by James Maguire
Think of all the big bad competitors that Microsoft has dispatched over the years. Think of all the changes it's navigated to remain King of the Jungle.
Heck, think of Vista -- what the tech punditry class did to that OS wasn't pretty. (Was it really so bad? Who cares -- once the chattering class smelled blood, it was all over.) Yet Microsoft rallied and came back with the spiffy Windows 7. A real lion always fights back.
But now, think about a small mouse that is (or should be) causing big fear in the lion's heart. Yes, the lowly netbook - eek! - so small, so humble, but such a treacherous threat to the brave lion.
The problem is, the things are so cheap. My wife's HP laptop crashed over the holidays, and she needed a replacement -- fast. She had deadlines pending. We were resigned to spending a painful chunk of cash on a fat laptop. But lo and behold, it wasn't necessary. There on Christmas Eve at the local Best Buy sat a $275 HP Mini netbook. It saved the day. She worked on it until we got home and got her laptop repaired.
Now, it turns out the cute little box is more than a second stringer. She loves it. It gets a lot of use, from Hulu viewing to serious note-taking. It will travel with her.
The threat to Microsoft is that, as the popularity of netbooks keeps cresting, the company's revenue from OS sales is taking a mauling. When the unit costs so little there's less room for a full OS mark-up. Pressured by the threat of Linux on netbooks, Microsoft let Windows XP go for a mere $15 a copy (if industry estimates are correct).
Clearly, in an iSlate world -- coming soon to a mall near you -- there will be a chaotic profusion of handheld devices. Someday soon, people will be monitoring their data centers on their handhelds. The hulking desktop is a has-been. Even those muscular 2004-era laptops are looking pale.
Microsoft's 1
0-Q filing from last January conceded that smaller units were costing them revenue:
"The decline in OEM revenue reflects an 11 percentage point decrease in the OEM premium mix to 64%, primarily driven by growth of licenses related to sales of netbook PCs, as well as changes in the geographic and product mixes."
So what's a giant to do? The world is falling in love with netbooks and that's squeezing the bottom line.
What would you do if you were Microsoft?
James Maguire is senior managing editor of Internet.com's IT Management channel.
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