WSJ: Microsoft makes $15 per Windows XP netbook license

No wonder Microsoft plans to push the Starter edition of Windows 7 into the netbook market. In a report about the subject, the Wall Street Journal quotes insiders who say Microsoft collects very little cash from Windows XP Home Edition licenses sold to netbook makers:

A Microsoft spokeswoman declined to discuss prices it offers PC makers, but people familiar with the matter say the company takes in less than $15 per netbook for Windows XP once marketing rebates are taken into account -- far less than the estimated $50 to $60 it receives for PCs running Windows Vista, a newer operating system that runs on standard desktop and laptop PCs.

Unlike Windows XP Home Edition, Windows 7 Starter will have certain artificial limitations—like the inability to run more than three applications concurrently. As we learned last month, Microsoft hopes these limits will encourage users to spend money on upgrades to full-featured Windows 7 editions.

But will netbook makers actually bite? According to the WSJ, Acer Product Marketing VP Sumit Agnihotry believes Windows 7 Starter's three-application limit "could be a tough sell, since Windows XP has no such limits." He wouldn't disclose whether Acer plans to use Windows 7 Starter, either, although he did hint that Acer could offer more expensive netbooks with fancier versions of Windows 7.

Even Intel is skeptical. Company CEO Paul Otellini reportedly commented in February that the upgrade scheme "is going to be tough for a bunch of reasons." As the WSJ points out, Intel financed the development of a netbook-friendly Linux distribution and recently turned it over to the Linux Foundation.

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