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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