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Microsoft Fears the Netbook

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Farewell, netbook! Welcome, "low-cost small notebook PC!"

If Microsoft (Nasdaq: MSFT  ) has its way, that's the term we will be using for the small Web-centric computing gadgets that have been all the rage since last year.

Quite a mouthful, isn't it? But don't worry, because the name will never take off. Besides, who is Microsoft to be doling out buzzwords? Mr. Softy isn't a tastemaker. Nor is it a fraternity elder assigned with dishing out nicknames to its brothers.

It's clear why Microsoft wants to dump the "netbook" moniker. The software giant is still reeling from its initial decision to power netbooks later this year with a crippled version of Windows 7 that will allow users to run just three applications at a time. The company backed away from that miscue, but the damage was already done.

Netbook users don't want to pay a premium for a Windows operating system anyway, especially when open-source solutions such as Ubuntu -- already a popular choice with some netbook cradlers -- can also get them where they need to go. Microsoft will also have a hard time persuading netbook users to pay up for Microsoft Office when free cloud-computing productivity applications are available from the likes of Adobe (Nasdaq: ADBE  ) and Google (Nasdaq: GOOG  ) .

Maybe Microsoft thinks that taking the "net" out of "netbook" will make consumers forget that the holiday best-sellers are primarily Internet-surfing devices that don't necessarily need Microsoft products to power them. Or maybe Microsoft thinks that belittling netbooks with a "low cost" tag is one way to get consumers to pay more for full-sized laptops that contain higher-margin versions of its operating system.

Either way, this campaign isn't right. Can you imagine Apple (Nasdaq: AAPL  ) lobbying to have the term "notebook PCs" replaced with "low-cost MacBooks" to set its slick machines apart?

Microsoft doesn't get it, or maybe it just doesn't want to. This company didn't give birth to netbooks, and it doesn't get to decide what the devices are called. Maybe some of the netbook's bigger manufacturers, such as Acer, or Asus, or even Intel (Nasdaq: INTC  ) -- the company behind the Atom chip that powers most netbooks -- should have a little more say in what we call these ultra-portable devices.

Sorry, Microsoft.

What's the deal with netbooks these days?

Google is a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Intel and Microsoft are Motley Fool Inside Value recommendations. The Fool wrote puts on Intel. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is still holding out for an Apple netbook. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (6) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 04, 2009, at 2:29 PM, Mcwop wrote:

    I am waiting for my Mini 12 with Ubuntu to ship. I am a hardcore Apple user, and feel even Apple is botching the netbook game.

  • Report this Comment On June 04, 2009, at 3:42 PM, TMFBent wrote:

    Love ya rick but I'd check breezy statements like this against the facts.

    "Netbook users don't want to pay a premium for a Windows operating system anyway, especially when open-source solutions such as Ubuntu -- already a popular choice with some netbook cradlers -- can also get them where they need to go. Microsoft will also have a hard time persuading netbook users to pay up for Microsoft Office when free cloud-computing productivity applications..."

    Seems to me that, given that netbooks started out Linuxy, only to see Windows get a 90% share, that people ARE willing to pay a premium. It's pretty easy to guess why that may be: they want to run programs they've got or are familiar with. And "cloud" computing programs are only good for when you're connected, which is, of course, not always.

    If you want to find a free solution to flog 'n' tout as an Office killer, I suggest you go with Open Office, which will run on either platform, and doesn't require you to be online, or working within a browser, to operate. Cloud applications are, I believe, all hat, no cattle.

    Of course, I think Netbooks are a shortlived fad too. If you can accomplish most of what a netbook is good for on an iPhone, why carry the extra weight? If you can't run higher-end applications on the netbook because of hardware constraints, I think you move up to a more robust laptop.


  • Report this Comment On June 04, 2009, at 3:48 PM, Netteligent09 wrote:

    Netbook is lousy. Customers can get 14.1' performance laptops at same price as netbook. There is only one problem remains: Microsoft Window Vista is the only choice and it is very bad. Microsft Widows 7 hope to improve but do not expect to make money.

