Netbooks are becoming a big problem for Microsoft's Windows business. ASUS & Acer, which together account for 90% of the netbook market, are using the rival Linux software on about 30% of their low-cost notebooks.
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The netbooks, which usually cost less than 300 Euros, are the fastest-growing segment of the personal-computer industry, a trend that's eating into Microsoft's revenue. Windows sales fell short of forecasts last quarter and the company cut growth projections for the year, citing the lower revenue it gets from netbooks. When makers of the computers do use Windows, they typically opt for older and cheaper versions of the software, according to Bloomberg.
"It's a real threat to Microsoft,'' said Dickie Chang, an analyst at research firm IDC in Taipei. "It gives users a chance to see and try something new, showing them there is an alternative."
Microsoft announced in April that it would extend XP's availability beyond its planned cutoff of June. That move helped Microsoft gain share in the netbook market, where almost all models initially ran on Linux. "We didn't have a clear policy to support netbooks a year ago," said Cathy Yeh, a Taipei-based spokeswoman at Microsoft.
Linux, equipped in 30% to 40% of Eee PCs sold, will probably sustain a market share of about 30%, said Samson Hu, a general manager at Asustek. The company estimates it will ship at least 5 million Eee PCs in 2008 after selling about 4 million since the product's debut.
Acer, which is aiming to sell 5 million to 6 million AspireOne laptops this year, estimates that Linux-equipped models account for about 20 percent of its shipments, spokesman Henry Wang said.
"Vista's computing needs makes it hard to run on netbooks, making older versions of Windows more suitable for the devices", according to Michael Cherry, an analyst at Kirkland, Washington- based research firm Directions on Microsoft.o estimates by Jenny Lai, a Taipei-based analyst at CLSA Ltd.
To cut costs, computer makers such as Acer and Asustek opted for slower processors and less memory. On these systems, Linux can boot up twice as fast as XP, according to Acer's Web Site.
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