Microsoft Gambles on Windows 7 ‘Starter’

“Microsoft managed to grab the lion’s share of netbook sales
last year, but at a heavy cost. It was forced to offer Windows XP
— a version of the operating system it had largely phased out —
at bargain prices to counter Linux versions.

“A Microsoft spokeswoman declined to discuss prices it offers PC
makers, but people familiar with the matter say the company takes
in less than $15 per netbook for Windows XP once marketing rebates
are taken into account — far less than the estimated $50 to $60 it
receives for PCs running Windows Vista, a newer operating system
that runs on standard desktop and laptop PCs.

“Netbooks are expected to run better on Windows 7 than Vista,
which required more powerful hardware than netbooks offered. To
encourage use of the new software, the company plans to offer a
version called Starter that will be inexpensive but comes with
significant limits. Besides only running three application programs
at a time, Starter will also lack some spiffy graphical interface
features of other versions of Windows 7.”

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