January 25th, 2009

Windows kicks Linux to the curb

Posted by Robin Harris @ 8:30 pm

Categories: Infrastructure, Marketing, Software

Tags: Microsoft Corp., Netbook, Netbooks, Nettops & MIDs, Linux, Microsoft Windows, Operating Systems, Hardware, Software, Robin Harris

Gosh, that didn’t take long!
Last July Linux had a huge opportunity to beat Windows in the red-hot netbook market (see Linux for housewives. XP for geeks. ). But faster than I’d expected Microsoft has kicked Linux to the curb, claiming an 80% attach rate for netbooks.

Windows 7 is the final nail in the desktop Linux market’s coffin. Unless Microsoft gets stupid on pricing, it is game over for Linux netbook market share.

Linux, we hardly knew ye - on the desktop, anyway.

It is tough to compete with “free”
Not that Microsoft got off easy. Their 5,000 man layoff is a direct result of the cost of competing with Linux - their client business revenue slid $335 million.

Ballmer’s layoffs mean this is no one-time blip. Linux has changed the competitive landscape in a way Apple never could - after all Mac OS costs twice as much as Windows. And this is just a taste: the economics going forward are brutal.

The birth of free Windows?
Windows 7 will run fine on netbooks - a smart move. But how to price it?

Linux is free, and as Moore’s Law drives down netbook prices, any difference will become more obvious. For the several billion people in the developing world, even $20 for Windows 7 may be too much.

If the Window’s netbook share drops below 70%, Microsoft will have no choice but to offer it for free to netbook OEMs. Sure, some nominal dollar figure will attach, but after marketing and developer support costs are figured in, it will be a wash.

This is as it should be: operating systems are becoming commodities, like a cell phone OS. The real innovation will be in netbook pricing models and new applications.

The Storage Bits take
Linux has lost the fight for netbook dominance, but it has inflicted significant pain on Windows. Microsoft faces a do-or-die defense of the Windows monopoly which will no doubt be successful.

The important fact is that for the first time in decades, Microsoft is playing defense, not offense. This is good for everyone, as even a 10% Linux share is enough for a future Linux breakout if Microsoft fails to stay current or raises prices.

Apple gets to watch Linux and Windows fight. If and when Apple offers a netbook, the OS will be an integral part of the package, not a choice. And they won’t be competing on price.

Comments welcome, of course. For more background on the Microsoft/netbook issues, do what I did. Read Mary Jo Foley’s
Microsoft blames netbook appeal, marketing costs for Windows drop and Larry Dignan’s Netbooks become the bane of Microsoft here on ZDnet.