Netbooks open door to Windows alternatives

SAN FRANCISCO, March 9 (Reuters) - As netbooks surge in popularity, open-source Linux-based operating systems have established a toehold on the low-cost, stripped-down computers as an alternative to Microsoft Corp's MSFT.O Windows.

Although analysts say no more than 15 to 20 percent of netbooks are running Linux platforms such as Ubuntu, the growing demand for the devices has jolted Microsoft, whose Windows Vista operating system was too bulky to run on many netbooks.

The first netbooks to emerge in 2007, such as Asustek's 2357.TW Eee PC, ran Linux. Microsoft quickly recovered by making its older Windows XP operating system available on netbooks, where it is now the dominant platform. The average consumer is still more comfortable with the ease and familiarity of the Windows experience.

But the contest may still be in the early innings. The expected release of laptops running Google Inc's GOOG.O Linux-based Android operating system -- which many including Microsoft are predicting -- would inject fresh competition into the market.

Moreover, analysts say equipment makers have an interest in helping to nurture a Windows alternative to help them save on licensing fees. Forrester Vice President J.P. Gownder said that although Microsoft’s platform now rules the netbook segment, it was initially embarrassed when the devices began to sell without Vista. “It is the first crack in any of the armor at all,” Gownder said.

The software giant is tailoring a version of its forthcoming Windows 7 operating system for the devices, and the early word so far has been positive, analysts say.

However Chris Kenyon, director of business development at Canonical, said that light, portable, Web-centric netbooks are the “sweet spot” for the Ubuntu operating system, which Canonical sponsors.

“We’ve seen the biggest manufacturers in the world establish and push non-Windows operating systems and have seen it established as a mainline product.”

Kenyon expects there to be “many times” more pre-installs of Ubuntu this year than last.

PC heavyweights such as Hewlett-Packard Co HPQ.N, Dell Inc DELL.O and Lenovo 0992.HK all offer netbooks with Linux-based platforms, as well as Windows versions.

Jay Pinkert, a Dell spokesman, said Ubuntu allows the company to appeal to the open-source community, and also offer a product at a lower price point.

Linux operating systems are free to license -- Canonical makes money through support and upgrades for Ubuntu -- while Microsoft receives as much as $60 for its netbook version of XP, analysts say.

“As long as customers find value in having an Ubuntu option we’ll continue to have it in the mix,” Pinkert said.


Netbooks are expected to be one of the only PC segments showing strength in 2009, with analysts estimating global shipments of anywhere from 20-to-30 million in 2009.

Although no one predicts an end to Windows dominance any time soon, some do see some opportunity for Linux netbooks in emerging markets, where cost is the overriding concern.

And others see potential for emerging open-source operating systems on netbooks.

“The big move to Linux will come when Android comes out on the netbook platform .... That’s what’s really going to open up Linux,” said Rob Enderle, principal analyst at the Enderle Group.

He said netbooks are perfect for so-called “cloud-based” computing -- with applications hosted on networks rather than on PCs -- and that the Android platform, if designed well, could find some traction.

Android is used on smartphones like HTC Corp's 2498.TW G1, but is being designed to support all kinds of connected devices.

Gartner analyst Ken Dulaney was skeptical that anything can seriously dent Windows’ supremacy, but said Android’s emergence would make things interesting.

“If Google got in with Android that would be a good statement, Dulaney said. “It would give Google a placeholder in a market that may grow from bottom up.”

Microsoft in January partly blamed netbooks for weaker-than-expected quarterly profits. The company makes only half as much on its netbook software as it does for a standard notebook, analysts estimate.

Microsoft expects to ship a low-end Windows 7 for netbooks and allow users to upgrade to more expensive editions.

(Reporting by Gabriel Madway; editing by Richard Chang)

((; +1 415 677 2536)) Keywords: LINUX/NETBOOKS Keywords: LINUX/NETBOOKS

C Reuters 2009. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN09473435ANALYSIS/