Computerworld has an interesting piece up about an intercepted memo from Microsoft to PC makers outlining eligibility rules for a new low-price version Windows XP Home. In order for a device to be sold with XP Home, it has to conform to a limited feature set to avoid cannibalizing sales of higher end computers.
Microsoft plans to offer PC makers steep discounts on Windows XP Home Edition to encourage them to use that OS instead of Linux on ultra low-cost PCs (ULPCs). To be eligible, however, the PC vendors that make ULPCs must limit screen sizes to 10.2 inches and hard drives to 80G bytes, and they cannot offer touch-screen PCs.
The program is outlined in confidential documents that Microsoft sent to PC makers last month, and which were obtained by IDG News Service. The goal apparently is to limit the hardware capabilities of ULPCs so that they don’t eat into the market for mainstream PCs running Windows Vista, something both Microsoft and the PC vendors would want to avoid.
Imposing the limitations solves a number of problems for the PC industry, said industry analyst Roger Kay, president of EndPoint Technologies Associates. “It allows PC makers to offer a low-cost alternative, and it prevents eroding of pricing and margins in the mainstream OS market,” he said.
So the $50 difference between an EEE PC with Windows and an actual usable notebook has Microsoft worried? PC makers are fine with it. They know if you buy one of these devices you will have no choice but to buy supplement it with a notebook or desktop. So far these have only been accessories to a real PC.
If the industry ever gets around to a usable small device in the $250 range then I will understand the concern. But right now, the prices are almost the same so what is the big deal?
