Windows 7 Non-Starter Edition
Microsoft’s decision to lift the three-application limitation from Windows 7 Starter Edition isn’t surprising. Its merits are questionable, however. Microsoft has made the wrong choice by keeping other limitations in place.
Whatever reasons Microsoft had for lifting the three-application limit, competitively, there was no other choice. Google’s Android is moving to netbooks, too. Microsoft may have knocked out vanilla Linux flavors from the netbook market, but Android will be tough competition, and the operating system ironically puts the “Net” in netbook.
Bundled Google Internet products and services, including the mobile application store, are the Net in the book. How could Windows 7 Starter Edition have effectively competed with the three-app limit as an OEM and customer adoption deterrent?
Apple is rumored to be working on a tablet-like device that would, based on price, compete with netbooks. I absolutely believe the rumors. Apple should lower Mac prices by moving iPhone/iPod touch upmarket. Apple loses by cutting Mac prices—better to release larger and more expensive iPhone/iPod models. The approach is consistent with the evolving netbook market, where carriers offer mini-notebooks subsidized with long-term 3G data contract commitments. Additionally, Apple can extend App Store to more devices, which will cause Microsoft problems—and Google, too.
Windows 7 Starter Edition
Three App-Limit Change Isn’t Enough
So, what exactly is Microsoft cooking? Late yesterday afternoon, Brandon LeBlanc clarified the company’s Starter Edition positioning in a Windows 7 Team Blog post:
We will be making Windows 7 Starter available worldwide on small notebook PCs. We are also going to enable Windows 7 Starter customers the ability to run as many applications simultaneously as they would like, instead of being constricted to the 3 application limit that the previous Starter editions included.
We believe these changes will make Windows 7 Starter an even more attractive option for customers who want a small notebook PC for very basic tasks, like browsing the web, checking email and personal productivity.
Yeah? Apple and Google should have loads of fun with the many Starter Edition limitations still in place:
- No Aero Glass (even though many netbooks pack plenty of graphics capability for it)
- No visual or audio customization
- No fast-user switching
- No DVD playback support
The restrictions are really silly. These imposed limitations can only increase Windows XP’s netbook appeal, and even that of Android netbooks or Apple’s rumored tablet (should it ship before mid 2010). Does Microsoft not understand that many, perhaps eventually most, netbooks will be sold subsidized by wireless carriers like cell phones? Can someone explain to me the sense in having a smartphone that is more functionally capable and more easily personalized than a netbook, simply because Microsoft arbitrarily truncates features?
The Tactical Error is Stupidity, Not Collusion
Unsubsidized netbooks are a menace. They suck out margins from the PC market. Unsubsidized netbooks also expose how much hardware prices have fallen while Windows licensing costs remained fairly stable. Windows’ cost as percentage of the PC’s cost has consistently risen for about a decade. Microsoft’s 2008 decision to extend Windows XP Home licensing to netbooks was more than about early models’ problems running Windows Vista. The move allowed Microsoft to effectively lower the OS licensing cost without actually doing so.
Starter Edition is yet another compromise, allowing Microsoft to offer a low-cost Windows version without sucking away licensing fees from other Windows versions. That’s why Microsoft places feature and system configuration limitations. Microsoft classifies a netbook as a mini-notebook with 2GHz or less processor, maximum 1GB of RAM, up to 10.2-inch display and hard drive as big as 160GB.
I fault Microsoft’s feature restrictions for being incongruous with the evolving carrier subsidized netbook market, but configuration limitations make some sense. The 1GB system memory limit is just plain stupid, but the 10.2-inch screen limitation is sheer brilliance. Microsoft may just save OEMs from themselves.
HP Mini 1000 Vivienne Tam Netbook
I’ll start with configuration requirements and work backward to the feature restrictions, which already were addressed a few paragraphs back. Acer and Asus are among the OEMs pushing for netbooks with larger displays—12.1 inches to 14 inches. Hello, people, a computer with 14-inch display is a notebook, not a netbook. Not that I support any netbook—mini-notebook, if you prefer—classification.
