Microsoft's Staff Reductions Directly Related to Success of Netbooks

by Sam Dean - Jan. 22, 2009Comments (3)

We've covered the growing popularity of Linux- and Windows-based netbooks several times, including the threat they represent to standard notebooks, and their ability to put open source software in front of millions of new users.  Today, JKOnTheRun shows without any question that all of this is not lost on Microsoft.  The software giant announced today that it is laying off 5,000 employees following a $465 million shortfall in OEM revenue, and this was cited as an explanation in the 10-Q filing: "“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." Check out JKOnTheRun's thoughts on whether there is anything Microsoft can do about the trend.

 


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3 Comments
 

While I think open source is great (I use Ubuntu Intrepid as my primary OS), I don't think it has quite the impact you make it seem.


The quote only says the decrease in expected OEM revenue is because of the growth, not decline of licenses. This is probably because they can't charge the full amount for Windows XP on a netbook (since the netbook has such a low price point). Instead, they probably charge something like $25 per copy.


This would decrease their profits due to users not buying Windows XP (or Vista) for the full price on a standard notebook or desktop, and instead paying only $25.


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I'm glad someone pointed out that in Microsoft speak, "netbook" means "Linux threat".


Microsoft had no choice but to give Windows for $5 apiece just to prevent GNU/Linux from gaining bigger (critical) mass. This is monopoly abuse (like the EDGI programme) and the EU Commission should pursue legal action.


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Quote: "Microsoft had no choice but to give Windows for $5 apiece just to prevent GNU/Linux from gaining bigger (critical) mass. This is monopoly abuse (like the EDGI programme) and the EU Commission should pursue legal action."


Let me ask the obvious question here; is the monopoly abuse demonstrated by lowering of the price of Windows to something well under $15, or was it keeping the previous price jacked so much higher, until Linux netbooks presented a genuine possibility of competition?


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