Microsoft Rules Netbooks Now, But ARM/Linux Threat Grows

Will Microsoft stick with Intel chips in Netbooks? Or will it port Windows to ARM processors — the same chips that lower-cost Linux-based netbooks coming later this year will use. One thing's certain: Redmond's rivals are preparing for battle.

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Microsoft is missing out on a growth opportunity by staying exclusively with the x86 architecture, Drew says. "It has been their way historically, and the cost of change to ARM processors may be what's holding them back."

Microsoft does not currently configure Windows to port to ARM processors and did not immediately respond to a request for comment for this story.

Microsoft and Intel Partnership Looks Solid

Industry analyst Kay says that lower netbook prices will be an advantage for ARM and Linux distributors, but still says the "smart money" is on Windows sticking with Atom processors because of their history and market presence.

Yet Microsoft's move to get versions of the upcoming Windows 7 on netbooks could raise prices, says Kay.

"Microsoft has said that it will offer both Starter and Home Premium for netbooks," says Kay. "Starter will be cheap, but it's unlikely that Home Premium will be sold at the same price as XP Home Basic is now selling for netbooks."

This is the wrong direction to go in a market driven by low price, and represents an opportunity for Linux, says Kay.

"Linux could compete here, but it will have to win converts one at a time," says Kay. "What happens with Google remains to be seen, but Android on netbooks will have to deliver an experience, not just brand name comfort."

Kay adds that ARM has some power in numbers and will benefit from all its licensees. "You have all these phones guys [Qualcomm, NVIDIA] excited to try netbooks," he says.

Microsoft's Enemy: Cheaper Netbooks?

ARM VP Drew emphasizes that Microsoft will have to face up to the rapidly dropping prices of upcoming ARM-based netbooks running Linux. "We're looking at prices as low as [US]$199. If, say, Google Android netbooks take off, Microsoft loses."

One well-known nonprofit recently switched to ARM chips. OLPC (One Laptop Per Child) Association announced it is dropping its AMD x86 processors and opting for low-power ARM-based processors in its next-generation XO-2 laptop. Its aim is longer battery life.

Nicholas Negroponte, chairman of OLPC, also expressed hope that Microsoft will move Windows to ARM.

"Like many, we are urging Microsoft to make Windows - not Windows Mobile - available on the ARM. This is a complex question for them," Negroponte said.