Ballmer made his comments during an analyst meeting last Tuesday, but only recently detailed transcripts [.doc] have become available. A J.P. Morgan analyst asked Ballmer about it, but the CEO remained rather vague about the subject. "I think we have an opportunity when we ship Windows 7, which will fit on a netbook, we have an opportunity to rethink the product lineup for netbooks, product lineup and price lineup, and we get a chance to engage in that dialogue, both with the OEM, and potentially with the OEM and the end user," Ballmer "explained" - politicians' talk.
What followed provided a clearer picture of where Microsoft stands on a netbook edition of Windows 7. "I think it's important for us, we have some time before we are actually in market, and as we have more to say you'll hear it, but we have a real opportunity given that Windows 7 fits on netbooks, to think about having a special netbook edition, but maybe somebody will want home, or maybe somebody will even, for example, want the business edition of Windows 7 on a netbook," Ballmer said, "I want to make sure we facilitate letting the customer, OEM or end customer, trade up if they want to trade up."
Ballmer later also said that the company does intend to deliver a version of Windows 7 at the same price of Windows XP today, so that netbook owners can trade up. Exactly what version that will be remains unknown. There's no upgrade path from Windows XP to Windows 7, so how exactly this trading up would work remains unknown as well.
Microsoft's vagueness on the subject is telling. Windows 7 runs fine on netbooks, and the company doesn't want to give consumers the wrong idea by insinuating that "normal" Windows doesn't work on a netbook, but a "special" version does.