As much as we’re excited about the performance of Windows 7 Premium on netbooks and how smoothly it has run in our early tests, we’ve been equally perplexed by the Starter Edition of this OS and its myriad limitations. The reason for Starter’s existence, according to Microsoft, is to enable netbook makers to offer lower-cost machines. But when you add up all the drawbacks you have to wonder if Starter makes sense for anyone. To get some answers we spoke with Don Paterson, director of marketing, Windows client. Late last week Paul Thurrott reported that Microsoft would remove one of the most contentious limitations of Starter Edition: the inability to run more than three programs at once. As of Friday afternoon Microsoft said it had “nothing new to share.” Also on Friday, Windows journalist Ed Bott tweeted that “My sources say ‘under discussion, not decided yet.’” The good news is that Paterson had a lot to share on the subject of netbooks, ranging from Starter Edition’s many other calculated trade-offs (no customizable wallpaper for you!) to why he doesn’t think Linux stands a chance (he says only geeks would want to tinker with it). Here are the highlights of our in-depth interview:
A lot of people don’t like the idea that Windows 7 Starter Edition will limit users to having three applications open at once. Why did you create it? Paterson: The goal was also to enable our partners to come to market with something that was more price aggressive than what they might be able to do if their only option was Home Premium. We heard pretty consistently from our partners that there’s a low end to this category where price is pretty sensitive. At the same time, users want to be able to run Windows 7. Starter was the solution for that scenario. But why the three-app limit? Paterson: We have a pretty good insight into knowing how people behave on netbook PCs, and there was a lot of debate on “What’s the right number of apps?” We felt that the three- app limit was the appropriate number. What is important for people to understand is how we define those three applications. Anything that is running in the background (things that might be sitting in the system tray like security features, connection managers, etc) is outside the boundaries of what we count in the three apps running. On the flip side, multiple windows of the same application only count as one application. We are pretty confident that people will be able to deal with the three-app limitation without a lot of hindrance. So why wouldn’t a netbook maker just stick with Windows XP? Paterson: You guys are as clear as anybody as to what some of the advantages are as far as usability, reliability, and the desktop enhancements. It’s the difference of almost a decade in terms of what Microsoft has accomplished. We’re real bullish about the core fundamentals and the improved experience someone is going to experience with a Starter unit than with an XP unit. It’s going to be easier, fundamentally; it’s going to be safer; and users will get all the benefits of better power management and faster boot up and shut down times. How much less will consumers pay for Starter edition notebooks? Paterson: Pricing is something we aren’t ready to discuss. I don’t think it will be defined by OS alone. Besides open programs, what other limitations will we see in Starter vs. Home Premium? Paterson: It’s funny that you use the word ‘see’ because a lot of it has to do with what’s visual. For example, when you hover over any open applications on the bottom of the desktop, you’ll see a preview of the pages. Then, if you hover over a preview image your entire desktop will go to that view. We call it enhanced preview then full preview. Users are not going to get that functionality in Starter Edition. What users will get when they hover is a list of the documents that would be open but it will be by file title. What about personalization? Paterson: It turns out that 95 percent of people like to customize their desktop background and 40 percent of those update them monthly. In Starter that will be one of the trade-offs. You will get a standardized desktop, and you won’t have the ability to customize that. That sounds like something that would cost more money to take out than it would to leave in. Paterson: It’s not so much about money from our side. It’s about what we can do to create distinctions between operating system versions. It helps distinguish what you do get with a Premium Experience. It says, “Your desktop experience will be less personalized, how important is that to you?” Is there anything else Starter Edition netbooks can’t do? Paterson: Another difference is around Home Group. I think this is a great feature, especially in the context of a netbook. With Home Group I can look right through another PC, connect it to a printer and print, as well as access files on any of those machines. If you have a Starter unit and bring it into a network where Home Group is enabled, it will appear and you can leverage all those assets, but you can’t initiate it. So in a way, Microsoft is reinforcing the fact that netbooks are secondary machines. Paterson: To some extent that is certainly true. We don’t tend to say “secondary” a lot, we say “complimentary”. Everything we see in our customer research says that, by in large, that is exactly how people perceive them. But don’t you think that the perception of netbooks as complimentary machines is changing because of the economy? Paterson: I haven’t seen it shift. In the market today it’s not too hard to find a value PC, with in integrated DVD drive and larger screen size, at prices at, or sometimes below that of a netbook. In any Sunday circular, it’s easy to find a $399 laptop. I think people have a pretty good alternative for a primary PC. Also, when we look at who is purchasing across multiple geographies, it tend to be college grads, in their 40’s, with a family, making over 75 grand a year. These are folks a lot less exposed to some of the economic hardships that others may be. The third data point is when you look across what is available in the market place then you look at the best selling SKUs (netbooks), they are not the cheapest ones out there. The top 12 units are more towards the $400 price point. That tells me that folks do the evaluation and say ‘I’m willing to pay a little more for a larger hard drive, and in many cases, Windows over Linux.’ What do you make of netbooks with 12-inch displays? Paterson: We would put that outside the bounds of what we consider a netbook. We hold the line at 10.2 inch. So when Windows 7 is available a machine like that would automatically ship with Premium and not Starter Edition? Paterson: My assumption is that it would. What percentage of netbooks do you think will be shipped around the holidays with Starter Edition vs. Premium? Paterson: I think at the start everyone is going to put them both out there and they’ll differentiate around the hardware. Everybody will learn in real time what the market gravitates towards. The real magic of WAU (Windows Anytime Upgrade) is that it doesn’t involve loading any more bits. It’s a 10-minute process that doesn’t do anything to your settings, files or programs. Recently Dell complained about the pricing for Windows 7 and said it might hurt adoption for the OS. How would you respond to that? Paterson: We are doing what we think meets the needs of the market place and of our partners. I always get curious when I see comments made in the press about that because sometimes that feels like negotiation in the press, and I just don’t want to get baited into that. Given that adding touch to a notebook is so expensive, do you think touch-enabled netbooks with Windows 7 will take off? Paterson: The price sensitivity is going to be the challenge. Price will have the most effect on the adoption rate of Touch in small notebook pcs. With a netbook and its form-factor, you’re probably not going to want to go into an Excel spreadsheet and spend a lot of time with it; it’s just not conducive for that. You’re probably not going to want to go into an Excel spreadsheet and spend a lot of time with it; it’s just not conducive for that. We put that in the bucket on content creation. On the flip side, the form-factor of netbooks is friendlier for content consumption. Then you see the scenarios where Touch starts to light up. Take Media Center for example. Imagine that the netbook is connected to accessible media content. Media Center becomes much easier and much friendlier with a Touch enabled screen. I can also have a gadget that is location aware and is feeding me suggestions. So now I’m on the netbook, I can just touch it, and it pops open and I see a list of things. Now I see a location that I want to go to, and I just hit it with my finger and it takes me to a map app and directs me. Intel recently announced the latest version of Mobilin, which is based on Linux. And others have high hopes for Android. What’s your take on these challengers? Paterson: The key thing to understand is that whether it’s Android or it’s Moblin, they’re both Linux. The question becomes how viable is Linux in terms of an alternative OS on netbook pcs? We would say, just like it happened in the market over the last year, it’s pretty clear which way the wind blows with consumers; 97 percent share for Windows in the US. There’s a list of geographies, 26 that we track, and with 19 of them we have 90 percent signature on netbooks across those geographies. So things have swung pretty significantly in our direction. When we look at why, based on research, talking to consumers and retailers, it comes down to ease. It’s important to remember that there are a billion people out there using Windows. When we’ve asked people what they do on these things, their answers are within a couple of points of what people do on a traditional PC. People see that it looks like a PC, it works like a PC, and they can use it right out of the gate. When you look at Linux, it’s like “wait a minute, I have a whole learning curve, and how do I make my way through it?” That’s issue number 1. At one point will that get solved? Maybe, but not anytime soon. Second, is the notion of application and device compatibility. Nobody matches Windows on that. You only have to fail once to put the consumer in a bad way. There have been different numbers thrown up on the Web about Linux return rates with netbooks. We’ve heard between 4x and 10x, depending on whom you talk to. A lot of times it’s “I tried to plug my camera into it and it didn’t work!” They’re used to Windows where you plug it in and a box pops up. Its plug and play. Linux coverage is getting better, but there are a lot of peripherals out there. I think we have something like 10,000 different drivers for various printers. Linux is just not as evolved on that front. This becomes a huge problem with retail; I’m selling a computer with Linux on it and I have no idea what environment they are going to use it in. Sometimes it is actually as simple as going to print something and nothing happens. If you’re a geek and are really into it, and are willing to invest the time to finding the resources to solve these problems, it’s a different story. But if you aren’t, then there’s no interest. The assumption is that at least some Android netbooks will be be paired with low-power ARM processors, where you could have a netbook that can reach 10-12 hours of battery life. Now a lot of people are asking whether Windows 7 will run on ARM. Can you give us an update on that? Paterson: I can’t go into the feasibility; you’ll need to talk to engineers about that. What I can tell you is that we don’t support it today. We look at Windows CE as our OS for an offering like ARM. What are benefits for ARM? You have increased battery life, great, that’s interesting. But when you look at how people are using netbooks, as a complimentary pc for spur-of-the-moment computing, you ask “Do I really need 12 hours of battery life? There’s a big question about what is enough battery life. You certainly need more than 3 hours, but 12 may be a little much. We are doing really good engineering work in Windows 7 in terms of managing power. In fact, today on XP you have some systems that get 9 hours of life. I took a 5-hour flight from Seattle to New Jersey and had no problem on a netbook the whole way. The things you give up for the increased battery life may conflict with the PC apps you want to run. They still have that issue to deal with, which brings us back to Linux. With ARM, Windows does not support it, it’s not a PC experience, and I can’t run things I’m used to running. Office, iTunes, Photoshop, Quicken, some really common consumer apps break down quickly. How many people are actually running Office or Photoshop on netbooks? Paterson: I can’t tell you for Photoshop, but we do ask about apps and Office. Somewhere between 25 and 30 percent of netbook owners have said they are actively using Office. As a business person traveling around, I may not create an entire PowerPoint on a netbook machine, but a netbook is convenient to bring around that I can use it easily on the plane and do some small tasks on Office. We’re seeing a lot of interest and are making progress in having Office pre-installed on netbooks.