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Windows 7
There is a lot of hubbub today about the Microsoft’s pricing plans for Windows 7 and the impact on the netbook market niche.
In a nutshell, Microsoft’s current plan is to have netbooks ship with a crippled version of Window 7 called the Starter Edition. Then to charge $80 to upgrade to the Home Premium Edition. With the typical purchase price of a netbook in the $300 – $400 range, this represent a 20% increase in the cost of a netbook.
To ensure that many netbook owners will be willing to fork over the the $80, Microsoft is crippling the Windows 7 Starter Edition by eliminating remote media streaming, changing desktop background and other “advanced” features.
Of course, netbook manufacturers can bypass all that by installing Windows 7 Home Premium at the factory. As a result, the list prices will rise by $50 or so.
We forecasted all this back in June in our article “Netbook Market: What Is Coming Next?“, where we said:
Microsoft currently owns a near monopoly on netbook operating systems. However, Microsoft has accomplished this by licensing Windows XP for nearly nothing for netbooks.
Google Chrome OS Logo
Microsoft wants to retire XP and move netbooks to the soon-to-be-introduced Windows 7. They are still trying to develop a scheme to increase licensing fees for netbooks. It appears that they will offer a somewhat crippled version of Windows 7 for netbooks – and entice netbook purchasers to upgrade.
Microsoft’s other strategy will be to severely limit the hardware on which the Netbook version of Windows 7 can be licensed. This will force netbook makers to ship new models with more expensive versions of Windows 7.
While they are still making a boatload of money, Microsoft’s financial performance has been waning recently, and there is a lot of pressure for them to remedy the situation.
The wild card in all this is you and I! How much will we be willing to pay? Will we simply roll over and pay the new Microsoft tax? Will we stop buying netbooks because the price is too high?
I expect that Google will take advantage of the situation by introducing an OS for netbooks. Whether that is called Android or Chrome OS is irrelevant. Google benefits if they can distract Microsoft and minimize their margins.
iPhone Applications
Both of these Google OS’s are built on Linux. Netbook buyers have already voted (with their dollars) against Linux-based netbooks. The real key is the inability to run Windows applications on Linux. Google will attempt to circumvent that problem by copying the iPhone App Store concept. They already have one for the Android OS called Android Market, but the applications here are better suited for cell phones. I expect we will see a Chrome OS App Store offering netbook applications soon.
I am a big Linux advocate, however, I don’t think Google will be successful in capturing any significant market share. Primarily, because people purchase netbooks with the intent on using them primarily as second computers. They expect them to work and run the same applications as their primary computers do.
On the other hand, I think Google already knows this. Success for them may be measured in whether they can force Microsoft to alter their plans and settle for lower Windows 7 revenue. In that case, the end users (you and I) win as well.
This is going to cause confusion with too many choices.
That was part of the reason why Vista failed. There is home basic and home premium. Then you get to choose between
Works and Office. With in Office there are several choices.
Microsoft stays on-top by confusing the buyer but they figure they are doing the right thing because it has MS’s name on it.
It is the same battle with Intel and AMD. Too many choices period.
I do agree that Microsoft confuses everyone with the nine different versions of Vista. But Microsoft’s Vista failure was due to a lot more than confused customers.
The primary issue was that Microsoft believed that they could sell an over-weight, over-featured operating system and compel their installed base to replace all of their existing hardware. The problem was that users didn’t find anything in Vista worth the huge upgrade expense.
They really shot themselves in the foot with the Vista Ready program. That was where OEMs sold new computers that were supposed to be able to run Vista, but in reality were underpowered. Customers decided not to upgrade.
Of course, the Vista Ready program was only needed because Microsoft was years late in completing Vista.
In order to bring Vista to market, Microsoft dropped many features that they had been touting for years and had created a buzz. That was big factor in the degree of disappointment in Vista.
Did I mention how much of a dog Vista was when it was first introduced?
In any event, it looks like they learned from their mistakes. Windows 7 runs fast and Microsoft has avoided most of their Vista mistakes. The only thing issue that I see as a potential pitfall is the packaging and pricing issue.
Microsoft really, really needs to increase revenue. I believe they will overprice Windows 7 and drive customers away.
If anyone ever invents a way to run Microsoft apps inside a Linux OS (please don’t tell me about WINE), Microsoft would be in real danger.
If I were Microsoft, what would keep me awake at night is the worry that Google will invent a compiler that would let applications developers simply re-compile their existing code and, viola, their applications would run in Linux.
Can you say ‘Turbo Tax for Linux’ or ‘iTunes for Linux’?