Microsoft plans to use Windows 7 to raise netbook prices

[AppleInsider]

The prospects of a premium priced Apple tablet computer may brighten at the hands of an unlikely ally, if Microsoft can carry out its stated goal of raising netbook prices using Windows 7.

After publicly advertising the idea that Windows PCs are cheaper than Macs in its "Laptop Hunter" ads, Microsoft CEO Steve Ballmer told an audience of financial analysts that the company's attempts to cut prices of Windows to induce demand in emerging markets had failed over the previous year, and that the solution to the company's woes will be to increase the price of computers.

"The theory was wrong," Ballmer said, explaining that there wasn't enough new demand to make up for the drop in profits. "You’ll see us address the theory. We’re going to readjust those prices north [using Windows 7]."

Reporting on the event, Peter Burrows of BusinessWeek wrote, "the company’s goal is to raise PC prices in the next year. That’s due both to expected popularity of a new class of higher-end and higher-priced netbooks, a new pricing strategy around Windows 7 that the company hopes will result in far more upgrades to premium SKUs, and a reversal of a strategy in the last year to cut prices to spur demand in emerging countries."

Lower competition, higher prices

The netbook segment of the PC market, introduced by a line of low cost, simplified mini-notebook models Acer debuted running Ubuntu Linux, captured the attention of PC sellers during Windows Vista's first year. The emergence of the new devices priced in the ballpark of $300 caught Microsoft off guard, and helped spoil the launch fireworks of Vista because the new operating system wasn't capable of running on the new stripped down machines.

Microsoft worked to eradicate Linux netbooks by pushing its PC partners to license Windows XP for next to nothing. This did nothing for Vista, but did result in the company being able to advertise that the new netbook category was still dominated by Windows. Moving forward, the capacity of netbooks to run Windows 7, which will not be offered for free, has been a major issue for Microsoft and its PC partners.

However, based on Ballmer's own comments, the ability of netbooks to run Windows 7 will involve both a redefinition of what a netbook is and a change in pricing, because Microsoft does not want to continue making lower and lower margins on the PC operating system software business it monopolizes.

Ballmer laughs off Apple gains

Burrows' report also noted that Ballmer laughed off the number of financial analysts in the room using Apple laptops. “We have low share in the investor community. I see a lot of Apple logos,” Ballmer said. “Don’t bother to hide them. I’ve already counted them. And it’s okay, feel free [to use them], so long as you’re running Office.”

Ballmer called Apple as a “fine company” doing well with a low-volume, high-price strategy, but claimed Microsoft hasn't lost market share to Apple over the past year, and that any changes in reported share numbers are just “a rounding error.” Share gains by Apple "cost us nothing," Ballmer said. "Hopefully, we’ll take share back from Apple. But they still sell only 10 million PCs a year, so it’s a limited opportunity."

Somewhat ironically, Microsoft has also been trumpeting its own tiny market share gains with its renamed search engine, despite having actually lost market share in the search business over the past few years. Additionally, Microsoft's gains have come out of the hide of Yahoo, which it hopes to team up with as a parter to take on Google.

[al_bundy]

the fad will go away, even with the small screen i'll take my iphone over a netbook any day.

[Rot'nApple]

Originally Posted by AppleInsider

Burrows' report also noted that Ballmer laughed off the number of financial analysts in the room using Apple laptops. “We have low share in the investor community. I see a lot of Apple logos,” Ballmer said. “Don’t bother to hide them. I’ve already counted them. And it’s okay, feel free [to use them], so long as you’re running Office.”

To which the investors turned their laptops around to expose to Ballmer that they are using Apple's iWork!

[jsavage]

Not for anything, but the "next to nothing pricing" was clearly ruled anti-competitive in the whole Netscape debacle, wasn't it? Oh well.

[MacTel]

I thought Windows was the working man's OS. Ballmer wants to stiff the working man now?

[JavaCowboy]

I'm not sure why Microsoft thinks that it now owns the netbook market, when it doesn't even offer a version of Windows for ARM. What's more, Intel is planning to sell the entire widget with netbooks running Atom and Mobiln, and Google will come out with Chrome OS.

Unless I'm missing something. Has Microsoft signed exclusive agreements with the netbook makers to distribute only Windows? What's in it for them if they can't threaten to install Linux on them.

[macosxp]

Apple owns more than 90% of the $1,000+ computer market, so Microsoft is very stupid to push more computers into that range.

Linux is already popular on Netbooks. Wait for it to get more popular.

And then Linux desktops are next.

[Ireland]

Please stop with the glorified titles Prince. MS are not the devil, you know.