Microsoft’s reasoning for the limitation is something else: Preserving Windows licensing fees. Some people claim the limited configuration favors both Intel and Microsoft, that the companies are colluding to fix prices. Randall Kennedy calls Microsoft’s guidelines “the great netbook price-fixing scam of 2009.” Matt Buchanan’s Gizmodo headline: “The Netbook Conspiracy: Intel and Microsoft Collude to Keep Netbooks Crappy.”
Trustbusters get all goose-bumped about monopolies colluding to fix prices. It’s the cornerstone of antitrust enforcement, the paramount of consumer harm. But there is no collusion to fix prices here. It’s ridiculous conjecture. Microsoft is solely protecting its own interests and to fault. Intel be damned.
Microsoft Can Fix the Problem
The carrier subsidized netbook has huge sales potential and could actually plug the hole by which mini-notebooks are leaking margins out of the PC market. Stupidly, Microsoft’s 1GB RAM limitation and feature restrictions will work against sales of carrier subsidized netbooks and for margin-sucking unsubsidized models.
Here’s what Microsoft needs to do to fix the netbook problem:
- Every portable computer with a 3G radio should be ineligible for OEM licensing of Windows 7 Starter Edition.
- Microsoft should work with carriers and OEMs to bring full-featured, subsidized netbooks to market. Subsidies will bring down buyers’ costs, while bringing carriers lucrative 3G data contracts and preserving margins for OEMs and Microsoft.
- Microsoft should work with carriers, developers and OEMs to bring an application marketplace to subsidized netbooks. This year.
Yesterday, eWEEK reported that netbook sales are highest on the coasts. Really? Where is the best 3G coverage and emerging 4G coverage? On the coasts. The East and West coasts are natural markets for carrier subsidized netbooks.
But eWEEK is wrong to suggest that “As the rest of America warms to netbooks, the challenge will be to emphasize their status as companion PCs, not just cheap notebooks.” Netbooks are not PC companions. They are PC replacements, or would be if not for Microsoft’s stupid Windows 7 Starter Edition licensing scheme.
A mini-notebook should be the smarter smartphone. I promise everyone reading this post, that’s exactly how Apple and Google think of the netbook market. Microsoft can dumb down Windows for netbooks, which will only make them cheaper and more dangerous to PC market margins. Smarter, full-featured, 3G-connected, carrier subsidized netbooks could revive PC margins and foster a market segment rich in applications and hardware add-ons.
HP has the right idea with the Mini 1000 Vivienne Tam edition: Status symbol. But HP’s fashion mini-notebook should be available with 3G radio and subsidized from AT&T, Sprint or Verizon. Get it?
[Photo Credits: Windows 7 Starter, Rob Butler; HP Vivenne Tam, Veronica Belmont.]
Do you have a Windows 7 story that you’d like told? Please email Joe Wilcox: oddlytogether at gmail dot com.
It is not just netbooks, PC World in the UK is offering £300 off a MacBook if you sign up for 3G at the same time.
I think it’s pretty obvious that there will be no future “new” product category from Apple that doesn’t have some kind of App Store functionality.
For a tablet or safari pad style device, why in the world would Apple go back to the potential security risks, lack of software dev incentives, etc of standard OSX when it could use it’s sandboxing, app delivery, etc technology from the iPhone OS.
What I’m curious about is whether they’ll get impatient with this transitioning and create an App Store for OSX. Kind of like Valve’s Steam but of course not limited to games. I think that would accelerate the Mac software market hugely – particularly gaming would take off, but the problem with having to not break traditional software distribution along side this new system would be significant.
Thanks, Terry.
I think your analysis is spot on, Joe.
lol even better – Citrix website anno 1996
Their motto: Windows without Walls
So many of Microsoft\’s marketing restrictions could be controlled by hardware, where it should be, IMHO. The amount of installed memory will determine the number of applications that will run. Aero being turned on or off should be determined by the hardware graphics installed. DVD playback should be determined by whether you have a DVD drive or not, not what some marketing schmuck in Redmond wants you to have. Marketing restrictions suck!
So the problem comes down to, how does Microsoft compete with much cheaper OS solutions, particularly at the low end? My answer would be to license Windows as a percentage of hardware cost, rather than a fixed cost. A fixed cost that is appearing to be fixed to the point of collusion. Now Microsoft will never agree to this in a market of declining prices, but it would help them through the netbook wars. The price we pay for Windows would be determined by the amount of hardware we buy.
