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Netbooks Take a Bite Out of Windows Profits

timothy posted more than 5 years ago | from the ineffables-abound dept.

Linux Business 221

twitter writes "Analysts at Bloomberg noticed the tumble in Microsoft's traditional software sales last quarter and blamed it on netbooks: 'The devices, which usually cost less than $500, are the fastest-growing segment of the personal-computer industry — a trend that's eating into Microsoft's revenue. Windows sales fell short of forecasts last quarter and the company cut growth projections for the year, citing the lower revenue it gets from netbooks. When makers of the computers do use Windows, they typically opt for older and cheaper versions of the software. Equipping Linux on a computer costs about $5, compared with $40 to $50 for XP and about $100 for Vista, according to estimates by Jenny Lai, a Taipei-based analyst at CLSA Ltd.' This is why MS declared war on the segment last year and palm top computers in previous years. While they may have successfully tamed the Asus EEE PC, they can't hold back everyone who wants to make a buck on cheap hardware and free software. Analysts have predicted the fall of MS's business model when computers break below $250/unit retail. We are there now, and it has shown in the bottom line."

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The troll, the legend (-1, Offtopic)

Anonymous Coward | more than 5 years ago | (#25688995)

This is what twitter has been doing to Slashdot for most of the year:

http://slashdot.org/~SockDisclosure/journal/214377 [slashdot.org]

Advocacy in action:

http://slashdot.org/comments.pl?sid=1014837&cid=25591469 [slashdot.org]

Disagree [slashdot.org] with the troll and find yourself in his troll list [slashdot.org] , where
he also documents death threats for the win.

Bragging with buddies about how "M$" monitors the way he creates accounts on Slashdot:

http://boycottnovell.com/2008/11/08/irc-log-07112008/#tNov%2007%2021:19:07 [boycottnovell.com]

Treatment of people who revealed what he was doing:

http://slashdot.org/comments.pl?sid=993447&cid=25494651 [slashdot.org]

Trascending Slashdot and bringing everyone down by association:

http://www.osnews.com/conversation/483454a1/Do_you_get_tired_of_the_Web_Hype_ [osnews.com]
https://lists.ubuntu.com/archives/ubuntu-users/2008-August/154926.html [ubuntu.com]
http://forums.somethingawful.com/showthread.php?threadid=2933313#post347878554 [somethingawful.com]
http://blogs.msdn.com/oldnewthing/archive/2007/11/06/5924058.aspx#6051569 [msdn.com]

Original submission, with original puerile style:

"Analysts at Bloomberg noticed the tumble in M$'s traditional software sales last quarter and blamed it on netbooks:

The devices, which usually cost less than $500, are the fastest-growing segment of the personal-computer industry -- a trend that's eating into Microsoft's revenue. Windows sales fell short of forecasts last quarter and the company cut growth projections for the year, citing the lower revenue it gets from netbooks. When makers of the computers do use Windows, they typically opt for older and cheaper versions of the software.

Equipping Linux on a computer costs about $5, compared with $40 to $50 for XP and about $100 for Vista, according to estimates by Jenny Lai, a Taipei-based analyst at CLSA Ltd.

This is why, M$ declared war on the segment last year and palm top computers in previous years. While they may have successfully tamed the Asus EEE PC but, they can't hold back everyone who wants to make a buck on cheap hardware and free software. Analysts have predicted the fall of M$'s business model when computers break below $250/unit retail. We are there now, and it has shown in the bottom line."

Welcome to the trolled by twitter club [slashdot.org] , timothy.

Re:The troll, the legend (5, Informative)

hairyfeet (841228) | more than 5 years ago | (#25689249)

While twitter may be a PITA,and his talking to himself with sockpuppets is just....well,it is pretty obvious the guy needs mental help, this does point out something I've been saying for a long time: MSFT is pricing their goods WAY too freaking high! $99 for XP Home? $199 for XP Pro? Is there ANYBODY else who charges THAT much for software THAT old? The MSRP retail hasn't changed since it came out in '01! And then they total crazy BS of Vista,with its,what? Six different versions? And the cheapest one is STILL $100? Totally freaking crazy.

If MSFT doesn't want to get their asses handed to them they better learn to accept normal profit margins on their software. Not to mention giving the public what they want. I mean,have you EVER heard of any other company killing off a product that was still selling quite well after 7 years? Most companies would kill for a product like that!

Mark my words: The netbooks and nettops are going to take up a serious chunk of the lowend. Because with even a half ass GPU added(so they can play High Def vids) they will do everything your average Joe wants to do with his machine. Last year when I walked through the college I saw full size laptops everywhere. Now I see very few full size while everyone has a netbook sitting on their lap. If MSFT doesn't learn to take a normal profit like everyone else then the custom Linux distros like the EEE Xandros(which is the most popular model at the local college) are going to seriously kick their ass. After all,they have a couple of years old desktop at home to run their Windows software on,so why should they pay so much more just for an old MSFT product?

Re:The troll, the legend (5, Insightful)

RiotingPacifist (1228016) | more than 5 years ago | (#25689315)

But Microsoft don't make much money on home sales or oem sales (its something like $10-$20) they make their money on corporate sales, which are unaffected by the netbook trend. So this article IS just twitter bullshit.

And this isn't the 1st time timothy has been caught.

Re:The troll, the legend (4, Interesting)

dokebi (624663) | more than 5 years ago | (#25689581)

Monopoly, meet perceived value.

Before MaBell was broken up, only Bell System phones could be connected to the phone line. And they charged arms and legs for that phone. Why? One, you didn't have alternatives, and two, if they charged too little, then customers wouldn't appreciate the service as much.

The price of something has very little to do with cost, especially in software. How much is an accounting program worth it to you? How much is it worth to a business? What if that software cost $20,000, and runs only on Windows with no alternatives? $200 is cheap in comparison.

Add to this the fact that OS is bundled with the computer (no direct means of perceiving the cost), it's very wise to set the retail price high. See, our product must be good to cost that much.

As much as I like GNU/Linux (3/4 of my boxes boot Linux), for most people, it's worth paying the $100 -$200 to get an OS that runs all the other popular software.

