When the netbook market first took off in the days of the 7" Asus EeePC, Linux was the only option, and they sold well. Microsoft soon realised they needed to be part of this, and contacted Asus and together they put Windows XP on the 9" version of the EeePC. Ever since then, Linux on netbooks has been having a hard time, with reports now stating that Microsoft owns more than 90% of new netbooks sold. In other words, Linux may have failed to gain the foothold people were hoping for - for whatever reasons.
However, there's a new line of netbooks coming onto the market, those based on ARM processors. Despite the hopes of some people, Windows doesn't run on ARM, so ARM notebook manufacturers will all be using Linux. These netbooks will be cheaper than Atom-based models, giving them a truly competitive advantage.
Another way Linux could gain ground from Microsoft in the netbook market would be Google's Android operating system. This can run on both x86 and ARM-based machines, and has the backing of a very large technology company. Analysts, however, disagree over Android's chances. "Netbooks are driven by price more than features," Michael Cherry, analyst with independent research firm Directions on Microsoft, "If the price gap between Windows and Linux-based netbooks widens, buyers may stop caring about the operating system."
A key factor will be Microsoft's pricing strategy. They won't stand a chance if they offer the
pointless and useless Starter Edition of Windows 7, which can only run three applications at the same time as an arbitrary restriction. Even though all versions of Windows 7 can easily run on a netbook, the editions above Starter may simple prove to be too expensive to compete with Android and/or Linux. Microsoft can't keep on offering Windows XP; they can dump Windows XP licenses almost for free now, but Windows 7 is a big investment that needs to be earned back first.
Another analyst, Tim Bajarin, president of consulting firm Creative Strategies, is less optimistic about Android's chances. He believes Google won't enter the netbook party until at least mid-2010, due to the uncertain economy now. Still, he doesn't believe Android will be much of a threat to Windows on netbook. "I still believe that a netbook is just a smaller laptop and that the majority of them will be Windows based even if an Android version does come to market in the future," he states.
This is a classic case of "time will tell". Google has never been about quickly gaining lots of marketshare with a product, and the company is often happy just entering a market quietly, hoping that in the long run they will make a difference. If netbooks are here to stay, and Google wants to be part of it, then there's no need to rush things.