Getting Netbooks into the Enterprise


Since it hit the market, folks have been saying that the iPhone may be a major factor in Apple's inroads to the enterprise. Rob Enderle wrote a few months ago that it's not just the smartphone's functions, versatility, user-friendliness or third-party developer support. It's the fact that it's a phone, and consumers and employees largely buy their own phones, then rely on them in the workplace. If the idea of employees buying their own devices catches on, Apple is in prime position and becomes a major enterprise player. Further, predicts Enderle, Apple will have maximized profits in this scenario, having avoided enterprise volume discounts, unlike its more traditional competitors.


And if that purchasing trend does take hold, the netbook may then be a major factor in Microsoft holding on in the enterprise. Corporate VP for Windows Consumer Product Marketing at Microsoft, Brad Brooks, claims an 80 percent Windows market share on netbooks in Feb. 2009, more than the 10 percent figure one year earlier. Those machines, running XP, are being sold largely to first-time computer buyers or folks buying a second machine, according to Microsoft research, says Brooks. And as for Windows 7:

"With Windows 7 we are on track to have a smaller OS footprint; an improved user interface that should allow for faster boot-up and shut-down times; improved power management for enhanced battery life; enhanced media capabilities; and increased reliability, stability and security. ... For OEMs that build lower-cost small notebook PCs, Windows 7 Starter will now be available in developed markets."

ABI says 39 million netbooks will ship in 2009; IDC says 42.4 million will be sold by 2012. They are expected to continue to be a bright spot among otherwise dismal PC sales. While Gartner thinks only 1 percent of shipped netbooks will end up in the enterprise in the next two years, that may not prove to be true if, again, growing numbers of netbooks purchased by employees become enterprise tools.


And IDC says it's not even tracking them in the enterprise, but thinks about 7 percent are in SMBs, where they meet immediate needs, despite their flimsier construction and so-so battery life. But these analysts may be using narrow criteria, looking at netbooks as not ready to perform as primary computing devices in that environment, since their usefulness to traveling employees and those who may use them as a second work device are already reporting that they're doing more intensive tasks than these mini-notebooks were expected to handle. And Microsoft intends for Windows 7 to further enable that trend.


Microsoft's margins on netbook sales are low, just like the machine's prices. And it's acknowledge that netbooks sales have hurt Windows revenue, replacing premium version sales with lower-end versions. With seven versions of Windows 7, steering customers through the upgrade path will be key. The segment's healthy growth has experts noting Apple's reluctance to enter the market.


And some industry experts expect Microsoft to cover another base by releasing a smartphone by the end of the year, running Windows 7 and offering slick integration with Zune and Xbox 360.