Microsoft charges less than $15 for each XP netbook

Recently Gartner Analysis predicted that the sales of netbooks will grow nearly 80% this year to 21 million units, while overall PC sales decline by 11.9%. Given that netbooks are leading the PC market growth, Microsoft is forced to offer Windows XP for netbooks at a discounted price to gain high share in netbook market. Microsoft hasn't revealed its pricing for netbook licenses publicly till now, but Wall Street Journal quoting unnamed sources reports that Microsoft is charging only less than $15 per netbook for Windows XP, less than one third of the estimated $50 to $60 it receives for PCs running Windows Vista. Microsoft usually charges $30 for the Starter Edition of Windows meant for PCs.

According to Microsoft, the Starter edition in Windows 7 was created so that Windows 7 can be offered on even the least expensive netbooks. Customers who aren't satisfied will have the option to pay an additional fee to upgrade to a higher-end version of Windows. But PC maker Acer, foresees that the Starter edition's 3-app limit and the additional cost for the upgrade to higher-end versions could be a tough sell for Microsoft, since Windows XP has no such limits.

It is not yet known whether Acer plans to use the Windows 7 Starter version in its netbooks, but Acer is also 'very sensitive about adding new cost to netbooks' since netbooks' greatest attraction is their low price and notes that customers are willing to pay more for features beyond what XP offers.

Intel also voiced some skepticism in February that Microsoft's plan to convince consumers to upgrade from the Starter version "is going to be tough for a bunch of reasons."

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55 Comments

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Symod said,
WTF is a 3 app limit???

You can't run more than 3 apps at once? You can't install more than 3?

You can't run more than 3 applications at once. For instance: antivirus, messenger and firefox. No more allowed.

That's probably the worst idea I have ever heard, what a dumb limitation...

Mark my words, this piece of crap will not float -- anyone who understands this limit is probably a bit of an advanced user and then probably needs more advanced features, while the regular people out will probably never figure out why they couldn't run more when their habits are probably different.

miguel_montes said,


You can't run more than 3 applications at once. For instance: antivirus, messenger and firefox. No more allowed.


Two out of those three won't even count towards the application quota..

anewhope said,

Two out of those three won't even count towards the application quota..


presumably as long as that is windows/msn messenger. Pidgin / aim / insert-name-of-favourite-chat-app-here are probably out of luck. Unless there is some api the app can use to register itself as a 'background task' (or whatever term MS are using to describe these exempted apps), in which case expect an app to patch all apps to be 'background' ones in fairly short order.

Of course, if they are restricting it to just windows messenger, the EU might be interested to know that...

djprotoss said,
presumably as long as that is windows/msn messenger. Pidgin / aim / insert-name-of-favourite-chat-app-here are probably out of luck. Unless there is some api the app can use to register itself as a 'background task' (or whatever term MS are using to describe these exempted apps), in which case expect an app to patch all apps to be 'background' ones in fairly short order.

Of course, if they are restricting it to just windows messenger, the EU might be interested to know that...


Rather good points actually ... It is rather unclear at the moment.

miguel_montes said,


You can't run more than 3 applications at once. For instance: antivirus, messenger and firefox. No more allowed.


Everday people will not like the three apps only limit. Do Microsoft ever consult the consumer? ( corporate customers excluded )

Even if they had to provide it to OEMs for free, it would still be a better option for MS than risk losing the netbook market to Linux.

But then, if they started doing that, they'd wind up in court again for "abusing their monopoly"...

it's a smart move by microsoft. they are selling licenses on a product that they will cease to support in the near future. so, if people want support they are probably better off just spending the money on a license for a newer version of windows rather than paying per call for support once they pull the plug on it. more money for microsoft either way.

iamwhoiam said,
OEMs will have to provide support.

Only for a certain amount of time, usually 6 months to a year. Then it goes to fee based support.

metro said,
Only for a certain amount of time, usually 6 months to a year. Then it goes to fee based support.

Does anyone actually use support?
I have a constant stream of users at my door requesting help because they no longer bother trying the OEMs for support. There are one or two notable exceptions but on the whole, customer support is a joke; Users are patched through to distant call centres staffed by non technical advisers who merely parrot off the analysis list in front of them.
'Experientia docet'

15 dollars? That really is cheap. If only all Windows OS's cost that. Heck, I wouldn't even go that low. If Vista Home Premium cost between 50-60€, I would buy it. But most computer stores here in Portugal sell it for more than double that...

M_Lyons10 said,
"...Starter edition's 3-app limit" ?? Huh?

Yes, you are allowed:

wininit.exe
services.exe
and one instance of svchost.exe


ShadowXhawk said,
seriously, on a netbook, why not just use ubuntu?

If Ubuntu supported the netbooks to the same quality as Windows with the same array of software to choose - I can assure you that every Netbook vendor would be using it. There is a reason Windows denominates generic PC sales - because it's better than GNU/Linux.

