The stripped-down, reduced-cost Windows 7 Starter Edition has already done its part to squander the public's recent good will for the new OS, but an ultra-low price could turn things around. Unfortunately, early signs aren't overly promising.
Starter Edition will serve two primary purposes for Microsoft: it'll provide a low cost, serviceable OS for markets where regular Windows pricing is simply unrealistic; and it'll give OEMs (and only OEMs) a more affordable version of the OS for netbooks, which Windows 7 has been thoroughly optimized for. Now, OEMs are telling Digitimes that Microsoft is asking $45-$55 for Starter Edition—a good price for Windows at retail, but prohibitively high for manufacturers that are used to paying around $15 for XP.
If Microsoft wants Windows 7 to become the de facto notebook OS, which it is well-positioned to become, this could be a serious miscalculation. The difference may sound relatively small, but given the choices of sticking with XP (or Linux) or hiking prices by $35+, netbook manufacturers—a proudly stingy bunch—wouldn't have a hard time choosing. [Ars--Thanks, Sicarious!]