Re:The troll, the legend (1)

negRo_slim (636783) | more than 5 years ago | (#25689785)

MSFT is pricing their goods WAY too freaking high! $99 for XP Home? $199 for XP Pro

I'm going to have to agree with you... I remember when I went down to finally buy a copy of Windows. My copy of 2000 was burnt for me at a repair shop in Beaverton, Ore.. The days before WGA were great... And that's what I call customer service! Either way XP Home was a big chunk of the money I had budgeted for upgradery, and lo and behold it didn't support dynamic disks, something I had nearly forgotten about. I really would of appreciated a little warning before losing all my data. So needless to say I don't buy Microsoft products anymore. A fucking warning, a note on the box, a real fucking manual. Anything to justify that price. I could give two shits about holographic stickers and CD labels.

That being said I believe the article is regarding the cost of the hardware to support the OS. More memory for XP, even more for Vista, etc..

Re:The troll, the legend (4, Insightful)

UnknowingFool (672806) | more than 5 years ago | (#25689897)

I mean,have you EVER heard of any other company killing off a product that was still selling quite well after 7 years? Most companies would kill for a product like that!

Some companies do that when they feel that they need to make progress and their current product is holding back. Apple did it when they killed their iPod mini line even though it was their best selling line of iPods. Apple could see that flash was the wave of the future for smaller MP3 players and moved towards it. Unlike MS, Apple provided a better product at the same price. MS provided a product that was superior in some ways and inferior in others. However the cost was higher factoring hardware requirements. For those upgrading on older machines, Vista was not an improvement.

Re:The troll, the legend (1)

Lumpy (12016) | more than 5 years ago | (#25690131)

Average joe does not care about high def video.
Average joe cares that his DVD quality looks better than regular.

Therefore give them medicore 3d and 1/2 way video acceleration and you got a winner. Mine so far has played everything I can throw at it.. It freaked on a 1080p uncompressed video, but then I know of quad core machined that freak on that one.

Re:The troll, the legend (0, Offtopic)

Zontar The Mindless (9002) | more than 5 years ago | (#25689319)

Guess what? Some of us have lives, and recognise the fact that, hey, it's just a website. If you don't like it, find a different one. I hear that there [4chan.org] are [digg.com] several [google.com] to [yahoo.com] choose [msn.com] from [www.gnaa.us] on this Internet thing.

Why make it more complicated than it really is? (5, Insightful)

schnikies79 (788746) | more than 5 years ago | (#25689003)

The economy (U.S. and the world) has slowed. Why would Microsoft be bucking the trend?

Re:Why make it more complicated than it really is? (4, Interesting)

jonbryce (703250) | more than 5 years ago | (#25689077)

Microsoft is regarded as a utility stock these days - in a recession, people still need computers as they aren't the luxury item they once were.

Also China and India are much bigger than USA and Europe, and those markets are still growing, at a slightly slower rate than before. That ought to more than counteract any decline in western economies.

Re:Why make it more complicated than it really is? (4, Insightful)

symbolset (646467) | more than 5 years ago | (#25689129)

Lots of talk of late about moving to less frequent refresh cycles. The bathtub graph of failures is more like a hockey stick, and the PCs in place have the processing power to meet people's needs throughout the current fiscal difficulty.

Software support is of course an issue, but there are no fixes for this either on offer or projected through FY2011.

Re:Why make it more complicated than it really is? (1, Informative)

David Gerard (12369) | more than 5 years ago | (#25689743)

Ubuntu and FreeBSD work wonderfully here on my PIII 1.2GHz laptop and PII 450MHz household server (with KDE for when I'm desktopping on it). Mac OS X 10.4 works wonderfully on our 400MHz G3, 400MHz G4 and 800MHz G4.

Really - this is all a Microsoft problem, because their software is mediocre.

Re:Why make it more complicated than it really is? (2)

Cowmonaut (989226) | more than 5 years ago | (#25690223)

I'll add to parent's post with another point:

It seems to me that hardware vendors for PC components have been so competitive compared to software creators that they've shot themselves in the foot by making such powerful devices.

Let's face it. Several things have caused software development to take a steep nose dive in terms of innovation over the years. Some blame lies with business practices such as MicroSoft's well known "Embrace, Extend, Extinguish" or even the way Apple bans competing applications on their iPhone. Toss in the ridiculous number of issues with software patents we so love to comment on here and elsewhere and you can readily see just how much is holding software innovations back!

Factor in the rate at which hardware was/has/is getting faster and more powerful and you should see where the problem is.

Simpler example: When I bought my current desktop in April it cost me approximately 3000 USD for the tower and monitor. More than I needed to spend, but at the time it wasn't an issue and that is besides the point.

To build the same exact setup now costs only 1245 USD!

This rig is designed for one thing: gaming. When it was built the only game it couldn't run on the absolute highest settings was Crysis, but it came damn close. Not a single game since Crysis came out comes close to taxing the system and it doesn't look like there is going to be anything for a while that will.

If gamers who are obsessed with having the highest settings possible run flawlessly can do so on "last generation" equipment, why upgrade? Why go top of the line?

If the software doesn't catch up with the hardware again we're going to have a gap of stagnation...

Re:Why make it more complicated than it really is? (2, Insightful)

rhyder128k (1051042) | more than 5 years ago | (#25689351)

That might be true to an extent but surely people are going to make hardware and software last longer when money is tight? Some offices simply replace a machine once it goes wrong if it's more than a couple of years old. I dare say that a 1Ghz PC with XP (or even better GNU/Linux) would suffice as a workstation for 80% of office workers. Making the current crop of machines last for another five years might give companies a chance of riding out the down turn, or at worst, save some cash.

Even firms that need top of the range PCs can retask them as general office machines after a couple of years rather than buying a new batch. All of this costs MS revenue.

I wonder if these changes will cause MS to step up the lock-in+automatic obsolescence aspects of their software?

Re:Why make it more complicated than it really is? (3, Informative)

Yvan256 (722131) | more than 5 years ago | (#25689079)

They never followed the standards before, why would they start now?

Re:Why make it more complicated than it really is? (1)

RiotingPacifist (1228016) | more than 5 years ago | (#25689323)

Because twitter and his sockpuppets fancied a troll and its Saturday so there wasn't much else to stick up!

You should not. (1, Troll)

twitter (104583) | more than 5 years ago | (#25689325)

You can't blame the recession when M$ underperforms the economy in general and other companies do better.