    Your current computers working just fine. Save your money for raining days. Do not buy unecessary computers, laptop, or toys. High Unemployement is going to be around for a long time.

    Small netbooks do not make you a better man or wise woman.

  • Report this Comment On June 04, 2009, at 3:51 PM, TMFBreakerRick wrote:

    Seth, fair enough on the popularity of Windows XP on netbooks. It is winning the war, but it doesn't mean that users "want to pay a premium" for it. Things will get interesting when Acer puts out the Android-powered system, that's for sure.

  • Report this Comment On June 04, 2009, at 8:08 PM, Geek1976 wrote:

    Microsoft is afraid to loose their Empire.

    The Microsoft´s nightmare start the same day that one professor dream about to give one laptop for each child of the world. One Laptop per Child.

    The humanitarian organization contacted the processors makers, Intel and AMD, they made the numbers, and think, why to support this humanitarian project if we can do the big business by ourselves. Soon the small Chinese makers of computers “San Jai Ji” started to produce low cost mini laptops.

    Acer see the business and run for it, Dell too, HP ofcourse, and then and then. But, what happened. They all are tideup or well with Intel or well with Microsoft because a lot of thing I can not tell here. You can look over the internet for example for the Lawsuit against Intel, Microsoft, etc anti monopoly laws brokerage, etc, and you will find a lot of info regarding to this.

    Well the thing is, the netbook market will not just vanish, on contraire, will be just bigger and bigger everyday. Linux, and now Google with their Open source Os, will start the world conquest, why?, well just because the above mentioned open the Pandoras Box, and now people know that they do not have to expend $1.000 USD for a laptop computer anymore, and for the vast majority of users, there will be no more earlier obsolete OS or computers because makers desires….

    Don you never has question your self or think on why you buy a laptop with a windows OS that runs fast like hell, and months later, after a lot of patches and OS upgrades, your laptop runs so slow that you can even take a batch mean while you power on it? And when you as they just say, your computer is obsolete, you need a dual core or what ever….. Why, I just whant to connect to internet, check my mail, write in to my blog…. I do not want to send a rocket to the moon…why I need now a dual core processor?

    Asus was one of the precursors of the netbook, but apparently Microsoft buy them and now they will not support open source os on their netbooks or Eee pc as they call it. No problem, they are not important for this netbook business, there are a lot of small assemblers and makers that will take their share as Acer, BenQ that is launching soon their Joybook u121, NetColors with their 10-N270(for me the most powerful and affordable 10.2 inches netbook around there), and all of them support the opensource OS and all of them will include soon integrated 3G that is for me the MUST for those small computers.

  • Report this Comment On June 05, 2009, at 12:16 PM, TMFBent wrote:

    But Rick, I think the XP thing shows they are willing to pay a premium, since it must cost more than a free linux OS, right? Either that, or it shows that manufacturers using a windows OS are able to push back the costs in other places to keep the total price competitive, at least competitive enough.

    I believe android will face the same fate as other linux variations on netbooks. People use the OS that has the apps they want. If there are enough android aps, then there will be a challenge, but if all Google can offer is its pretty lame suite of "cloud" applications -- all of which are inferior to open office, IMO, and even more inferior to a copy of MS Office -- then the game will be over before its begun.

    The iPhone is the only product I can think of that could skip over the need for aps, as its native aps were just so desirable. But by creating such a vibrant developer community (theres some chicken and egg here) they've given it a huge lead in the smartphone space. (Once they fix the situation with outlook sync and tasks, I'll probably even go that direction.)

    What will matter is what people demand from their netbooks. If all people want is email and a bit of web browsing, I think netbooks will hit a wall and phones will take that biz. If people want more aps, I think they hit the processing and performance wall, and more robust laptops running mac or windows take the biz.

    It will be fun to watch, especially because everyone thinks they know which way it will go, and we will all be wrong.

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