Are Linux netbooks really returned more often than Windows models?

Windows' dominance extends to 96% of netbooks sold in the U.S. in February. Worldwide, three-quarters of the 15 million netbooks sold in 2008 came with Windows. But Linux, which now accounts for the remaining quarter of sales, is set to challenge Microsoft this year.

The first wave of netbooks using the ARM processor are expected to hit the market in the second half of the year, all running a version of Linux — either the Google Inc.-backed Android, Canonical's Ubuntu distro, or even the Intel Corp.-created Moblin netbook OS.

The new wave of ARM netbooks are expected to be cheaper than the $300 to $400 of the cheaper Intel Atom-based netbooks today at about $200, and they are expected to boast longer battery life, as well as instant-on and other smartphone-style features.

Windows: A familiar desktop friend?

Microsoft says that Windows dominates — and will continue to dominate — netbooks because customers are looking for a familiar, PC-like experience, as well as compatibility with their peripherals and software such as Microsoft Office.

“Users simply expect the Windows experience,” wrote Brandon LeBlanc, a Microsoft blogger, on the Windows Experience blog last Friday. “It's easier to use, just works out of the box with people's stuff, and ultimately offers more choice.”

LeBlanc cited several pieces of evidence focused around anecdotes indicating dissatisfaction with Linux netbooks that customers subsequently returned.

MSI, maker of the popular Wind netbook, said last fall that its research showed Linux netbooks were returned four times more than those running Windows.

“They start playing around with Linux and start realizing that it's not what they are used to,” Andy Tung of MSI told Laptop magazine in October. “They don't want to spend time to learn it so they bring it back to the store.”

Even Canonical echoed MSI's comments to Laptop magazine.

“The customer will get their netbook sent to their home and they imagine to find something like a Microsoft desktop, but they see a brown Ubuntu version. They are unwilling to learn it and they were expecting to have Windows,” said Gerry Carr, a marketing manager for Canonical.

Reports say that Carphone Warehouse, a Best Buy-like electronics superstore chain in the U.K., stopped selling netbooks running Ubuntu last December after one in five purchasers returned them. The three netbooks it sells on its Web site today all run Windows XP Home.

Microsoft blogger LeBlanc writes, “When they realize their Linux-based netbook PC doesn't deliver that same quality of experience, they get frustrated and take it back.”

Stephen Baker of the NPD Group Inc., which provided the market data for this story, said, “Those Linux return rates jibe for the most part with everything I've heard in the U.S.”

No shoo-ins here

But Philip Solis, and analyst at ABI Research, questions the “reliability” of this evidence.

Solis said in a March research note that Taiwan's MSI had not yet shipped a Linux-based Wind at the time of the comment to the magazine. When it did, it did “adapt” the OS for the netbook's smaller size — an key ingredient to Linux's acceptance by consumers, Solis wrote.

Acer Inc., Asus Inc. and Dell Inc. have all built customized versions of Linux for their netbooks. Solis said that Asus has noted equal return rates for Linux netbooks versus those running Windows.

And while ABI's surveys show U.S. consumers clearly stating their preference for Windows netbooks, Solis said that isn't true around the world.

In Asia, netbook buyers are both thriftier and “and not as tied to the Windows environment,” Solis said. “They're looking for certain features, but they aren't as tied to a certain brand name.”

Solis predicts an increase in Linux netbook shipments this year, from 25% to a third of the 35 million netbooks expected to sell globally this year. Under that estimate, Linux will be shipped on 11.5 million netbook PCs in 2009.

Solis is bullish about his prediction because of the coming ARM wave. With Microsoft still balking at porting Windows 7 to ARM's mobile CPU, PC makers using ARM have no choice but to use Linux.

Also, ARM's low-cost and low-energy attributes will pull the netbook category, which has edging upwards and become less distinguishable from regular laptops, back towards the “net” end of the product spectrum.

“Netbooks are meant to be more an Internet-based device,” Solic wrote. “The fact that so many consumers view netbooks as devices that are secondary to their PCs means there is room to change consumers' views about what a netbook is and what to expect around operating systems and user interfaces.”

NPD's Baker flatly disagrees. “If it looks like a PC and is sold in the PC aisle in the store … people will perceive them as PCs,” he said.