[jazzguru]

Originally Posted by macosxp

Apple owns more than 90% of the $1,000+ computer market, so Microsoft is very stupid to push more computers into that range.

Linux is already popular on Netbooks. Wait for it to get more popular.

And then Linux desktops are next.

Don't forget Google's Chrome OS, which is targeted mainly for netbooks (at first).

[Quevar]

Originally Posted by Rot'nApple

To which the investors turned their laptops around to expose to Ballmer that they are using Apple's iWork!

I can't help but think that the recent update to MS Office that dramatically improved it's speed is due to the fact that they are worried about many Mac users switching to Pages and Keynote. (Definitely Keynote, somewhat Pages, but definitely not Numbers, imo) They make a reasonable amount of money from their Mac BU and probably don't want to watch it slide away, especially if that base were to be increasing....

[Lukeskymac]

Originally Posted by Ireland

Please stop with the glorified titles Prince. MS are not the devil, you know.

They sure come close to it...

[wobegon]

Originally Posted by Ireland

Please stop with the glorified titles Prince. MS are not the devil, you know.

Microsoft plans to use Windows 7 to raise netbook prices

Where in that title is Microsoft proclaimed the devil?

And what about it is 'glorified'? He's paraphrasing Ballmer's stated plan to raise the price of netbooks through the cost of Windows 7.

[camroidv27]

And this relates to Apple how?
Apple currently has no netbook.

Since this article has no Apple relavance, then it only has one purpose being posted here.

Please, focus on Apple products and such. I'm not here to read about M$ and their blunders. I want to read about Apple and their blunders (of which there are many)

[Dreadkid08]

Originally Posted by camroidv27

And this relates to Apple how?
Apple currently has no netbook.

Since this article has no Apple relavance, then it only has one purpose being posted here.

Please, focus on Apple products and such. I'm not here to read about M$ and their blunders. I want to read about Apple and their blunders (of which there are many)

I think Micro$oft blunders are pretty funny though

[jpellino]

... of the economics textbook that Ballmer is apparently using to shore up a table leg and make him read it? Demand goes down and prices go up? Talk about a reality distortion field. I want the pencil contract at Microsoft. They must be going through them by the gross, what with using them to repeatedly stab themselves in the thighs just to get through meetings with the marketing suits.

[diamondgeeza]

Originally Posted by Quevar

I can't help but think that the recent update to MS Office that dramatically improved it's speed is due to the fact that they are worried about many Mac users switching to Pages and Keynote. (Definitely Keynote, somewhat Pages, but definitely not Numbers, imo) They make a reasonable amount of money from their Mac BU and probably don't want to watch it slide away, especially if that base were to be increasing....

keynote is far superior to powerpoint. The last 9 months of being forced to use windows only at work has also made me think word is not so great either...

[Mystigo]

I am a big Apple fan. But I own a lot of Microsoft stock. Ballmer is driving me crazy. He should not be in charge of Microsoft. His vision seems to consist of dismissing real competitive threats when they appear, and then blindly and belatedly chasing the markets he scoffed at months before.

This is costing me a fortune.

[Dr Millmoss]

Originally Posted by Ireland

Please stop with the glorified titles Prince. MS are not the devil, you know.

Or the devil you don't know?

[Cbswe]

Originally Posted by camroidv27

And this relates to Apple how?
Apple currently has no netbook.

Since this article has no Apple relavance, then it only has one purpose being posted here.

Please, focus on Apple products and such. I'm not here to read about M$ and their blunders. I want to read about Apple and their blunders (of which there are many)

Thats is ridiculous. Microsoft always got to do with apple. They're competitors.
So every time MS does progress or has a backfall, it affects Apple.

[zunx]

What is the price of crap? Becase crap, even at low price, crap is!

[justflybob]

Originally Posted by Dr Millmoss

Are the devil you don't know?

That's like the old "The Gnu knew he had a new cage".

IMHO Micro$oft has been, and always will be, far worse than any fictional character any religion chooses to conjure up.

But that's just me....

And millions like me.

[JeffDM]

Originally Posted by AppleInsider

Ballmer laughs off Apple gains

Burrows' report also noted that Ballmer laughed off the number of financial analysts in the room using Apple laptops. “We have low share in the investor community. I see a lot of Apple logos,” Ballmer said. “Don’t bother to hide them. I’ve already counted them. And it’s okay, feel free [to use them], so long as you’re running Office.”