Over the year, PC shipments were up by 12% but M$'s software profits were only up 2%. Those profits were actually down over the preceding quarter. Then again, it's not like you can trust M$ numbers because they have been caught cooking the books before. Vista is a failure, so I'm not sure how they managed to do keep themselves from sinking, other than squeezing their existing customers harder than ever [slashdot.org] . That's bad for good will, you know.

Red Hat, IBM, Google and other companies are doing just fine and are growing.

So, the simple answer is best. M$ is having a hard time competing with free software, just like everyone knew they would.

Re:You should not. (-1)

Anonymous Coward | more than 5 years ago | (#25689357)

You very clearly have no idea how any of this works.

The simple answer is - the entire world is in decline, Microsoft is in decline. Occam's razor.

Vista is only a failure in your mind, and no droning lists of constructed 'problems' will change that.

Re:You should not. (0, Troll)

jcr (53032) | more than 5 years ago | (#25689905)

Your simple answer ignores the fact that microsoft is underperforming the rest of its industry. Occam's razor doesn't require tossing away facts.

-jcr

Re:You should not. (0)

Anonymous Coward | more than 5 years ago | (#25689989)

I'm sorry, I must have missed that 'fact'.

Care to provide the evidence? What I have says differently [google.co.uk] .

It's not, it's all just fanboy bullsh*t (0)

Anonymous Coward | more than 5 years ago | (#25690183)

It's not true by any measure. It's just a lead-in meme, like so many others. That's how Slashdot works, if you haven't noticed. twitter says "M$ is underperforming the industry", provides no proof of that whatsoever and then the next guy uses it as the argument du jour. The mods think it sounds impressive, and that's that. The other part where IBM, Google, RedHat and everybody else is doing super great while "M$ is dying" is also not true, of course.

See how that works? False Assertion, False Assertion, False Conclusion, Profit!

Been that way for years. It's a form of mass hysteria, I suppose. I don't know why people are still surprised when they see it.

- JM (posting AC because I can see where the moderation on this one is going)

Re:You should not. (1, Informative)

Toreo asesino (951231) | more than 5 years ago | (#25689437)

Vista is a failure

Keep saying it enough and you might convince yourself. Meanwhile, if your metric for failure is sales, then I'd suggestion 180 million sales [arstechnica.com] isn't a bad metric to go by.

To be objective, Vista did break a lot of things when it RTMed, hence the bad rap it took. Nearly 2 years on now, and things are much much smoother.

But no, you're right, Vista is a failure. Keep repeating it and it'll be true eventually I promise!

Chill dude. (4, Insightful)

turgid (580780) | more than 5 years ago | (#25689697)

It's slashdot, don't take it so seriously. You're allowed to say M$. You're allowed to hang out here when the pub's shut and there's nothing on TV.

Vista is a failure by most standards and Microsoft's OS monopoly is gradually being eroded. This recession is helping.

Vista only "sells" because PeeCees come with it installed by default. Don't kid yourself that the situation has changed in the last few years. MS still has a monopoly and uses every dirty trick in the book to keep competing operating systems off of new machines.

Also, remember that a substantial proportion of new (Vista) machines get reinstalled with Windows XP legally or not.

Never mind, the future is bright. Windows 7 will come with 256 threads, comrade. Double-plus good!

My Communist-Anti-American-Virus-Cancer Linux PeeCees eat 256 threads for breakfast. So do my All-American Sun SPARC/Solaris boxes. 10 lines of C says so.

I don't like Microsoft, and I hate Windows. Bill Gates, Steve Balmer et. al. are a bunch of crooks. I'm human, I have opinions. Twitter's cool. It's allowed opinions, and it's nice to see them amongst the pro-M$ apology this site has become.

Re:Chill dude. (-1)

abigor (540274) | more than 5 years ago | (#25690037)

You have confused cores with threads. They are entirely distinct entities. 256 cores is a hell of a lot, and I'm not sure if Linux, or indeed any Unix, supports that many yet.

Re:Chill dude. (5, Informative)

turgid (580780) | more than 5 years ago | (#25690097)

I have not confused cores with threads. Cores are simply individual CPUs integrated on to a chip. AMD and intel are currently up to 4 on a chip. Sun does 8 on a chip (with 8 thread contexts per core).

Solaris, Linux and many other unixes have been scaling (not merely being just "aware of") many more that 256 CPUs (call them cores) for well over a decade.

Do some googling. Solaris especially and linux scale almost linearly to thousands of CPUs per system today. To say that Windows' performance is embarrassing in this respect would be an understatement.

Re:You should not. (5, Insightful)

David Gerard (12369) | more than 5 years ago | (#25689749)

180 million sales! And at least some of those were actually activated and are actually in use!

Microsoft have the precise number of Vista machines in the wild - it's the number hitting the Windows Update servers. But they don't push that number, they push the "licenses shipped" number, which is meaningless in a world with legally allowed XP upgrades.

Re:You should not. (2, Interesting)

Anonymous Coward | more than 5 years ago | (#25690023)

And at least some of those were actually activated and are actually in use!

Not only that, but apparently they're even connected to the intertubes [hitslink.com] .

Uncomfortable stats, those. twitter says the "methodology is flawed", but can't actually point out why [slashdot.org] .

When Microsoft's revenue fell 24% a few quarters ago, willy (that's his real name) wrote up a storm of lame journals detailing why "M$" was dying; next quarter when they continued to shovel money, he was strangely silent. He's been smoking the BoycottNovell weed a bit to strongly, where they have parties when NOVL or MSFT are down 2% and find other things to do when they're up by 15%. That's been willy's war chant [slashdot.org] for the last few months.

So you don't need Microsoft to tell you how many Vista machines our out there, there are independent metrics for that.

Uncomfortable stats, those. "Flawed" for reasons unknown when presented to zealots like you and willy. Funny, how you show up everywhere he's posting, too.

Re:You should not. (0)

Anonymous Coward | more than 5 years ago | (#25690091)

Whatever happened to Crazy Willy's "Free Culture is FUN!" meme he was trying to push some time back? It came across as forced and slightly hysterical. What an absolute fruitcake.

That cackling sound you don't hear (1)

symbolset (646467) | more than 5 years ago | (#25689943)

It's Jim Allchin [nwsource.com] . Because he fled this train wreck by hopping off as the train left the station and is now enjoying his island paradise. He's so far away you can't hear him chuckle. But giggling he is.

He got his.

