With Windows 7, Microsoft has done the technical work to make the operating system work on Netbooks, but the low-cost laptops still pose a challenge to the way Redmond does business.
As the only fast-growing part of an otherwise sluggish PC market, Netbooks are clearly a product category that Microsoft can't afford to ignore. At the same time, computers selling for only a couple hundred dollars don't give Microsoft the opportunity to get the kinds of revenue for each copy of Windows that it is used to receiving.
Microsoft is hoping Windows 7 provides an opportunity to move Netbooks up the food chain, with the distinction between such devices and traditional laptops eventually going away entirely.
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