Ballmer called Apple as a “fine company” doing well with a low-volume, high-price strategy, but claimed Microsoft hasn't lost market share to Apple over the past year, and that any changes in reported share numbers are just “a rounding error.” Share gains by Apple "cost us nothing," Ballmer said. "Hopefully, we’ll take share back from Apple. But they still sell only 10 million PCs a year, so it’s a limited opportunity."

I really don't understand why this item had to be rehashed when this was the topic of an entire article on the same day, only three items down. It wasn't even five hours ago.

Originally Posted by macosxp

Apple owns more than 90% of the $1,000+ computer market, so Microsoft is very stupid to push more computers into that range.

Netbooks are about as far from $1k range as you can get. Increase the price on a $300 netbook by $50, and it's still hardly close to $1k. MS cut the licensing cost on netbooks as a special price class alone, any price adjustment in the netbook class won't make the regular notebooks any more expensive. I think there were restrictions on screen size, CPU speed and RAM to qualify for a netbook license.

Linux is already popular on Netbooks. Wait for it to get more popular.

And then Linux desktops are next.

I haven't seen Linux on anything close to 1 out of 10 netbooks for sale at retail. There were more in the earlier days, but they dried up pretty quickly.

Every year in the past decade was the "year of Linux on the desktop". It didn't work so far. I'd like to see Linux become a viable alternative, but it hasn't happened yet. Something needs to change for it to happen at all.

[camroidv27]

Originally Posted by Dreadkid08

I think Micro$oft blunders are pretty funny though

And I would agree with you, they are usually quite hilarious. I just don't think an APPLE dedicated site is the place to talk about them. People should be talking about their inadequacies on an M$ dedicated site. (Then again, I'm not the ruler of the internet... so this is only my opinion)

Originally Posted by Cbswe

Thats is ridiculous. Microsoft always got to do with apple. They're competitors.
So every time MS does progress or has a backfall, it affects Apple.

Yes, competitors, but no, not every thing M$ does affects Apple. M$ is software, Apple is hardware (though these days, more about gadgets than anything). As for the netbook arena, it doesn't affect Apple. OS wise, since you cannot run M$ programs on Apple, again Apple is not affected. (And if you argue that you can run M$ on Apple using Parallels, then you are buying an over priced PC: Windows + Parallels or other VM is more than just the windows license, to which both Apple and M$ are happy)

Anyhow. Its my opinion that they two don't affect each other. They really shouldn't. Apples and Oranges. The rivalry is all made up in people's heads, thanks to the think-tank at Apple.

[Quadra 610]

So what.

I have absolutely no problem with MS owning the netbook market. Seems they'll be squeezed out of the lower end as well, leaving it open for possibly Google Chrome netbooks or low-cost Google alternatives.

MS are virtually locked out of the Premium end.

So where does that leave them?

MS can't sell enough cheap junk, so now they want to charge more for the same thing??

Am I misunderstanding something here?

[8CoreWhore]

That tyrant will single handedly drive that company into the ground like a lawn dart.

[Ireland]

Originally Posted by wobegon

Microsoft plans to use Windows 7 to raise netbook prices

Where in that title is Microsoft proclaimed the devil?

And what about it is 'glorified'? He's paraphrasing Ballmer's stated plan to raise the price of netbooks through the cost of Windows 7.

Why all defensive? Get real. We all know Prince has Apple v MS wrestling matches in his sleep every night

I used to think this was Apple Insider. These days it seems like Microsoft Insider.

[cutter]

Originally Posted by Rot'nApple

To which the investors turned their laptops around to expose to Ballmer that they are using Apple's iWork!

That's so cute that you'd think a bunch of professionals would be using iWork!

[tundraboy]

First they roll out the laptop hunter ads to brand themselves the Walmart of OSes. Now after publicly laying claim to the cheap end of the market they want to move their brand upmarket. In the history of brand management, that is the hardest thing to do. (Harder even than Jack in the Box recovering from a food poisoning event.) VW tried to do it with the $70K Phaeton. That flopped. Walmart tried to do it after suffering from Target envy a few years back. That flopped. Somebody name me a success story.

Ballmer really has no clue where he wants to take Microsoft. He's been zigging and zagging since the day he took over as CEO. I am amazed at the patience of MS stockholders.

[cutter]

Originally Posted by JeffDM

I really don't understand why this item had to be rehashed when this was the topic of an entire article on the same day, only three items down. It wasn't even five hours ago.

Because K knows that simply putting the word "Microsoft" in a thread title gets the cult of Apple reacting like Pavlov's dogs?

[jazzguru]

Originally Posted by cutter

Because K knows that simply putting the word "Microsoft" in a thread title gets the cult of Apple reacting like Pavlov's dogs?

OOOOH! He said it again!