Re:You should not. (3, Insightful)

ConceptJunkie (24823) | more than 5 years ago | (#25689979)

And how many sales of Vista would there be if Microsoft didn't have a de facto monopoly and could force that steaming load of overripe cheese onto practically every new computer sold in the world?

Not 180 million but maybe 180 thousand.

Vista is a failure because very few people would choose it. The vast majority of sales were forced on people regardless of what they would choose, and I can guarantee most of those sales would not happen if customers didn't have a choice.

I'm glad the Netbooks are hurting Microsoft because Microsoft does nothing but damage the industry and stagnates the state of the art. They are a boat anchor on the whole technical industry and the sooner their monopoly is broken, the better we will all be.

Can you please explain? (0)

Anonymous Coward | more than 5 years ago | (#25690127)

Can you please explain why you'd say "IBM, Google and RedHat are doing fine" when they
are clearly not?

Can you please explain why you've been doing this:

http://slashdot.org/~SockDisclosure/journal/214377 [slashdot.org]

Can you please explain why you added a former XEmacs maintainer and
free software advocate here:

http://slashdot.org/~twitter/journal/204737 [slashdot.org]

After he posted this reply to you:

http://it.slashdot.org/comments.pl?sid=1009565&cid=25537739 [slashdot.org]

Can you please explain why you do things like these:

http://slashdot.org/~twitter/journal/206773 [slashdot.org]

Can you please explain why you've spent years posting things like these to Slashdot:

http://slashdot.org/comments.pl?sid=112229&cid=9521025 [slashdot.org]

Can you please explain why after trolling Slashdot for so long you think you deserve to
have your submissions accepted and your comments modded up?

Re:Why make it more complicated than it really is? (5, Insightful)

Lumpy (12016) | more than 5 years ago | (#25689387)

Because it really is a part of a trend. I just got one of the el-cheapo Acer Aspire one. It's got a 160gig drive, a dual core processor, a 1024X400 screen that is brighter than any laptop I have ever seen (LED instead of the crappy CFL as well.

This thing is really fast, really small, and cost me less than $350.00 at WALMART of all places. It does more and has better specs than my new Dell laptop from 2 years ago and cost 1/4 the price.

Microsoft better be scared, because the high end one like this has XP on it and not vista. and that is how it was marketed to me, "you want these laptops because they do not come with vistal.. Vista is something you want to stay away from."

Yes it's walmart, but even if the minimum wage know nothing about computers sales guy at walmart is telling people that vista sucks, then it is hurting microsoft... And I bought the high end aspire one.. most of them come with linux (a variant that sucks) and with ubuntu having a distro coming out just for these tiny pc's that is brain dead easy to install from a thumb drive, I can see joe sixpack installing ubuntu on his new pocket sized laptop he got for cheap.

Re:Why make it more complicated than it really is? (1)

negRo_slim (636783) | more than 5 years ago | (#25689835)

a 1024X400 screen

I trust it has a mighty scroll wheel!

Re:Why make it more complicated than it really is? (2, Informative)

Anonymous Coward | more than 5 years ago | (#25690021)

That screen would be 1024x600, and the processor is only a single core with hyperthreading. I should think that your Dell laptop from two years ago has a faster processor if nothing else.

Re:Why make it more complicated than it really is? (1)

Lumpy (12016) | more than 5 years ago | (#25690053)

Thanks for the correction on the screen, and that means the sales guy lied to me, each me to not read the full online specs. Time to go kill a sales guy, Nahh. for this cheap I really dont care. It plays Command and Conquer Generals as well as bzflag incredibly well. I've been kicking a coworkers butt in operations meeting bzflag tourneys for a week now.

It feels quicker, but then that could be the effects of a 2 year old XP install in that laptop as well. I have not reformatted and reinstalled that work laptop even though I have been planning on it.

Anyways, I imaged the drive and blew out the XP install to install ubuntu... other than losing the wifi switch function it's 100% and I found an article in ubuntu forums that talks about how to make that switch function again...

MSFT goes SaaS? (3, Interesting)

Rinisari (521266) | more than 5 years ago | (#25689019)

I was talking to a friend at work about this. We basically felt the same way--Microsoft will eventually either have to cut significant costs so that it can afford to sell Windows for $10-25 per copy (even if it's a reduced version for netbooks) or move to a Software as a Service (SaaS) model. Microsoft could charge $10 to OEMs (maybe $50 retail) upfront, then require a subscription to get updates other than security updates. It could move to a "new big feature" once or twice a year that only subscribers can get.

It's a little farfetched, I know, but it seems the way to go these days. I'd rather pay $50 upfront and then $10 per month for four years than pay $400 upfront at retail. On a netbook, I think it wouldn't be unreasonable for Microsoft to offer something like Box.net on-line storage/backup as part of the subscription, too, especially for netbooks, which, like phones, are more prone to being lost/stolen than larger laptops and desktops.

Not farfetched (4, Insightful)

nurb432 (527695) | more than 5 years ago | (#25689037)

They are salivating while trying to make it work. Their MOLP"s are almost that and part of their core revenue stream.

Re:MSFT goes SaaS? (5, Insightful)

jonbryce (703250) | more than 5 years ago | (#25689085)

People are not going to pay for updates. It is difficult enough to persuade people to load updates when they are free.

eventually... (0)

Anonymous Coward | more than 5 years ago | (#25689557)

...some CEO is going to be facing the whole board and a flock of big shareholders, and they are going to ask why, after he dropped millions on windows licenses, plus did updates, that they lost a million customer records that the bad guys got and did something with them, and microsoft goes "tough shit, read the EULA". He is going to go ballistic at that point.. He will then push what will be a land mark case that is going to the supreme court, and they will *force* software makers to offer bare bones warranties, as in "suitable for purpose" to be connected to the internet and not get owned easy. That EULA and license to use stuff that insists you have zero rights or means for recompensation due to bad design will be found to be utterly bogus, and there is precedent, you can't contract your rights away, especially on top of the fact that they are awarded *patents* on software like it is a real product and not just a "work of art" as would be the case if it was copyright only. That's the big ass difference there, once they insisted on patents. It is a product, it should perform like a product, it should have minimum warranties like any other product, and be free from glaring defects if it is sold or leased. And MS and others will then have to suck it up, always offer fast good updates, not charge for them, and even be forced to give rebates back if they exceed some computer lemon law, which will be coming right after that first ruling. They could very easily be charged for damages at that point, if the law is something like no more than three major defects per release, after that, it is a lemon. That will slow release cycles and force the software industry to grow up and write really good code, and get rid of the release often, fulla bugs, charge up the wazoo business model they have now. Now FOSS might be-I would think so anyway- a different story if it is given away for free as in cost, probably no damages or warranty if you accept it is a perpetual free beta, but stuff that costs large folding money..nope..eventually all it is going to take is one really freaking annoyed CEO whose fleet of MS PCs got hosed to get this normal product warranty yes, stupid EULA no, nonsense into the courts. Either that or all the software makers will universally drop all notions of patenting, one or the other, and all of them will offer free as in cost copyright only software and make their loot offering customization and other services.

