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Telcos double down on netbooks with Windows 7

Smart-phone economics in play

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Expect more telcos in the US and Europe to offer customers netbooks with calling plans and running Windows 7, in the run up to Christmas.

The head of Microsoft's netbook strategy has told The Reg the "big four" US telcos will offer netbooks powered by Windows 7, in addition to regional carriers.

Telcos in Western Europe will also get on the bandwagon, director of netbook PCs in Microsoft's Windows client group Don Paterson told us 24 hours before the Windows 7 launch. Orange and O2 are leading those offering netbooks in the UK and Europe so far.

Verizon in the US has made much of the running offering netbooks with a calling plan, along with AT&T. Paterson noted Verizon had been "very, very happy" with its results on netbooks.

Paterson, as you'd expect, would not provide details ahead of Microsoft's official Windows 7 launch in New York. Telco announcements are expected as part of the overall Windows-7 launch news.

Reading between the lines, though, it sounds like we can expect T-Mobile and Sprint to offer devices.

It also sounds like carriers are picking Windows 7 Starter Edition. This exposes APIs not available in Windows XP, currently popular on netbooks, for features such as touch and location-based services - the kinds of things carriers will carry over from the smart phone market.

"You'll see news around telcos, some of which will pop tomorrow and the coming weeks," Paterson told us. "Some want to take advantage of the launch and others will want to wait two weeks to get their own runway."

He added: "We are talking to every major telco world wide."

Paterson noted this is new ground for Microsoft in its dealings with telcos. Microsoft has traditionally dealt with them as consumers of Windows on PCs and servers.

Now, telcos are buying Windows on netbooks from OEMs, so are becoming a retail channel for Microsoft.

Selling netbooks is a challenge for telcos. Patterson said Microsoft has been involved in early discussions on data plans, and expected netbooks with Windows 7 from carriers would be sold on such plans.

He pointed, though, to the challenge for carriers of making money off of devices, saying the economics had to work. Typically, carriers in the US and Europe sell handsets at a low initial price because they subsidize the device. They make money up over the long-term from the plan.

"One of the challenges mobile operators face is it sounds good but it still has to be a profitable business. The economics [have] started to look similar to higher end smart phones," Paterson said of the current state of play.

He noted there's a feeling among industry analysts that for a real breakthrough in uptake of netbooks carriers simplify the billing.®

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