Netbooks hammer Windows revenues for second straight quarter

Netbooks, the small, cheap laptops that are gaining popularity, hurt Microsoft Corp.'s Windows revenues for the second quarter in a row, company executives said Thursday.

Revenues for the Windows Client division were down 16% in the first calendar quarter of 2009 compared to the same period last year, Microsoft said -- in part because of the continued growth in netbook sales, which accounted for 10% of all PC shipments in the quarter, according to Bill Koefoed, Microsoft's general manager investor relations. Profits for the company's Office suite also fell.

A second indicator of netbooks' impact was another fall-off in what Microsoft calls the "premium mix," or the percentage of Windows sales attributed to the higher-priced and higher-margin editions, such as Vista Home Premium, Vista Business, Vista Ultimate and Windows XP Professional. During the first quarter, the premium mix fell by 14 percentage points year-over-year, from 76% to 62%.

This was the second quarter in a row that the Windows premium mix drop was in double digits: In January, Microsoft confirmed an 11 percentage point drop, from 75% to 64% year-to-year, for the fourth quarter of 2008. At the same time, the company noted that Windows revenues had slumped 8%.
Netbooks affect Windows revenues because most come with Windows XP Home, a version that costs computer makers much less than, for example, Vista Home Premium. Reportedly, Microsoft sells copies of Windows XP Home to netbook makers for as little as US$15, but charges $50 to $60 more for a Vista "premium" edition.

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