Re:MSFT goes SaaS? (1)

TBoon (1381891) | more than 5 years ago | (#25689151)

Microsoft could charge $10 to OEMs (maybe $50 retail) upfront, then require a subscription to get updates other than security updates. It could move to a "new big feature" once or twice a year that only subscribers can get.

I'd rather pay $10 to *not* have them come up with a "new big feature" that often. Netbooks don't need "big features", they need a simple and stable platform to run user applications on.

Re:MSFT goes SaaS? (5, Insightful)

fuzzyfuzzyfungus (1223518) | more than 5 years ago | (#25689157)

I'm not sure that SaaS can save them from this problem. People are fairly willing, these days, to pay monthly subscription fees for services, so there isn't an inherent psychological problem; but windows netbook $250 + $10/month vs. linux netbook $250 + $0/month is going to be a hard sell. Perhaps worse, though, is the interest cell companies are showing in selling subsidized netbooks with data plans. If the netbook+monthly fee thing becomes a telco standard, the MS will face the unpleasant prospect of having to play knife-fight-in-a-telephone-booth with the notoriously mean bloodsuckers at the telcos over exactly how much of the customer's monthly fee with go to them and how much to the cell guys.

Ultimately, though, it just comes down to the fact that cheaper hardware demands cheaper software. 50 or 100 dollars for windows is noticable; but not hugely important in a $2000 computer. 50 dollars for windows on a netbook probably means the difference between impulse purchase and not. I don't think that this will affect MS's market share directly, they can afford to give away XP for netbooks until the end of time, if they want to. Their margins, though, will suffer, and that could be quite serious for some of their divisions. Being able to start a project and let it absolutely hemorrhage money for years if need be gives MS impressive strategic freedom. If their margins on Windows and Office suffer, they won't be able to do that anymore.

Re:MSFT goes SaaS? (4, Insightful)

rolfwind (528248) | more than 5 years ago | (#25689239)

It's a little farfetched, I know, but it seems the way to go these days. I'd rather pay $50 upfront and then $10 per month for four years than pay $400 upfront at retail.

$400 for Windows is too much, the OEMs pay much less.

Also the last thing I need is another monthy bill. I have a Trac Phone to avoid that (could easily afford the iPhone but not justify the monthly rate). My used car is bought outright. Other necessary bills minimized, especially in this economy. Etcetera.

Once windows becomes subsciption: it will either be structured in such a way (updates as you describe) that most people don't bother thus lose money anyway, or many people start migrating away which is exactly what they don't want. It would be the beginning of Linux as a mainstream desktop OS.

Re:MSFT goes SaaS? (1)

i.of.the.storm (907783) | more than 5 years ago | (#25689377)

I like your fiscal planning. I wish there was a decent prepaid carrier with good network. Verizon's "prepaid" essentially costs the same as their regular service and you don't even get minutes, just pay $1 every day you use it for in calling and I think more on top of that for calling other people. T-Mobile might be an option, I'd love to get a G1 but I'm not sure whether they let you get a prepaid account with that.

Re:MSFT goes SaaS? (0)

Anonymous Coward | more than 5 years ago | (#25689559)

> It would be the beginning of Linux as a mainstream desktop OS

Only when Linux has the killer apps. The O/S is irrelevant, it's all about the apps.

Re:MSFT goes SaaS? (1)

mlts (1038732) | more than 5 years ago | (#25689701)

One note. Subscriptions tend to become contracts from what I see. Paying $20 for the OS, and signing an agreement to pay $15 a month for a year is not what I want to do with a computer.

Re:MSFT goes SaaS? (2, Interesting)

David Gerard (12369) | more than 5 years ago | (#25689767)

Particularly when they discover Wine. We use Wine as production machinery at work, so we know damn well it's up to enterprise use. Its magical niche is replacing that one bit of old crapware you can't get rid of. And I'm more surprised these days when Windows software doesn't work well under Wine than when it does.

Re:MSFT goes SaaS? (1)

rolfwind (528248) | more than 5 years ago | (#25689909)

Yeah, I'm down to one software that doesn't have a Windows equivalent or can't run on wine like ebay Blackthorne. Unfortunately, it's not going to work anytime soon.

Re:MSFT goes SaaS? (1)

David Gerard (12369) | more than 5 years ago | (#25690013)

Indeed. Arse! [winehq.org]

Oh well, this is the sort of thing VirtualBox was made for ;-D

Re:MSFT goes SaaS? (1)

rolfwind (528248) | more than 5 years ago | (#25690041)

Okay, cool thanks.

I was told exactly because of .net 2.0 that it won't install. Didn't think of installing net by itself.

Re:MSFT goes SaaS? (2, Informative)

maxume (22995) | more than 5 years ago | (#25689271)

I don't think Microsoft will have to cut significant costs to sell Windows for $25 a copy. Especially XP, which they have pretty much already paid for. As it stands, their OS sales are essentially printing money for them. Go to the following page and find the "Client" section to see what I am talking about:

http://www.microsoft.com/msft/reports/ar08/10k_fr_dis.html [microsoft.com]

Re:MSFT goes SaaS? (1)

Joce640k (829181) | more than 5 years ago | (#25689287)

Microsoft can afford to sell Windows for $10-$25 a copy, or even less if they need to. At the moment they're making 85% profit on it (according to GIS for "windows profit margin").

What this means is that the gravy days are over for Microsoft.

Re:MSFT goes SaaS? (1)

RiotingPacifist (1228016) | more than 5 years ago | (#25689329)

They already do better than this OEMs pay something like $50 or less for a license, they make their money on corporate sales.

