Microsoft and the great netbook price-fixing scam of 2009

Microsoft is colluding with netbook hardware vendors to deny customer choice and protect profits

It's the question vexing hardware vendors everywhere: How do they seize on the fervor and froth of the netbook craze without cannibalizing sales of their higher-priced, higher-margin notebooks? After all, if the current crop of netbooks can run the majority of users' day-to-day computing tasks -- and my recent personal experience with an HP Mini 2140 shows that they indeed can -- then what's to stop these same users from ditching their notebook habit altogether in favor of the lighter-weight and increased battery life of a full-time netbook?

Now we're hearing that Microsoft is about to weigh in on the matter. The company already muddied the netbook hardware waters when it set forth its byzantine "maximum hardware requirements" for netbooks running Windows XP Home. And with Windows 7 just around the corner, the company is reportedly preparing an updated set of parameters. In a nutshell, the acceptable netbook screen size is decreasing (from 12.1 inches to 10.2 inches), the acceptable storage capacity is increasing (from a 32GB solid-state drive or 160GB hard disk drive to 64GB SSD/250GB HDD), and restrictions on touch and other Windows 7-centric features are being lifted.

[ Get the lowdown on the coming netbook revolution from InfoWorld's Neil McAllister. | Follow Randall C. Kennedy's test of working only with a netbook. ]

It all centers around Microsoft's archaic, multilevel pricing strategy. If you're a hardware vendor and your device fits within these restrictions, you qualify for the lower-cost netbook edition of Windows 7. If not, you have to offer one of the pricier versions and pass the additional cost onto your customers. And given the price-competitive nature of the netbook marketplace, this latter option would be suicide, so expect most vendors to fall in line.

On the surface, the whole situation reeks of the worst kind of collusion, with Microsoft helping certain at-risk hardware vendors to deny their customers choice by letting them hide behind the straw man of software licensing costs. Do you like that shiny, new netbook on the shelf? Want one with the same general specs but a slightly larger screen? Then get ready to go with a second- or third-tier vendor and pay through the nose!

What those involved in the great netbook price-fixing scam of 2009 fail to realize is that denying customers choice is never a smart move. The savvy ones will find a way around the restrictions, while the regular Joes will scoff at the arbitrary nature of the "rules" and walk away. I, for one, am encouraging enterprise customers to fight back, to demand that their hardware providers take the business netbook concept seriously and provide the configurations and form factors users are asking for.

And if you, like me, find yourself retching at the thought of this latest Microsoft money grab, there's always the Ubuntu netbook remix.

Copyright © 2009 IDG Communications, Inc.

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