Windows 7 to usher in the $200 netbook age

Microsoft recently invited PC manufacturers to Redmond to talk about Windows 7 and revealed some interesting details about its thoughts on the netbook market - not least predicting a $200 (£140) price point for Starter Edition variants by Christmas.

The manufacturers are already gearing up for Windows 7 PCs, says Mark Croft, the Director of OEM (Original Equipment Manufacturer) Worldwide Marketing.

"They came wanting to know real block-and-tackle information about working through the process, about the schedule and some details around specific OEM policy and licensing". He added, that covered how pre-installed software will be handled and what counts as a netbook for licensing.

Croft insists Microsoft hasn't locked down a limited netbook specification yet: "There isn't a standard, uniform view of the world. Each OEM has nuances on this depending on what they think their brand value is, each one has a slightly different take on what they're trying to do in terms of market share or margin.

"Some of them are trying to make $10 on this device or $20, and some are just trying to sell a unit and break even. Some of the OEMs absolutely have an opening price point but they really have the objective of persuading the customer that if they pay a little bit more, they get significant extra functionality, whether it's in the hardware specification or the software and experience. No two are the same."

Starter or Home Premium?

Some OEMs will continue to offer Linux netbooks, although Croft repeats stories of higher return rates than Windows models: "I have heard from big US retailers that they are seeing a disproportionate amount of returns."

And although the Starter Edition will be an option for Windows 7 netbooks, "we are clearly going to market to customers that Home Premium is the default. We've made our case to the OEMs; we've shared some analyst data with them about customer preferences."

But there will be netbooks with Starter Edition and that will drop prices lower than ever, he predicts. "We have a couple of the OEMs continuing down a path to be very aggressive on price. It puts the pressure on everyone. We're anticipating opening price points to reach about $200 at least in the US market this holiday season, and another $50 maybe for Nvidia Ion machines."

Along with price, battery life under Windows 7 is going to be a big issue for netbooks and notebooks alike. "Outside of price it's one of the next few things customers make buying decisions on" says Crofts; OEMs are working hard on this, and he predicts we'll see custom power profiles on all new machines.

"Windows 7 can help, but settings on PCs and peripherals are key (one USB device that doesn't enter selective suspend can significantly reduce battery life). "Our breaths are held to see how material the real-world battery life increases are at the holiday season."

Startup time has been another focus and again, it's not just the OS that makes a difference – it's the software that's installed and often the software that's pre-installed. Microsoft has been putting more pressure on the OEMs this time Croft says. "We're all about putting the stopwatch on how quickly a customer gets to a usable experience. With OEM pre-installed software what you'll see is a little bit of streamlining going on in the initial experience for the customer."