Re:MSFT goes SaaS? (5, Interesting)

jmorris42 (1458) | more than 5 years ago | (#25689379)

> Microsoft could charge $10 to OEMs (maybe $50 retail) upfront, then require a subscription to get updates other than security updates.

Yea, it could. But they currently get $32 for XP on a netbook and as much as $80 for a basic Vista. Big OEMs like Dell pay less (exact amount secret) and some machines that ship with more expensive versions of Vista pay more. The point being that even if your idea could work it would be a fatal hit to their bottom line. If they can't tap people for at least $5 a month a subscription model is going to be seen by Wall Street (rightly) as a lot less profitable than the current model.

The problem is that the only way people might pony up that kind of coin is they actually get something major, not just fixes to product defects. Even giving access to every Microsoft non-game product wouldn't induce many people to put up with a monthly subscription.

> I'd rather pay $50 upfront and then $10 per month for four years than pay $400 upfront at retail.

If they could still clip people for $50 up front they would have a future. Good luck convincing an OEM to put a $50 component into a product destined to retail for $200 or less. That is the world that is coming and it terrifies Microsoft. As the hardware cost for a basic network node approaches zero the software cost must do likewise, the days of selling the basic operating system, browser and office suite are coming to a close. And as computers become consumer electronics the reality of that transition is just being realized by the soon to be former PC makers. So both the current hardware makers and Microsoft are desperately trying to find some way to survive and would just love to transition to a subscription model in some sort of joint venture with the telcos/ISPs. Laptops/netbooks might end up tethered to a cell modem and a monthy bill but neither Dell nor Microsoft are needed by the telcos. They would rather buy the machines direct from China themselves and pocket the profits.

> On a netbook, I think it wouldn't be unreasonable for Microsoft to offer something like Box.net on-line storage/backup
> as part of the subscription..

Pay for a net based service? Surely you jest. ASUS is already giving it away for free now.

Re:MSFT goes SaaS? (1)

fermion (181285) | more than 5 years ago | (#25690019)

Right, but computers are getting cheap enough that the cell phone subscription model might work. Buy a computer, sign up for $50 a month internet access over the cable or phone lines, applications, email, etc. The problem with this used to be that the computers were not good computers and the amount of control the service vendor wanted was excessive.

Now it would not be unreasonable for a person to choose a computer they wanted, get a discount, up to 100%, pay an activation fee, and walk out with a complete solution. Of course, MS does not tend to provide complete solution, relying on third parties to do that bit, so MS is going to have to write some mighty good software and give some mighty good incentives if they wish to survive in this way.

Ultimately it would provide the kind of regular income that MS is currently missing in the consumer sector. Enterprise has to pay MS money every year, but most others only buy stuff 2-3 years. It is unfortunate, but expected, that they wasted all their time writing Vista instead of preparing for this new market.

Re:MSFT goes SaaS? (1)

petermgreen (876956) | more than 5 years ago | (#25690187)

Yea, it could. But they currently get $32 for XP on a netbook and as much as $80 for a basic Vista.
Where are those figures from, I thought MS direct OEM (not system builder) pricing was negotiated on a case by case basis.

Re:MSFT goes SaaS? (0)

Anonymous Coward | more than 5 years ago | (#25689809)

Microsoft has about an 85% net profit margin on windows and office.

They can afford to cut their prices about 70%, and still be reasonably profitable.

They wouldn't be able to subsidize projects into other areas (Xbox, etc.) or generate enough cash to sustain their stock price, but they'd still do fine.

Correction (-1, Troll)

Anonymous Coward | more than 5 years ago | (#25689025)

Equipping Linux on a computer, USING CHILD LABOR IN CHINA, costs $5 each.

Re:Correction (1)

zippthorne (748122) | more than 5 years ago | (#25689103)

Considering how easy it is to image a disk for identical machines, those are some well-paid children. Better paid than you, I would imagine.

Unless you're saying that that's what development costs, in which case, I'd say those are some well-educated children...

Re:Correction (5, Funny)

LiquidCoooled (634315) | more than 5 years ago | (#25689145)

The children are not paid to install the software on the machines.
They are paid to drag the crates of machines up out of the mine.

Re:Correction (1)

masshuu (1260516) | more than 5 years ago | (#25689393)

Yet you almost need 4 years of collage to get Windows running

Re:Correction (0, Redundant)

cp.tar (871488) | more than 5 years ago | (#25689405)

They mine those machines?
Those are some damn good mines the Chinese have...

Re:Correction (1)

naapo (982524) | more than 5 years ago | (#25689789)

They mine those machines

Haven't you heard about data mining before?

Re:Correction (3, Insightful)

TeacherOfHeroes (892498) | more than 5 years ago | (#25689175)

Equipping Linux on a computer, USING CHILD LABOR IN CHINA, costs $5 each.

Linux. So easy, even children can install it!

Re:Correction (1)

thrillseeker (518224) | more than 5 years ago | (#25689215)

Equipping Linux on a computer, using MANDATORY VOLUNTEERISM IN AMERICA, costs $50 each.

There, fixed that for you.

Next up - American "volunteers" outsourcing "volunteering" to Chinese children ...

Wrong (2, Informative)

TheLink (130905) | more than 5 years ago | (#25689219)

You're either trolling or you are one of those clueless people who have no idea how much lower the cost of living is in poorer countries and so keep believing your jobs are going overseas because of child labour.

Normal labour doesn't even cost that much in China.

Even with a brain dead CD installation method I'm sure you can install Linux on more than 10 computers in one day. Low cost labour in China doesn't cost USD50/day.

A decent ready-made meal probably only costs USD1.

Yes most chinese workers can't afford two SUVs/trucks, a big house with a TV in each room (and the heating/cooling bill), a big slab of meat for every meal. But perhaps with the current energy infrastructure, maybe the world can't afford it either.

If I can get paid USD5 per PC install of Linux, bring em on, I'd easily do 100 a day, and still have lots of time to nap, post on Slashdot, play games etc.

May not be a lot of money for you, but it's good money where I am.

Re:Correction (0)

Anonymous Coward | more than 5 years ago | (#25689291)

Equipping Linux on a computer, USING CHILD LABOR IN CHINA, costs $5 each.

