Microsoft targets Eee PC

Posted at: 3:46am 12th May 2008 by James Morris

Worried by cheap Linux-powered machines, Microsoft offers discount rates to encourage OEMs to opt for Windows

‘Your most unhappy customers are your greatest source of learning,’ said Bill Gates in his 1999 book, Business @ the Speed of Thought. Nine years on, it seems as if people are queuing up to give lessons to Microsoft. Apple is raking in the cash, and thanks to ultra low cost PCs (ULPCs) like the Asus Eee PC, Linux is threatening to become popular.

According to PC World, Microsoft is taking the ULPC so seriously it has created a new programme to help manufacturers create Windows XP-powered machines that can compete in terms of price with Linux-powered Asus’s Eee PC and Elonex ONE, by offering XP Home at a steep discount.

However, there will be a few catches – to qualify for the discount, the ULPCs will only be allowed to have screens 10.2in in diameter or less, hard disks 80GB in size or less, and they can’t have touchscreens. They will also be confined to 1GB of RAM and a 1GHz single-core processor.

The reason for the limitations are to keep these systems very clearly differentiated from Windows Vista PCs. Microsoft has already pulled back from its decision to discontinue Windows XP support in June, in the realisation that many aren’t yet ready for the move to Vista. But it wants to maintain the message that Vista is now the preferred choice for mainstream PCs.

So how cheap will these OEM copies of Windows XP Home Edition be? In developed markets they will cost a rock-bottom $32, and in developing ones $26, with a further $10 available for manufacturers participating in Microsoft’s Marketing Development Agreement. That’s still not as cheap as Linux (i.e., free), but Microsoft hopes this will encourage more manufacturers to stick with Windows for their ULPCs.

However, predictions of the ULPC’s likely popularity vary wildly. Microsoft reckons as many as 13 million units will be sold this year, whilst IDC only puts the annual total at 9 million by 2012. Nobody’s quite sure whether people want a cheap, light PC – or a powerful mobile phone like Apple iPhone.

Microsoft refused to comment on the details of the deal in the UK, but John Curran, Director of Windows Client Group, Microsoft UK gave the following statement to Custom PC:

‘Microsoft is deeply committed to working with PC manufacturers in the UK to offer a wide variety of Windows experiences that meet the tailored needs of our customers. These experiences range from exciting new laptops and desktops that enable people to take advantage of the latest in digital photography, music, entertainment, and Office productivity to new ultra low cost PCs that serve as easy to use starter PCs and terrific companion devices for browsing the web and doing mail. We expect to see Windows XP based ultra low cost PCs introduced into the UK market in the next few months.’