Macalicious said,
If Ubuntu supported the netbooks to the same quality as Windows with the same array of software to choose - I can assure you that every Netbook vendor would be using it. There is a reason Windows denominates generic PC sales - because it's better than GNU/Linux.

Saying soomething's "better" is completely subjective.

Macalicious said,
If Ubuntu supported the netbooks to the same quality as Windows with the same array of software to choose - I can assure you that every Netbook vendor would be using it. There is a reason Windows denominates generic PC sales - because it's better than GNU/Linux.

Clearly you haven't seen the debian / ubuntu repositories, for they contain myriad software to suit all tastes.

People do not like change, and they have been spoon fed M$ bloatware for years; hence the disinclination to change. The OEM's have only themselves to blame; they took the easy route of offering only one option and now they are forced to pay whatever price M$ dictates. Karma is a bitch

liberatus_sum said,
Clearly you haven't seen the debian / ubuntu repositories, for they contain myriad software to suit all tastes.

People do not like change, and they have been spoon fed M$ bloatware for years; hence the disinclination to change. The OEM's have only themselves to blame; they took the easy route of offering only one option and now they are forced to pay whatever price M$ dictates. Karma is a bitch :)


Are you suggesting MS make all the software for Windows? Or is Windows the only "bloatware" you refer to? Does this apply to Win7 too?

Do you know how much MS plan to charge for the starter edition?

What is preventing the manufacturer's from offering Linux?

Linux does in fact have a lot of software available to it. The problem lies with getting their OS to function properly with the devices in use. Manufacturers don't seem concerned in supporting an OS which overall has less than 1% marketshare. At the same time, the Linux community cannot grow without support from the hardware manufacturers. Also, let's not forget that Linux does not have the overall ease of use for the consumers.

You could sit and cry about how "easy" Linux is to use for you, but that's not going to get Linux moving anytime soon. Seriously, that'd be about as useless as the using the term "M$" to somehow "stick it to them".

Funny how only the Linux/Mac fanatics seem to feel "spoon-fed" by Microsoft. They just cannot get over the notion that the vast majority of people using Windows do so because they want to.

It's like telling them the world is round when they really think it's flat.

Talk about having a superiority complex.

C_Guy said,
They just cannot get over the notion that the vast majority of people using Windows do so because they want to.


Actually, the "vast majority" of people use Windows because that is what the IT department at their job standardized on a decade or more ago when Microsoft was in full-on monopoly mode.

C_Guy said,
They just cannot get over the notion that the vast majority of people using Windows do so because they want to.

Really not a road you want to go down. Thar be dragons!

But PC maker Acer, foresees that the Starter edition's 3-app limit and the additional cost for the upgrade to higher-end versions could be a tough sell for Microsoft, since Windows XP has no such limits.

Its true. Thats it, its that simple. Started eddition will bring more negative than a positive to netbooks.

s0nic69 said,
Its true. Thats it, its that simple. Started eddition will bring more negative than a positive to netbooks.

Depends on how much they will be asking for an upgrade to an uncrippled version.

Starter isn't as bad as some people make it out to be. It's a perfectly reasonable budget OS. Things like anti-virus and even Messenger don't count against the 3 app limit so you don't hit it as quickly as you might think, especially on something like a netbook where you probably don't have a ton of stuff running anyway.

Plus, upgrading to Home or Pro is a cinch with Anytime Upgrade.

Brandon Live said,
Starter isn't as bad as some people make it out to be. It's a perfectly reasonable budget OS. Things like anti-virus and even Messenger don't count against the 3 app limit so you don't hit it as quickly as you might think, especially on something like a netbook where you probably don't have a ton of stuff running anyway.

Plus, upgrading to Home or Pro is a cinch with Anytime Upgrade.

How much is the upgrade and wouldn't it be better to just get a small laptop running Windows Vista/Seven?

Could also format the hard drive and install Windows 7 or Windows XP.

Just like Brandon said, Starter Is a good OS, no problem with the 3 app limit, I realy can't imagine no one using more than 3 app on a netbook, what that will be? word, IE and another program? I can't imagine someone using wmp on a netbook, photoshop or others.. I realy think that netbooks are for Internet and "word" working.

Billy Gun said,
Just like Brandon said, Starter Is a good OS, no problem with the 3 app limit, I realy can't imagine no one using more than 3 app on a netbook, what that will be? word, IE and another program? I can't imagine someone using wmp on a netbook, photoshop or others.. I realy think that netbooks are for Internet and "word" working.