Gamers would pay more, but their already loyal to Microsoft. The true netbook buyer would pay much less because they aren\’t buying as much hardware. And the netbook manufacturers could produce a media netbook with DVD, better graphics and a larger screen, and pay more to license Windows. My Microsoft buddies say it\’s all about choice. This will provide more choice than the direction Microsoft is headed in.
P.S. to Joe. The invalid security code message should appear on screen, not a pop up dialog.
I purchased an Acer AspireOne netbook with 1GB RAM, Atom processor, 160GB HDD. It came pre-loaded with Windows XP Home. I decided to test Windows 7 RC on it. It works absolutely flawlessly and quite briskly, even with full aero. Of course the Windows 7 RC is the ‘Ultimate” version, and that is what I would eventually like to run on this “netbook” once it RTM’s. But if it is going to cost me over $300, that will not be an option as I spent only $259 on the netbook itself. I wonder what the pricing will be in this case.
Re Joe’s Appstore 4 Windows comment
Sure, I agree; but the benefits would be much smaller than in the OSX world and conversely the backlash would be much greater in the Windows world than the OSX world.
While i find Daniel Eran Dilger to be something of a fruitloop, i do agree that Windows and OSX serve two totally different markets and customers, so what’s good for one ain’t necessarily good for the other.
Well, whatever, App Store for Mac OS X would put Microsoft in an arguably difficult position. But my eyes are on Google even more than Apple. App Store is oh-so Web 2.0. For the mobile Web, services should be available anytime, anywhere and for any device. Google’s start is slower than Apple’s but Android’s potential reach and developer appeal may yet be greater.
I don’t see an App Store for OSX causing MS any problems except if MS tried to emulate it. Windows already has the widest array of available software for any platform whereas OSX lacks in that regard.
I don’t quite understand your Android tie-in at the end as that clashes with the ‘any device’ statement. The future of software development is interpretive (??) rather than compiled. Web applications are brilliant in that the HTML merely describes the view component and the local HTML interpreter displays that interpretation optimally based on the specifics of the device it’s running on. There’s just a few bits like bi-directional or socket-like functionality and such missing to make it the truly best development option for 99% of cases.
It’s funny, having been a Citrix consultant in a previous lifetime (or so it feels) – their exact marketing punch line all the way back in 1998 or even earlier was “any application on any device any time”…
little addition – “interpretive & declarative rather than compiled” i should have said…
Right, but App Store brings everything together, including payments and billing. How much better off would Windows be today, if Microsoft has something similar in place. Look at how much Xbox benefits from a store providing games and other goodies.
Can you document that, whatever? That’s an amazing bit of information–it’s own blog post. The similarity can’t be coincidence. In a quick Web search I definitely found references for WinFrame: “Windows Without Walls.” Classic.
i stumbled across it in the wayback machine if you look at the one 1996 entry – http://web.archive.org/web/19961221213351/http://www.citrix.com/
some excellent geocity’esque design there aswell…
I’m not sure how familiar you are with Citrix as a company – they have had a pretty interesting relationship with Microsoft. Short version: They were given source code access to Windows NT 3.51 and created a wholly seperately sold and bundled version of Windows called Winframe that made Windows more or less multi-user. Other than WinCE this has never happened before or since AFAIK.
Then one day Microsoft called them to Redmond and basically said “you give us your multi-user IP and you can have Software Assurance as a concept from us.” (<- this is before MS came out with SA themselves so Citrix almost beta tested this for them – at least that’s what a medium-level Citrite told me once)
They are one of MS’s staunchest software partners, hence the partnership / cooperation efforts around Xen as well.
Overall their wierd at-the-same-time tight partnership and strong competitor relationship in the very same product areas have always intrigued me. XenApp – RDP, XenServer – HyperV, CAG – Microsoft’s BlueWhale technology stuff, etc… But somehow they make it work.
I find Mark Templeton’s view on their Microsoft partnership particularly funny / insightful – (slightly paraphrased) “Partnering with Microsoft is like riding on a Tiger – it’s super impressive to your clients and strikes fear into your competitors, but you always worry about getting bucked off and eaten”