Cheaper operating systems eat in to software giants? margins

Microsoft loses out to netbooks

Microsoft has reported that despite selling more copies of Windows, revenues for the company actually decreased, which the company has attributed to the rising sales of netbooks.

Sales of these devices have boomed from 500,000 units sold last year to 11 million predicted for this year. Since around 25 per cent of netbooks are now shipped with Linux, some have claimed that there is a potential problem for Microsoft.

“If you look at the price points of some of the netbooks, they are $300 to $400,” Liddell told the San Francisco Chronicle. “Clearly that is attractive for a lot of people in terms of adding a third or fourth PC to their homes. So it will affect the margins, but some of that will be incremental growth that we wouldn’t otherwise have had.”

However, IDC analyst Bob O’Donnell attributes the slowing sales to Microsoft’s high prices, telling the SF Chronicle: “You can’t charge 100 bucks for an operating system on a machine that costs $299.”

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