Although this doesn't seem to have been a great holiday season for technology in general, I suspect that netbooks will be a bright spot for computer makers. Tiny notebook PCs like the Asus Eee PC, Acer Aspire One, Dell Inspiron Mini 9, and HP Mini 1000 are attracting a lot of attention.All is not peachy in netbook land, however. For one thing, these tiny notebooks also tend to carry tiny prices. Several of these netbooks were selling for just $299 in their lighter configurations; that's the kind of money the vendors like to charge just for a 3-year warranty alone. As a result, the profit margins for these puny PCs are mighty thin.

Then there is the software problem. Netbooks tend to have specifications that are more like the computers of a decade ago than like today's PCs. Small screens are a given for a tiny form factor like this, but most netbooks also have relatively weak CPUs, limited memory, and scant storage. Several versions of Linux run comfortably on these systems, but of course most people want the operating system they already know: Windows.

Microsoft seems to have given up on the idea of ever running Windows Vista on netbooks, as evidenced by their decision to keep Windows XP around specifically for netbooks. But there are strings attached to this stay of execution. For example, the only version available is XP Home, which means these devices aren't welcome in a corporate setting that uses domains.

If a netbook maker wants to use XP, its system must not be too powerful. Originally, Microsoft limited its use to systems with 10-inch diagonal screens or smaller, but in July they raised that to 14 inches. There are still some tight restrictions on the power of the hardware though; the system can't have more than 1GB of RAM or a CPU faster than 1 GHz. Even the price the manufacturer pays for XP varies depending on the screen size!

Since most netbook buyers have expressed their preference for Windows XP, Microsoft's performance limits essentially dictate the specifications of netbooks you're likely to see in the near future. You want 2 GB of RAM in your netbook? Sorry, you can't get XP if you do that. These are artificial limitations, of course, and Microsoft can lift them as long as it's willing to give XP more life.

One safe bet you can make is that Windows 7 will fit comfortably on a netbook in some configuration or another. There is no way that Microsoft is going to let XP continue to live as its primary netbook OS offering.