In a meeting with financial analysts, Ballmer said Microsoft decided early in the introduction of netbooks about two years ago that it was important to be the leading operating system vendor in the market. Today, Windows XP is in more than 90% of netbooks, aided by the high rate of return on netbooks that had shipped with Linux.
Going forward, Microsoft plans to maintain its dominance. "Windows 7 will be available on the netbook," Ballmer said.
Windows 7, the successor of the poorly received Windows Vista, is expected late this year or early 2010.
The netbook market today is growing while non-netbook PCs have been flat or slightly down, Ballmer said. Besides being a growth market, the mini-PC also provides Microsoft with an opportunity to create a downsized OS that will be easily adapted to many other different devices.
"I think you'll see an opening up of a lot of opportunities for us," Ballmer said. The CEO acknowledged that today revenue per netbook is less than on a standard PC, because the price of the OS running on these low-cost devices is less.
One component key to netbooks, which are primarily used for e-mail and Web browsing, is the browser. And on that front, Microsoft's Internet Explorer has been losing market share to the No. 2 browser, Mozilla Firefox.
Ballmer said Microsoft is spending money on marketing and building Internet Explorer 8, which is currently in beta, with features to take back and expand market share. "We believe browsers are important," Ballmer said. "They're not a commodity."
As of the end of November 2008, Firefox's market share reached more than 20%, while Internet Explorer's had fallen below 70%, according to Web metrics firm Net Applications. Throughout the year, Firefox usage on the Web grew steadily, starting in January 2008 with a 16.98% share. Internet Explorer, on the other hand, started 2008 with a 75.47% share.
InformationWeek has published an in-depth report on Windows 7.