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In the process of pillorying the intelligence of buying Macs in the recession, Microsoft CEO Steve Ballmer may have admitted defeat in fighting Linux-based Netbooks. Ballmer said:american beauty

Paying an extra $500 for a computer in this environment--same piece of hardware--paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be.

But if this reasoning is sound against the Mac, doesn't the same apply to Microsoft in its competition with Linux? Glyn Moody thinks so:

This is a very frank analysis of the problem for Microsoft: after all, who's going to pay extra money just to get the Windows logo on a Netbook, when they can get the same features for less with free software?

What goes around, comes around. Indeed, Canonical's Ubuntu distribution already claims fealty from a host of OEMs (original equipment manufacturers) like Dell and Hewlett-Packard, with more signing on, and Novell also has scored some considerable points on the Netbook.

Even if consumers and businesses don't opt for Linux on their Netbooks, the Windows they're choosing is not very profitable for Microsoft, and getting users to upgrade to a pricey Windows 7 could prove to be a fool's errand, as Microsoft admits. Microsoft may well end up winning the Netbook war against Linux and losing at the same time.
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Why pay a few hundred dollars for Windows on a device that costs only a few hundred dollars and drops all the time? The economics of the recession may help Microsoft against Apple, but they're no help against Linux-based Netbooks.