For me – and, I suspect, many others – the purchase of a netbook will NOT be as a notebook replacement, but as an additional device. In such cases, Microsoft enjoys more revenue, not less.

Given that most sales of low-cost netbooks in developing countries will be to first-time purchasers, hense Microsoft will enjoy more revenue, not less.

I strongly suspect that its only a matter of time when all netbooks will be outfitted with WWAN radios and wireless telcos will begin offering them at greatly subsidized prices (perhaps even for free) with a two-year data plan commitment. Once again, that’s more revenue for Microsoft, not less.

The current OEM licensing fee for a netbook version of Windows XP is $26.

Something I’m curious about is whether ordinary peoople will be able to buy a version of W7 suitable for netbooks, or whether only manufacturers will be able to buy it.

If I could buy a cheap version of W7 suitable for my netbook, and if it did everything I need, why bother with the full version of W7 on desktops and notebooks?

I agree with Jake. I was pretty surprised to see the cost of some Linux distro’s when it came to support. When I talk to the IT manager at work he laughs when I talked about the thought of switching to Linux. The idea of having to retrain 5,000 people to use Linux even for 1 day blows any supposed savings out of the water. I enjoy Linux and I use it daily, but when I have to type a document or work on a spread sheet I don’t use Open Office even though I think its a very good product.

Your $20 license fee presupposes that Linux is free on these netbooks. This is unlikely considering the work that HP, ASUS, etc. will have put into tailoring a distro for their netbooks. Also, if Linux on Dell PCs is anything to go by, the price charged for Linux is not that different to the cost of Windows and can sometimes be more.

I’m curious as to how this will impact business sales, since the XP downgrade option is set to end in Jan 09. I can understand MS will kill XP when Win 7 is released, but the real issue to most netbook users I think regardless of price is performance. The question is not how much MS will charge for licensing, but can Win 7 perform on a netbook as well as XP does today? At least that’s my burning concern, not a $20, $40 or even $60 extra for the OS.

Finally, take into account many users will still have copies of XP on them when Win 7 is released. MS may stop sales of XP altogether, but it’s doubtful they will shut down their activation servers for people wanting to install (or reinstall) the OS on their system. I can assume the number of PC’s running XP even after Win 7 is released will be substantial.