Why netbooks are killing Microsoft, Very good and informative read! Options

[illriginal]

Editor's Note: This story is excerpted from Computerworld. For more Mac coverage, visit Computerworld's Macintosh Knowledge Center.

When Microsoft laid off 5,000 people in January, analysts and pundits pointed to plenty of reasons for the first major layoffs in the company’s history. The obvious culprits included the overall economic meltdown, Apple’s continued success and Wall Street’s desire to see a leaner Microsoft.

But the real cause of the layoffs can be summed up in a single word: netbooks. These lightweight, stripped-down laptops that sell for between $200 and $400 have taken a big chunk out of Microsoft’s bottom line. Unless the company comes up with a plan to handle them, its revenue will stagnate.

In announcing the layoffs, Microsoft said that its revenue had increased an anemic 1.6 percent in the quarter that ended Dec. 31 compared to the same quarter a year earlier. But that number doesn’t tell the whole story. Windows took the biggest hit, while systems for servers and related tools had hefty increases in sales. Windows sales were down an eye-popping 8 percent; server and related revenue grew 15 percent.

Microsoft clearly blames netbooks for the drop in Windows sales. Here’s what it said in its statement: “Client revenue declined 8% as a result of PC market weakness and a continued shift to lower priced netbooks.”

Netbooks have become the only bright spot for PC makers, with sales accelerating while the rest of the PC market stays in the doldrums. According to IDC, 10 million netbooks were sold in 2008 and that number should double to 20 million in 2009.

Why is all this bad news for Microsoft? First, an estimated 30 percent of all netbooks ship with Linux. That means Microsoft doesn’t get a penny for Windows from 30 percent of all netbooks being sold. Given that netbooks represent the fastest-growing PC market segment, the company’s problem may get worse with time.

In addition, netbook owners who buy Linux machines won’t be buying Microsoft Office, handing Microsoft an additional revenue hit for every Linux netbook sold. So it’s not surprising that in the most recent quarter, sales of Office were anemic. Overall, sales for Microsoft’s business division, which is in charge of Office, were up slightly, at 1.9 percent. But sales of the consumer version of Office plummeted 23 percent—and consumers are the people buying netbooks.

Microsoft faces other netbook-related woes as well. The company doesn’t get paid as much for a version of Windows sold on a netbook as it does for a version of Windows sold on a laptop or desktop PC. There’s very little margin on a machine selling for $200 to $400, and so Microsoft simply can’t charge full freight for Windows on one. And given the price that Microsoft charges for consumer versions of Office—usually about $200 for the lowest-priced version—netbook owners who use Windows aren’t likely to pay for Office either. It doesn’t make much sense to pay as much for a piece of software as you did for your entire PC.

Microsoft clearly recognizes the problem and is taking action to try to solve it. First, it built Windows 7 to run on netbooks, something that Vista doesn’t do. When Windows 7 ships, expect Microsoft to spend plenty of money promoting it for use on netbooks, in an attempt to drastically cut into Linux sales.

In addition, Microsoft is working on low-cost, ad-supported, Web-based versions of Office. That way, it can start to get Office revenue from netbook owners.

Will these steps be enough to make up for the overall shortfall in revenue caused by netbooks? Probably not. That’s why the company is desperate to figure out a way to make its online businesses succeed. If it can’t, the days of big revenue growth are behind Microsoft, thanks in part to netbooks.

Source: http://www.macworld.com/article/138972/200...l?lsrc=rss_main

[illriginal]

Well what do you expect? Windows was mainstream and backed by a thief who gave nothing but empty promises? I mean think about it, Microsoft almost had monopoly chain going on. When you hit that status, you know damn well your product is hardcore mainstream.

So ya, over the years people simply get used to Windows. Imagine if the community of Linux mainstreamed their product(s) since the late 80s? Pffft... Windows wouldn't even be looked at.

For example, security? Linux/Unix destroys all other OS in regards to security. Stability? Heh... without a doubt. Viruses? Non-existent. Productivity? Of course... in fact you can have a lot more productivity in Linux than Windows. And finally, how about style? Microsoft is JUST now making their OS stylish, while also making it into a fat slow cow. While Linux has been stylin on them fools since back in 2002.

So... with the flexibilities, productivities, and security of Linux compared to any of Microsoft's distros, Linux by far is the better choice. It totally owns Windows in every which way.

If companies were to just hire a few Linux/OpenGL etc.. programmers, they could make all their Windows format software compatible with Linux, such things as video games and video cards drivers, Windows would probably have a challenge. In the last 5ish years you have seen companies making drivers for not just Windows, but also Mac.

If Crysis was compatible with Linux... pffffft I could easily max out all my settings to the fullest on both the video card and the game and I'd have a flawless game play.

Anyways, this is never going to happen. People are just too mentally lazy to even learn a different OS. Regardless of all the positives it has, especially for office or even home use.

[mipadi]

If companies were to just hire a few Linux/OpenGL etc.. programmers, they could make all their Windows format software compatible with Linux, such things as video games and video cards drivers, Windows would probably have a challenge. In the last 5ish years you have seen companies making drivers for not just Windows, but also Mac.

The lack of "really good" video card drivers for Linux isn't really due to a lack of manpower, but rather politics. Companies like ATI and NVidia are resistant to releasing really decent open-source drivers, for obvious reasons. Likewise, Linux kernel hackers are really resistant to allowing closed-source drivers to have full access to the kernel, and they refuse to lend technical support to people writing closed-source drivers.

[illriginal]

The lack of "really good" video card drivers for Linux isn't really due to a lack of manpower, but rather politics. Companies like ATI and NVidia are resistant to releasing really decent open-source drivers, for obvious reasons. Likewise, Linux kernel hackers are really resistant to allowing closed-source drivers to have full access to the kernel, and they refuse to lend technical support to people writing closed-source drivers.

I totally agree... except for NVidia and just recently, Adobe. NVidia and Adobe finally opened up to the community after hearing/reading our demands from a good bunch of consumers who actually do use their products but are not affiliated with Microsoft Windows.

I remember back in 2005, I believe, the community signed petitions for Adobe, ATI, and NVidia (just now realized that's Latin for envied), and ATI is the only one at the moment giving us a hard time. Luckily I've stuck to NVidia.

What boggles my mind is that these are just drivers, what could we possibly use that data for? They're not gonna lose any money for developing open source drivers. Because it is their products that we purchase that needs those drivers, that's where they make their money, through their hardware. And Adobe as well, they wouldn't lose money if they made a Linux friendly Flash player, which finally they've made stable releases (except for Kubuntu 64 bit, I'm still having a hard time with audio in Flash while the video looks flawless).