Microsoft vies for budget laptop market with XP price cuts (ars technica)

Basically, what good product design giveth, Microsoft taketh away.  If your engineers are able
to provide impressive specs at an impressively low price... MS will ruin it by upping the
price of the OS, effectively punishing the manufacturer and their customers for any good job
done by the design team.  Yes, I can certainly see why the name "Microsoft" is so closely
associated with the word "innovation".

Microsoft prospered originally because IBM had to protect their legacy systems by crippling
the new stuff.  DEC did the same.  Car manufacturers do it. Everyone does it, and Microsoft is
no exception.  This move just happens to be more desperate, more obvious, and will be more
immediately counterproductive than their previous legacy protection moves.  Microsoft will
become synonymous with "old", "clunky", and "obsolete", and competitors will quickly learn
from the market to avoid Microsoft systems.

This will drive innovation in Linux handhelds much faster than if Microsoft played it smart.
Go, Microsoft, Go!

keep cutting those prices baby!

Yeah!

love it.

This move is a good thing.  It means many things.  First I'd say we are officially in the
'then they fight you' phase in yet another market segment, low spec laptops.

I suspect OEMs are split on this, many were terrified of what was shaping up as a race to the
bottom and hope Microsoft has saved them from the pressures of the marketplace.  On the other
hand some won't like the heavy handedness of this move, the obviously artifical line between
cheep machines that qualify and others that don't, etc.  And besides, OEMs like Asus don't
have a choice but to play ball with Microsoft because while the EEE PC is selling well with or
without Windows, annoying Microsoft would risk their higher dollar product lines.

Watch customers for the interesting reaction.  What do you think Fortune 500 corps are going
to think when a) they are told XP is dead, kaput, unavailable, etc. yet Microsoft is selling
the very product many of them WANT at prices lower than the sweatheart deals they can get when
buying by the 10K units and sometimes after waving the Penguin flag themselves in attempts to
get better prices.

Longterm this move won't stop the bleeding.  Moore's Law is going to drive prices down because
for a large segment of the market a 1Ghz class machine is enough so faster isn't really
valuable to those customers.

I'll just repeat a prediction I have made before.  Eventually the prices on hardware will drop
low enough that one of two things happen.

1.  Microsoft lowers license pricing far enough it guts their profitability in order to
maintain an OS monopoly that won't be able to keep enough cash rolling in to make shareholders
happy.

Remember that Windows and Office generate almost all profits, which is how they can lose money
on things like their Internet and game divisions.  Office will be under increasing pressure
from OO.o as the years roll on so jacking it's price to compensate isn't an option.

Keeping XP around is only a stopgap.  When they are selling the same OS at vastly different
prices those paying the premium prices will start to balk.

2.  Microsoft conceeds the bottom to Linux.  Of course this will be fatal because what is low
end today will be average tomorrow.  The computing world is littered with the husks of
companies who made this mistake.  Don't expect Microsoft to be this dumb.

But even worse will be when a Chineese consumer electronics maker gets the bright idea to
churn out a cheep generic linux desktop or laptop and sell it in places that don't have a
horse in the PC game and thus won't care if it canabilizes sales of higher price/margin
machines.  Not being in the PC business they won't have other product lines to worry about
retaliation on.  Game over.

So does this mean that someone who buys a Windows EEEpc with XP and connects it via the VGA
port to his 1600x1200 desktop monitor will be prevented by crippled XP from running at
1600x1200? Or that if he upgrades his RAM, XP will stop working and demand another $40 (or
whatever)?

Yes, a really really good way to persuade the masses that MS is a greedy convicted monopolist
pig!

Now, who is going to ship the better-than-Eee product with the 11 inch high-res screen and 2Gb
RAM on-board and the low linux price tag, that will have to cost 20% more if you want Windows
with it?