Business Week has published what seems to be a reasonable analysis of M$’s business plan.

• sell XP to OEMs for $15 to hold back GNU/Linux – this didn’t work
• advertise to steer people from Macs – nope, people want quality
• push multi-grade 7′s onto everything – no chance, there are not enough suckers to pay for a crippled version and upgrade for a fee. That reveals the price they have been hiding all these years.

The preceding annotations are mine, not Business Week’s.

This looks like M$ is playing defense. They are really going to have to pump up the budget for advertising to pull this off. It will not work, though, because everyone has seen Macs and GNU/Linux and they know M$’s stuff is not worth a premium in price.

$15 is no bargain for XP if you have to shell out bucks for anti-virus, periodically re-install due to corruption and fragmentation, and the thing gets slower with use. Compare it with a cell phone. As long as you do not bend, fold, staple or mutilate it, about all you have to do to maintain it is change the battery every few years. Compared to that XP is very high maintenance. Selling the new licences is going to be tough. People hate to spend money for nothing which is what M$ demands.

The market is bigger and wiser than M$ wishes it to be. The recession is provoking thought in IT. Some may get fired for buying M$. Some may choose to spend money wisely. It’s all good.

We should know in a couple of years whether the plan succeeds. I expect it will succeed in some measure but the high profit margin is over and shareholders will probably seek some revenge as will customers who wake up and realize how much time and money they have wasted on that other OS.