Although the conventional wisdom is that the rise of the Netbook is hurting the Windows business, a Microsoft executive said Tuesday that lower-cost laptops can actually be a good thing.
Speaking at an investor conference, general manager Charles Songhurst said that overall, most people buying Netbooks are either multiple PC owners in developed markets or first-time PC buyers in emerging markets.
"From what we see they are incremental," Songhurst said. "They are new scenarios."
Even if that is true, the fact is that Netbooks have been growing in numbers, while traditional PCs have slumped--a shift that has undeniably hurt the average amount of money Microsoft is getting for each copy of Windows.
One of the opportunities, Songhurst said, is if Microsoft can gain additional revenue on high-end PCs, noting that Microsoft has tended to get about $50 in Windows revenue for the standard $1,000 PC. (Microsoft tends not to talk about how much it charges PC makers for Windows, so it was interesting to hear him mention that figure a couple of times during his chat, which was available as a Webcast.)
Asked about Google's forthcoming Chrome OS, Songhurst said that while it could be a threat if it is demonstrably better, just being cheaper won't offer much of a threat, saying the quality of Windows 7 will help the company fend off new competition. Microsoft plans to launch Windows 7 on October 22, while Google's Chrome OS is not expected until next year.
As for whether Apple might gain ground inside corporations, Songhurst said that Apple isn't winning over the key executives that make technology purchases, such as chief information officers.
"If they are not compelling to the CIO, they are not going to make inroads in the enterprise," he said.
On the Bing front, Songhurst acknowledged that even if Bing is getting good results in the U.S., the company faces an even larger hurdle in the global market, where Google has nearly 70 percent share. Songhurst said that although Bing's engine is available globally, it has yet to put the same kind of marketing dollars overseas as it has in the U.S.
"That marketing push makes a (big) difference," Songhurst said.
One of the other things Microsoft has done is sign deals with companies such as Hewlett-Packard and Lenovo to make Bing the default search engine on new PCs. Asked if Microsoft is eying more such pacts, Songhurst said yes.
"Always we'll do distribution deals for Bing," Songhurst said. "We're quite active in getting out and competing for those."