargain basement price on netbooks did not cost Microsoft anything.  But they need to make a profit on their investment in Windows 7.  But they can’t raise the price much.  Heck. the $30 that Al-Khaledy mentions would be a 10% increase for many netbooks.

That won’t fly.  Mostly because Linux is not gone.  As proof, see my article earlier today about how Linux continues to grow market share at a client OS on the Internet.

It is still the #1 server operating system.  And, although Microsoft would like you to believe that it’s being developed by geeks sitting in their underwear at night coding in their basements, in reality, Microsoft’s competitors (IBM, Novell and many others) continue to polish and improve it.

So you chould expect that Microsoft will continue to provide Windows for netbooks at a sweetheart price.  They will transition from XP to Windows 7 with a nominal price increase.

Even the most diehard Microsoft fanboys should be appreciative.  Without Linux challenging Microsoft, the price of netbooks would be a lot higher.  And maybe the netbook craze would have never happened.  After all, netbooks don’t run Vista very well at all.