There's nothing wrong with child labor. Children worked their ass off to build the united states and bring it to where it is. It is our holier than thou attitude that pisses the world off. Let children work for a better world, for their children.

Re:Correction (0)

Anonymous Coward | more than 5 years ago | (#25689519)

There's nothing wrong with child labor.

Sure there is. What's wrong with child labor is that children can't defend themselves, can't protect themselves from predatory employers. Hell, adults have a hard time doing that: it's why the U.S. has labor laws (and unions, of course, which came first.) Sure, the U.S. used child labor for a long time, but stopped it when those kids were found to be mistreated and suffering terribly.

And I'd appreciate if you, as an American, would stop lumping all of us into whatever stereotypical preconception you've invented for yourself. I don't like it when people from other parts of the world do it, I don't do it to them, and I sure as hell don't like when one of us does it.

We're not all the same, not all arrogant, not all self-serving, not all in the throes of holier-than-thouness ... it's just that the obnoxious members of our society get more airtime.

Blame Game (-1, Offtopic)

nurb432 (527695) | more than 5 years ago | (#25689033)

Not our fault, bla bla bla its their fault bla bla bla.

nice to see corporations have the same problem with personal responsibility the rest of the world has.

Mmm... (1)

circlingthesun (1327623) | more than 5 years ago | (#25689045)

Wasn't there talk a while ago that M$ was giving away XP for free to netbook OEM's?

Re:Mmm... (4, Insightful)

Ilgaz (86384) | more than 5 years ago | (#25689111)

I stared to a Asus Eee thing a while ago running Windows XP. Just the idea of running XP on that machine along with Antivirus, Firewall and only the software updates horrified me.

If the companies put XP as option to them, it is not like they are getting it free (or dirt cheap), it is because they are very afraid of Microsoft.

If you are World's one of the most respected mainboard manufacturers (Asus) and you started to gain ground with your Laptops, you don't want to make Microsoft mad. MS can provide a single buggy driver update and create chaos in your customerbase. All they need to say "oops" after it. Customers will blame YOU, not them.

Re:Mmm... (1)

Kent Recal (714863) | more than 5 years ago | (#25689337)

MS can provide a single buggy driver update and create chaos in your customerbase. All they need to say "oops" after it. Customers will blame YOU, not them.

Why would someone blame ASUS when a driver update pushed out by microsoft breaks a previously working system?

Re:Mmm... (2, Insightful)

Frac O Mac (1138427) | more than 5 years ago | (#25689597)

Maybe not necessarily blame them, but people sure would be wary of buying one.

Re:Mmm... (1)

mk2mark (1144731) | more than 5 years ago | (#25690081)

Well that might be the case if microsoft were the only people that could write drivers?

What's stopping asus and co. developing their own drivers like they've always done? Even I, as a consumer can streamline/incorporate whatever drivers I like to a windows cd.

they left one part out (1)

ILuvRamen (1026668) | more than 5 years ago | (#25689097)

I think they forgot that as far as I've heard, the netbooks aren't getting very good reviews from people who I guess you could say are using them wrong. If they sell their old P4 laptop and get a netbook as their only computer, they say it sucks. If they have a PC and want to be more mobile and get a netbook, they love them. So basically nobody can own one without owning another machine. So there's really still almost the same sales in windows operating systems because a large percentage who buy netbooks for the price wouldn't have bought a full $800 laptop anyway so microsoft isn't losing much. With netbooks and their amazing sub 14 inch screens and slow processors and inability to run many types of games and software, I don't expect them to take over for PCs ever so it's not as doom and gloom as this article makes it sound.

Re:they left one part out (1)

multisync (218450) | more than 5 years ago | (#25689297)

So basically nobody can own one without owning another machine.

It seems to me they would make a great non-geek spouse machine, especially if you can't justify the cost of a Mac. I'm looking at picking one up myself, just for something I can carry around for reading slashdot in coffee shops and running VNC, Penguinet etc. to access the machines on my home network remotely.

You're right to a point. (1)

Fantastic Lad (198284) | more than 5 years ago | (#25690229)

As you describe, I still run and require my desktop setup. I only picked up a netbook to replace my worn out but trusty old WindowsCE portable word processing device from 1998. I was never in the market for a new machine capable of running Vista in the first place.

Although, when the new school term began this Fall, the guys at the computer store told me that university students descended like a plague of locusts and cleaned out their stock of netbooks in under a week. --Sales which would likely have been Vista laptops otherwise, so I can see that as a source of MS misery. I have not talked with any student owners of netbooks, so I don't know how happy they are with them, but I know that mine has become indispensable to me.

I might also be led to believe that with the influx of Linux netbooks, it has raised general public awareness of Linux which by extension lowers the fear-of-new-things for people buying fresh desktop systems. I bet Ubuntu has gotten a boost from emboldened regular consumers of new regular systems as a result. I do know a couple of young twenty-something year-olds who talk about their Ubuntu systems without any trace of irony or awareness that it might be seen as unusual.

This post was written on an eee1000 running XP.

-FL

People know what computers are now (1, Interesting)

uassholes (1179143) | more than 5 years ago | (#25689115)

They are no longer novelties, and people know how to use them.

In this day and age, the desktop metaphor is no longer useful for helping neophytes.

Anyone clinging to their desktop metaphors are like children clinging to their "woobie".

Microsoft's days are past. People are sophisticated enough now to move to a new level.

If you still think of a directory as a "folder", ask yourself why.

Re:People know what computers are now (1)

dvh.tosomja (1235032) | more than 5 years ago | (#25689269)

>> If you still think of a directory as a "folder", ask yourself why.

I think nothing has changed there, file and directory are filesystem objects, document and folder are desktop objects, do not mix them please

Re:People know what computers are now (5, Insightful)

steeleye_brad (638310) | more than 5 years ago | (#25689321)

and people know how to use them.

After working for a university help desk, I can tell you with a great deal of certainty that this is quite false.

And I still think of a directory as a "folder" because pretty much all of my software refers to it as that. All the icons are of little folders, my file manager has a "make new folder" command, lots of programs I use have a command along the lines of "open folder". You know, maybe this is just proving that I'm some sort of "child clinging to my woobie," but I'm honestly not sure what the hell any of your points are.

Re:People know what computers are now (1)

zippthorne (748122) | more than 5 years ago | (#25689381)

Indeed. Although computing is hurt a little by the folders metaphor:

Unlike a file cabinet, there is no reason why any document needs to be in only one folder at a time.

