Netbooks eat into Microsoft's revenues

Citigroup Global Markets analyst Brent Thill thinks that the drop in first-quarter earnings and revenues at Microsoft is related to the success of netbooks, or low-end laptops. In a report explicitly titled "Netbooks crash the party," Thill noted that "their sales are literally blowing the roof off any analyst's expectations." Sales of netbooks are expected to reach 11 million before the end of this year, and reach 41 million by 2012. This is phenomenal growth, considering that there were only half a million netbooks sold last year. Unfortunately for Microsoft, up to a quarter of netbooks run the Linux operating system, with the rest opting for the older--and cheaper--Windows XP Home Edition. Indeed, Microsoft has been forced to push back its planned obsolesce of the Windows XP operating system as a direct result of netbooks. Still, it is too early at this point to tell whether netbooks are cannibalizing sales of Microsoft's Vista operating system, or creating a brand new market as customers acquire netbooks as a secondary unit.

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- check out this article from the Inquirer

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