Netbooks bleed Microsoft profits. It's about to get worse

Microsoft is hurting profits by winning the Netbook battle, a battle that Canonical's Ubuntu is about to make much harder.

Microsoft has achieved something of a Pyrrhic victory against Linux-based Netbooks: it now claims 96 percent of the Netbook market, but its earnings continue to be battered by the lower revenues and profits that come with the low-end Netbook phenomenon.

Even as Microsoft "wins" in Netbooks, it loses, as ZDNet's Larry Dignan writes. Microsoft expects "the overall spending environment to remain difficult," but it may not yet appreciate just how much worse it can get.

After all, Canonical, which develops Ubuntu, the world's leading consumer-focused, Linux-based desktop operating system, on Monday released a Netbook-optimized Ubuntu distribution, as IDG reports.

Better battery life. A nicer visual experience. An operating system tightly tuned for applications like e-mail, Web browsing, and office productivity. All for a price that is dramatically less than Microsoft Windows...even after Microsoft discounts.

Microsoft's love-hate affair with Netbooks is about to get worse. Competition does that to a company.

Follow me on Twitter @mjasay.

Tech Culture
About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.


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