We all know that Google Android netbook devices will be hitting the streets in the coming months. They are going to be running on really inexpensive ARM-based hardware and be getting an easy, unified interface, care of Google.
But how are these devices going to compete with Microsoft? Everyone in the world is familiar with the Microsoft interface and just about every application runs on Windows. It is going to be hard to topple something so ingrained in society.
Enter the recession economy. Google is going to compete on price. They are going to revolutionize the computer like they revolutionized Email - by making it (almost) free.
Their netbooks are going to cost about half to two thirds of what a normal Intel Atom-based machine will cost in hardware terms. And that is before the operating system is figured in. Microsoft is currently selling its seven year old Windows XP on most netbook computers. According to the Wall Street Journal, they only receive about $15 per license for these and it is hurting their bottom line in a big way. They are doing this to stave off the broad adoption of Linux on Nebooks.
Microsoft can't afford to keep their prices this low for long. Instead of raising the price for the new Windows 7, they are experimenting with a Windows 7 starter edition which only allows three concurrent applications to be running at the same time. They are hoping that this will get their OS in the door (and kill Linux before it starts), and spur an up-sell as the users get frustrated by the three application limit.
I can't think of a way to lose market share quicker.
Microsoft doesn't have much of a choice, however. If Windows OS is now only worth $15/machine, the value of Microsoft just plummeted. They'll need to make more on Windows 7 licenses.
This is exactly what Google needs to start getting a foothold in the netbook market. Even the idea of this application limitation will make some people go elsewhere.
That price advantage will have other benefits. The current $100 Netbook with a plan will turn into free netbooks with plans when you apply the Google discount. TMobile in the US would be a good bet on the carrier. They proudly carry Google's G1 Android phone currently and it wouldn't be hard to see them follow with a netbook.
But this backdrop will only get Google in the door. They have to prove their Android OS is up to par with the other operating systems out there. It will have to be secure, quick and most importantly, easy to use.
This should be exciting to watch.