Now this is somewhat solved by linking: what a file cabinet solves with duplication of resources, most modern file systems solve with pointers, although this functionality is typically *not* exposed at a level that is convenient or intuitive for the median user.

But, there's no reason why that needs to be the limit of things, and indeed there are database structured file systems out there, though they don't seem to have caught on as well as their slightly flatter counterparts, and I think this is partially because of the way the files/folders metaphor restricts thinking.

Must be joking (1)

CarpetShark (865376) | more than 5 years ago | (#25689823)

Most PC users aren't even aware of the concept of a filesystem. A good portion aren't aware of the possibility of installing programs and using them without an internet connection, or that needing an account on a website to use some basic thing is a loss of autonomy. Some users are getting more PC saavy, but many are barely hanging on as their boss tells them to type at the new-fangled glowy-box.

Re:People know what computers are now (3, Insightful)

Lumpy (12016) | more than 5 years ago | (#25690163)

That is funny.

I deal with only degree holding education professionals for tech support. and Most do not know how to use a computer. they completely freak out when they lose a "folder" and they bork their Office or Outlook all the time by deleting a toolbar or doing something else that is trivial to fix.

Most people, including highly educated people DO NOT know how to use a computer. They can barely operate them.

Reading this on my Eee 901. (0)

Anonymous Coward | more than 5 years ago | (#25689131)

That is all. ;)

DamnSmallWindows (2, Insightful)

TBoon (1381891) | more than 5 years ago | (#25689179)

I'd like to see MS reinvent the WinCE concept as something a bit more similar to DamnSmallLinux/PuppyLinux. A minimalistic base system, capable of (and optimized for) running at ultra low-end hardware, yet able to run virtually any "real" Windows application (and game) if the hardware is up to the task, and have storage space for the extra modules needed.

Re:DamnSmallWindows (1)

bazorg (911295) | more than 5 years ago | (#25690009)

If you visit The Pirate Bay and look for TinyXP you'll see that it is possible to slim down normal XP to 400MB (after installation) and use that as a good base for customization. Considering the way this is achieved, I'm surprised that OEM's haven't adopted the technique to make their own Windows "editions".

Re:DamnSmallWindows (1)

Lumpy (12016) | more than 5 years ago | (#25690181)

It's called embedded XP and it also is a utter failure. I've had to fight with Embedded XP on several systems. It's a resource hog and has all the flaws of XP for embedded use.

Yeah, I'm seeing these everywhere (0, Troll)

93 Escort Wagon (326346) | more than 5 years ago | (#25689335)

Oh, wait. No, I'm not.

Re:Yeah, I'm seeing these everywhere (3, Funny)

Lumpy (12016) | more than 5 years ago | (#25689411)

Thanks for letting us know. Hey everyone, the entire planet is where 93escortwagon is!

I'll tell all the students at the MSU and UofM campuses that they cant use the eee's and aspire one's I see all over the place, because you said so..

Have you proven that the universe revolves around you yet? we are all waiting with baited breath.

Re:Yeah, I'm seeing these everywhere (2, Funny)

dvice_null (981029) | more than 5 years ago | (#25689461)

I bet you have no windows in the basement?

Open Source (1)

Reikk (534266) | more than 5 years ago | (#25689431)

This is yet another example of open source software hurting the American economy.

Windows Profits Down (1)

CopaceticOpus (965603) | more than 5 years ago | (#25689515)

Should we take up a collection?

tamed the eeepc??? (2, Interesting)

nimbius (983462) | more than 5 years ago | (#25689603)

give me a break. even with a 10" eeepc stuffed with microsoft bloatware, im going to do the same thing ive always done with my new windows laptop: return the OS for a refund.

funny though how with my eeepc 901 they have a section in the manual at the end guiding users on how to get back to a windows installation. not certain if it correlates with their statements on "no one is buying these linux laptops" or not, but id be curious to see an unbiased (read: not in bed with redmond) party evaluate whether anyone is buying laptops with linux.

the one thing redmond cant fight on this is i believe price. as a wise man once said, "if your going up against 'free' you'd better have a damned good product."

Re:tamed the eeepc??? (1)

Ant P. (974313) | more than 5 years ago | (#25689879)

Wait... you bought a 10" eee with windows just to return windows and install Linux? The same eee that comes in 8GB windows and 20GB Linux configurations?

microsoft (with a $) (2, Insightful)

FudRucker (866063) | more than 5 years ago | (#25689671)

microsoft's exorbitant prices and chronic vulnerabilities made it necessary...

people want to use their computers, not be used by a corporate giant and third parties nickeling & dimeing them to the limit at every corner...

Re:microsoft (with a $) (1)

mk2mark (1144731) | more than 5 years ago | (#25690039)

I'm sorry, but how can that be considered insightful unless you consider $50 for XP (retail) exorbitant?

Bad summary (0)

Anonymous Coward | more than 5 years ago | (#25689863)

While they may have successfully tamed the Asus EEE PC but, they can't hold back everyone who wants to make a buck on cheap hardware and free software

Oww! GRAMMAR! Seriously, how hard would it be for the editors to actually, y'know, edit things?

Why not a MacBook? (-1, Troll)

Anonymous Coward | more than 5 years ago | (#25689995)

MacBooks are just as cheap as these netbooks. Why just go with a Mac that has a tried and true, 100% secure OS?

Re:Why not a MacBook? (2, Funny)

Lumpy (12016) | more than 5 years ago | (#25690205)

Really? show me where to buy a G4 iBook with 1 gig in it for $350.00 in new shape with a new battery and 160gig hard drive.

Oh and make it very portable and have a very bright screen instead of the very yellowed ones that G4's are known for when they are used.

Also the G3 toilet seats are incredibly slow compared to these netbooks, and again only come with dead batteries and no ram or hard drive space.

All Hail the fall of Microsoft and the Beginning (0)

KozmoKramer (1117173) | more than 5 years ago | (#25690193)

All Hail the fall of Microsoft and the Beginning of the Linux and OS X/etc... generations. I long for the day when most users use Linux on a PC or a MAC, and the lame Windows dies. Imagine a day when Linux is the main Desktop or Server OS and Wine has been perfected to run your old windows applications. There will be no need to the hassle that is Microsoft and its' products.
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