It's not just on the client side that Microsoft is feeling pressure to lower operating system prices. The company is doing the same with Windows Server and will introduce a new, lower-priced Server version in the next couple of months.
That was another interesting tidbit dropped by Microsoft CEO Steve Ballmer during his February 24 "Strategic Update" presentation for Wall Street analysts.
Ballmer told attendees that a new "Foundation Edition" version of Windows Server is in the works:
"(W)e are introducing a new low cost, low price, low functionality Windows server SKU. If you take a look at it, as server prices, hardware prices have come down, we don't exactly have a netbook phenomenon, but if somebody can buy a $500 server, they're a little loathe to spend $500 for the server operating system that goes with it. So we have something that's akin to netbook at the server level, and we'll be introducing our Foundation Edition over the next month or two."
If Windows Server Foundation Edition really is like Windows client, the lower-priced SKU will be available to server makers only and not directly to customers.
I asked Microsoft for more specifics and officials had no comment.
Microsoft officials recently said that there won't be a netbook-specific SKU of Windows 7, and the company will allow netbook makers to preload any version of Windows 7 they want on their low-priced, lower-functionality netbooks. Microsoft officials said they are expecting most PC makers will opt for either Windows 7 Starter Edition or Windows 7 Home Premium for netbooks.
Analysts asked Ballmer today about how Microsoft would price Windows for netbooks going forward. Ballmer acknowledged that Microsoft currently charges PC makers less per copy of Windows XP for netbooks than it does for full-fledged PCs, but declined to offer further details. During the Q&A period, he told one analyst with netbook questions:
"We will continue to have a netbook product at the current Windows XP price point. The question is, what other price points will we have above that, and how effective are we in trading people up. I think it's important that we maintain an offer at the price point that we have on netbooks today."
Update (February 25): Paul Thurrott of Windows SuperSite fame has more information on the new Foundation Edition SKU. It will be targeted specifically at emerging-market customers, be based on Windows Server 2008 R2, and won't include the Hyper-V virtualization role, Thurrott said.