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What's a Netbook? Ask Microsoft

For today, we are -- actually, I am -- dropping the RCPU tradition of using the first-person plural and switching to good ol' first-person singular because I'm going to share a few personal experiences with you. And, yes, we're going to talk about netbooks. Again. But hang on -- there's a reason why.

It's true that I'm somewhat enamored with my netbook (which, for the record, runs XP). It's great for everyday use -- my old laptop serves mostly as a storage device now -- and was fantastic on a recent trip home to Dallas. Instead of lugging a laptop bag with a seven-pound monster inside it, I zipped my three-pound machine (a touch on the heavy side for a netbook, actually) in the neoprene case that came with it and tossed it in my carry-on, a trusty LL Bean backpack that has seen action from Rotterdam to Rhode Island.

I breezed through airport security, surfed with ease at airport pubs (and almost missed my flight) and generally felt light as a feather, which is not a feeling that comes easily to me. Netbooks are great -- to me, anyway -- because they fill a gap between relatively expensive portable devices that don't have keyboards and aren't great for typing (and I type a lot, as you know by now), and full-fledged laptops that are heavy, cumbersome and, well, also relatively expensive.

I'm not a gamer, and I don't run massive publishing or design programs, so a browser, e-mail client and productivity suite are just about all I ever need -- and all three run just fine simultaneously on my little machine. Of course, a lot of you know this stuff already, as netbooks are becoming one of the hotter commodities of the PC market.

That last bit, of course, has mostly been bad news for Microsoft, which charges relatively little for the copies of XP it sells to netbook makers and therefore doesn't make much of a profit margin on those copies. So when news leaked this week -- and, as I write this, it's all still unconfirmed by Microsoft -- that Microsoft is trying to define exactly what a netbook is for Windows 7 purposes, nobody was particularly surprised. Redmond magazine columnist Mary Jo Foley explains it all, as usual.

Without getting too bogged down in details, a "leaked" Microsoft document -- again, this is unconfirmed stuff, but it comes from Tech ARP, usually a reliable source -- suggests that Microsoft will not classify anything with a screen larger than 10.2 inches as a netbook. There are some other not insignificant metrics included (in particular, the part about 1MB of RAM) in the clandestine document, but the point is that some of the new 11.6- and 12.1-inch-screen machines that are coming out will be notebooks in Microsoft's view (and Intel's, if you believe a fair number of reports) and not netbooks.

That means that Microsoft allegedly won't let those larger machines go out with cheap copies of Windows 7 on them. OEMs will have to pay the full Windows 7 price, apparently, in order to load the OS on those machines, and they won't get access to some of the lower-level Windows 7 editions that'll be targeted at netbooks. Of course, OEMs having to pony up more for Windows 7 will potentially wipe out one of the most significant advantages netbooks have over standard laptops: they're cheap.

In many cases, this won't be a big deal. Most netbooks that fit solidly into the category -- including mine -- have 10.2-inch screens (or even smaller), anyway. But the line between netbook and notebook is blurring, and some manufacturers are releasing somewhat larger machines and calling them netbooks -- and pricing them that way. Mostly, that means sticking a price tag of $400 or less on them. That's actually a lot cheaper than the standard entry-level notebook, which I personally found in my comparison shopping to run at least $500 and usually closer to $650 or so.

Now, those notebooks have more memory, faster processors and more capabilities than netbooks, but the whole point of a netbook is to be simple and cheap, and to serve the needs of folks who browse, e-mail and type a document now and then, and don't do a whole lot else. Netbooks are what technology is supposed to be -- a cheaper, simpler, lighter version of a familiar device.

So, by (allegedly) making OEMs pay a notebook price for Windows 7 on a netbook, Microsoft and Intel would actually be taking a technology that's getting simpler and cheaper and make it artificially more expensive so that they can try to get some of their margins back. That sub-$400 price tag that makes netbooks so attractive might be awfully hard to maintain if an OEM has to pay exponentially more for Windows 7 on a 12.1-inch netbook than for the OS on a 10.2-inch model. All of that seems to run counter to some extent to Moore's Law, and to a great extent to the broader notion that technology should progressively become simpler, cheaper and more accessible (which, I'm pretty sure, is a by-product of Moore's Law).

Now, for enterprise partners -- especially those that are trying to make a living selling hardware -- the potential Microsoft pricing gambit might not be the worst thing in the world if it keeps prices high and margins relatively fat. Or it might. I've asked the question before about whether netbooks (and Linux) might eventually invade the enterprise, and thus far, nobody has called me crazy. In fact, one reader actually thought I was on to something.

At some point, if Windows doesn't bring enough value for the money it costs, consumers and companies are going to stop paying for it just because they always have and don't know what else to do. There is competition for Windows on netbooks -- from Linux, potentially from portable devices and, apparently, from (get this) Intel! If you haven't heard of Moblin, read all about it here and then do some head-scratching as to why Intel might be so keen to see Microsoft bully OEMs on Windows 7 pricing for netbooks. Hmm...

RCPU has long defended many of Microsoft's business practices, and nothing Redmond might allegedly be doing here seems to be at all illegal. The question is whether it's good for the industry long term, and the answer to that question seems to be no. Surely there's a better way to figure out how to make money on netbooks than by simply making them cost more and taking away much of their appeal.

It's all enough to make me want to run Linux, and I never really thought I'd say that.

What's your take on netbooks? Do you think Microsoft is out of line with its potential pricing strategy for Windows 7? Do you have a positive or negative netbook experience you want to share? Share it at lpender@rcpmag.com.

Posted by Lee Pender on May 27, 2009 at 11:55 AM