Do it again...

[Undo Redo]

How can it be said that Microsoft's goal is to increase the price of computers, when the actual goal is to increase the price of Windows? Did Balmer actually say that? Did Peter Burrows say that; or did Appleinsider say that?

[Quadra 610]

Originally Posted by Undo Redo

How can it be said that Microsoft's goal is to increase the price of computers, when the actual goal is to increase the price of Windows? Did Balmer actually say that? Did Peter Burrows say that; or did Appleinsider say that?

I'm not sure what's going on.

Windows being more expensive might increase the price of the machines they come loaded on.

So . . . Ballmer thinks that raising the price will help sell them? Does he think that a higher price tag will give the illusion of greater desirability? Will the other box makers magically start building Apple-like systems with unibody encolsures now? LOL this is interesting.

Can someone chime in on this, please.

[Quadra 610]

The prospects of a premium priced Apple tablet computer may brighten at the hands of an unlikely ally, if Microsoft can carry out its stated goal of raising netbook prices using Windows 7.

After publicly advertising the idea that Windows PCs are cheaper than Macs in its "Laptop Hunter" ads, Microsoft CEO Steve Ballmer told an audience of financial analysts that the company's attempts to cut prices of Windows to induce demand in emerging markets had failed over the previous year, and that the solution to the company's woes will be to increase the price of computers.

This makes no sense to me.

Am I missing something here?

[antkm1]

Originally Posted by al_bundy

the fad will go away, even with the small screen i'll take my iphone over a netbook any day.

i wouldn't speak so soon, just a few days ago there was a big story about the long awaited re-launch of the Apple Mac Tablet Touch device (according to AI sources). I don't know if you were on that thread but seemed like everyone was saying that would be the netbook killer. you may be singing a different tune once you see that!

I for one will opt for the netbook. Cheap and has a keyboard and let's me surf on the couch or just about anywhere under 3 lbs.

[antkm1]

Originally Posted by MacTel

I thought Windows was the working man's OS. Ballmer wants to stiff the working man now?

I agree with you. with the debacle that was Vista and now they want to ween back customers by charging extra for W7? Sounds like we're all getting the screw.

[jazzguru]

Originally Posted by Quadra 610

I'm not sure what's going on.

Windows being more expensive might increase the price of the machines they come loaded on.

So . . . Ballmer thinks that raising the price will help sell them? Does he think that a higher price tag will give the illusion of greater desirability? Will the other box makers magically start building Apple-like systems with unibody encolsures now? LOL this is interesting.

Can someone chime in on this, please.

A higher price increases desirability? I thought it was the other way around - desirability increases price.

Anyone remember the "Tickle-Me-Elmo" phenomenon?

Isn't it obvious that the only way to truly create desirability - and therefore command a higher price - is to produce a product that is desirable?

[Quadra 610]

Originally Posted by jazzguru

A higher price increases desirability? I thought it was the other way around - desirability increases price.

Anyone remember the "Tickle-Me-Elmo" phenomenon?

Isn't it obvious that the only way to truly create desirability - and therefore command a higher price - is to produce a product that is desirable?

Yes!

I still don't understand what MS wants to do here. They couldn't sell them when they were cheaper, so now charging MORE will move product?

Sorry, but I must be misunderstanding something here.

Wasn't it MS' whole strategy for months now to compete on price?? So now they want to make greater margins by charging more for the same product they couldn't move in the first place?

[antkm1]

Originally Posted by macosxp

Apple owns more than 90% of the $1,000+ computer market, so Microsoft is very stupid to push more computers into that range.

Linux is already popular on Netbooks. Wait for it to get more popular.

And then Linux desktops are next.

I'd like to see the source you're quoting about the 90% of $1000+ computer market...could you site the article?

I'd also like to know if you missed the part in this posting where AI stated that MS dropped XP prices to allow for a stronger share of the netbook market, which it seemed to work (in the past few months) if you look at most netbooks out there (dell offers about 70%-80% windows netbooks).

[Quadra 610]

Originally Posted by antkm1

I'd like to see the source you're quoting about the 90% of $1000+ computer market...could you site the article?

Apple dominates the $1000+ notebook market, confined mostly to purchases made from physical stores (Best Buy, etc.)

This has been in the news for the past two weeks.

[antkm1]

Originally Posted by diamondgeeza

keynote is far superior to powerpoint. The last 9 months of being forced to use windows only at work has also made me think word is not so great either...

what's not so great about Office compared to iWork? I'd like to know since i'm fencing with Apple currently, but Office products don't really bother me. I really like the '07 version, much more intuitive.