Is Microsoft Headed For A Netbook Train Wreck?

Want to see a company snatch defeat from the jaws of victory? Just watch Microsoft execute its netbook game plan against Linux.For more than a year, Microsoft has relied on Windows XP to keep Linux from claiming a bigger share of the netbook market. It's a strategy that didn't work as well as some people have claimed, but it was still relatively effective.

More to the point, keeping XP around was Microsoft's only option since Windows Vista won't run on netbooks at all.

Using Windows XP, however, was a stop-gap measure -- and an expensive one at that. Microsoft earns no more than about $15 per netbook shipped with XP, and some estimates put that figure far lower. Margins on PCs running Windows Vista, by comparison, can run well over $50 per unit.

Windows 7 is supposedly Microsoft's silver-bullet solution to this dilemma. It will run on netbooks, allow Microsoft finally to retire XP as an OEM option, and keep existing Windows users from wandering off the reservation.

Or will it?

According to a recent Wall Street Journal Online article, OEM netbooks will actually run something Microsoft calls "Windows 7 Starter Edition." If you think that sounds like a gussied-up piece of crippleware, join the club.

Among other features, Windows 7 Starter Edition will not allow users to run more than three applications at once. System services (such as anti-virus tools) and multi-tab programs don't count against the limit. Most other applications, however, will count, including email and IM clients, Web browsers, and text editors.

Aero Glass is off-limits in Starter Edition. That might not be a big deal on a netbook. Remote desktop won't work, either, and that certainly is a big deal for many users.

Would you pay a premium for a netbook shackled to this bit of insanity?

Plenty of netbook users will pay for Windows 7 Starter Edition -- not because they're a bunch of rubes but because they simply don't realize what they're getting. When they learn the hard way that running four apps at a time is verboten unless they pay for an upgrade, quite a few are likely to go looking for refunds.

I have a nagging suspicion Microsoft might shoot down this trial balloon before it expands into a full-blown marketing disaster. Acer and Intel, for example, are already complaining that Windows 7 Starter Edition simply won't sell.

That would be a shame, because I can't imagine a better way to encourage small businesses on tight budgets to try desktop Linux.