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Linux Netbooks: $435 million in vaporized 2008 profits

Feb 21, 2009, 16:02 (0 Talkback[s])

[ Thanks to An Anonymous Reader for this link. ]

"For the first time in recent memory, Microsoft has a real operating system competitor for PCs. And Vista is not up to the challenge because MSFT wants to sell it for full price and it's too resource intensive for low powered netbooks . So MSFT is relying on its two year outdated OS, Windows XP to take on Linux. Vista runs on a neglible 1.5% of Netbooks.

"Lets run the math. Once again, software is a unique business model in that every incremental sale adds to the profit because development costs are fixed. Likewise, sales losses hit the bottom line.

"10 million x $36 difference in cost = $360 million

"Earlier we calculated that lost sales due to Linux marketshare was $75 million. Quite interestingly, MSFT is actually realizing a much bigger loss due to the price cut of XP. Getting in a price war with a free product is never going to be pretty."

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