- Notepad
- Calc
- Firefox (or IE)

there you go, can't open anymore apps. These are all "small" apps so opening a 4th one wouldn't be hard on a netbook but Starter wouldn't let you

Billy Gun said,
Just like Brandon said, Starter Is a good OS, no problem with the 3 app limit, I realy can't imagine no one using more than 3 app on a netbook, what that will be? word, IE and another program? I can't imagine someone using wmp on a netbook, photoshop or others.. I realy think that netbooks are for Internet and "word" working.

If you can't imagine someone using WMP on a netbook then I'm guessing that you've never really used a netbook before. I watch DVDs on my netbook often (using a USB DVD drive of course). As far as the 3-app limit, I'm usually running a minimum of 5 applications according to Windows Task Manager (although Windows 7 beta counts MSN messenger as two applications in Task Manager, I'm counting it as one) and if I bring up any application that's sitting in the system tray, that gets added as an application in Task Manager too. Personally I can't see many people at all being happy or productive with a 3-app limit. I think that all it's going to do is frustrate people to the point that they'll upgrade, and maybe that's exactly what MS is expecting will happen.

Then don't buy Starter!

Starter is probably a good choice to deploy on computers in a workstation, like on the level of public libraries and elementary schools. Maybe not for the average joe, but it's pretty darn affordable.

Microsoft is charging only less than $15 per netbook for Windows XP, one third less than the estimated $50 to $60 it receives for PCs running Windows Vista.


$15 is not "one third less than the estimated $50 to $60", it is however "less than one third" of those amounts. One third less than $60 would be $40.

By the way, this just proves what people have said for a long time: Microsoft could easily charge less for XP and still make a profit. They are charging more (roughly double) for XP Starter Edition than for the full version of XP Home on netbooks!! That's just silly.

No, that's just the Microsoft Tax.
Everybody knows that Windows and Office are incredibly overpriced, but then so are most of the other major software suites.

And just in case you think I'm some sort of MacFan: MacOs is overpriced too.

I'm biased but I have to disagree. With the time, effort, expertise, and cost that goes into building an OS, I think they're both a steal. Especially when compared to what people happily pay for other consumer software.

Then again, it's also weird to me that OS X is more expensive than Windows ($129 for just the Leopard Upgrade disc felt pretty steep to me).

I think £160 for a retail copy of Vista Ultimate very reasonable considering it's something I use everday on various computers...mine...my girlfriend's...uni computers. With the cost of hardware, I think the cost of the operating system is very reasonable, and it's a very necessary component.

Bear in mind it cost around $6 Billion to develop.

Airlink said,
No, that's just the Microsoft Tax.
Everybody knows that Windows and Office are incredibly overpriced, but then so are most of the other major software suites.

And just in case you think I'm some sort of MacFan: MacOs is overpriced too.

Nothing is over priced until the market says so - and the market says so via a drop in demand for that product in favour of a competing product that is cheaper. Obviously there are still a huge number who see value in Office, Windows and MacOS X are purchasing it because of it.

Then again, it's also weird to me that OS X is more expensive than Windows

Probably due to a more varied software suite than Windows with Automator, Spaces, Boot Camp, a multitude of preconfigured programming languages, and so on. The difference will be even greater in Windows 7 as it's getting stripped from having Windows Mail and Photo Gallery, etc. As you said yourself, sofware isn't cheap to develop.

Brandon Live said,
Then again, it's also weird to me that OS X is more expensive than Windows ($129 for just the Leopard Upgrade disc felt pretty steep to me).

There is no such thing as a "$129 Leopard Upgrade disc".

.Reo said,
There is no such thing as a "$129 Leopard Upgrade disc".


So the $125 I spent on that same exact thing didn't exist?

Jugalator said,
Probably due to a more varied software suite than Windows with Automator, Spaces, Boot Camp, a multitude of preconfigured programming languages, and so on. The difference will be even greater in Windows 7 as it's getting stripped from having Windows Mail and Photo Gallery, etc. As you said yourself, sofware isn't cheap to develop.

However, don't forget that the apps they removed are still free to download. So it can't offset anything.

neufuse said,
So the $125 I spent on that same exact thing didn't exist?

No, what you spent $125 on was for the entire Leopard installaton disc. So far, Apple has not distinguished "upgrade" versus "full installation" pricing - what you buy each time is the full operating system. Some people may want to say that's stupid - that it would be better if they offered a cheaper version of the OS as an upgrade-only path, but that assumes that the upgrade version would be cheaper than the current full version.

Apple has released an upgrade-only version of the disc, but as far as I know that was never for sale. Rather, Apple included it in the cases of any computers that were boxed before Leopard was released and that were still sitting on store shelves. That way, even if you were buying a slightly aged computer, it was still considered new and would be up to date with Apple's latest offerings, software-wise. That also included the iLife suite. I believe Apple also offered to ship those upgrade-only DVDs to customers who had purchased a Mac within a month before Leopard was released - the customer only had to pay for the cost of shipping of the DVDs.