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Netbooks and the 'Dismal Science'

Who will tell the investors? Bill Koefoed, Microsoft's GM of investor relations, has that task. And he recently explained that Microsoft's profitability as a company had a lot to do with PC sales, which were "down somewhere between 6 and 8 percent" in the last quarter. In particular, high-profit business PC sales were lower than consumer PC sales. A particular stumbling block for Microsoft was netbooks, representing "about 11 percent of industry PC sales." The low-tech, low-cost, smallish netbooks bring in less OS revenue for Microsoft than traditional PCs. Microsoft's revenues have been dogged by this "netbook effect" for the past nine months, according to Koefoed. 

Microsoft currently provides the aging XP for netbooks, but any edition of Windows 7 can run on these devices, we're told. The missing piece of the puzzle is what Microsoft will charge for Windows 7 running on a netbook; most think the price will be higher, but the details haven't been announced.

Steve Ballmer recently hinted at a possible way out of this number-crunching mess. He suggested that a category of netbooks, called "ultrathins," will appear next year. Ultrathins will be higher-powered and higher-performance machines compared with netbooks, he explained. And there's even another mobile computing device category that Microsoft is calling "consumer Internet devices" or CIDs.

Is any of this helping? Would you buy an ultrathin running Windows 7 for a higher price than a netbook running XP, or is that too confusing? Let Doug know at [email protected]

Posted by Kurt Mackie on 08/14/2009 at 1:17 PM


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