Microsoft Makes $15 Per Windows XP Netbook

Reports today say that despite the fact that Microsoft’s Windows XP is near-defacto operating system on netbooks today, the Redmond company makes less than $15 per license sold.

Recent NPD data says that 96 percent of all netbooks sold throughout February 2009 came with Windows. Presuming that the vast majority of Windows-based netbooks run Windows XP rather than Vista, that means Linux is running on a mere 4 percent of netbooks. Microsoft is apparently trying to grab that last 4 percent.

The Wall Street Journal today cites people familiar with the matter as saying that Microsoft takes in less than $15 per netbook for Windows XP once marketing rebates are taken into account. This is compared to the $50 to $60 it receives for PCs running Vista. So why is Microsoft so eager to grab the entire market?

It’s a well known fact that Microsoft is planning to offer a stripped down version of Windows 7 developed specifically for netbooks. That said, while Windows 7 Starter is said to be “optimized” for netbooks, the widely reported fact that it can only run three applications at once is something many people have been wary of. If we fast forward to a time when an consumer is given the choice of running no more than three apps or using Linux, which would you choose? An XP user might not be a Windows 7 user, but a customer is a customer, right?

The WSJ cites Brad Brooks, corporate vice president for Windows product marketing at Microsoft, as saying Starter was created so that the company could offer Windows 7 on even the least expensive netbooks. Brooks maintains that despite its limitations, it is an easier and more stable OS than XP.

"When you see Starter on netbooks, there are a lot of impressions that it is limited," said Mr. Brooks told WSJ. "It's a pretty robust operating system for customers at the price points we're giving it to them," he finished.

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