Microsoft’s Windows 7 May Not Cure Netbook Headache

Per Bloomberg, Windows 7 will not solve Microsoft's dilemma with the increasingly popular low-cost netbooks, whose lack of processing processor often force manufacturers and users to install older and cheaper versions of Windows, or worse, open-source Linux.

To entice consumers, Microsoft will offer several versions of Windows 7, ranging from a low-priced Starter Edition all the way up. The problem is the Starter Edition can only run three programs at a time. It's Microsoft's way of forcing users to upgrade to more advanced and pricier versions. However, it is highly doubtful if Microsoft can price the more advanced editions much higher, since netbook prices tend to be south of $500, sometimes going down to $200. A $100 operating system on a $200 machine is simply unthinkable for most users.

And if, in the meantime, Linux distro's improve, particularly with their User Inteface, then these will even become more attractive alternatives for netbook users. Low-cost just can't compete with free if all the functionality and usability are comparable.

As it is, the netbook boom has already impacted Microsoft's bottom line, with Windows revenue falling 8% just last quarter even as netbook sales increased 50-fold last year. Windows accounts for 28% of Microsoft's $60.4 billion annual revenue and IS its most profitable division.

It would be interesting to watch how Microsoft will attempt to solve its netbook headache.