I think MS's reaction will be interesting. When linux netbooks came out, they aggressively discounted Windows for them, fending off the linux threat from below.
MS/intel already have some incredibly cheap tablets (and Windows 8.1 reportedly runs well on them). Seems logical that MS will discount again.
All they have to lose is everything.
That was an interesting, and scary, wielding of their power actually. I'm happy they don't have quite that much power anymore.
The reason I say it was scary was that it was a moment in time where you could watch a class of computers from one generation to the next get worse because of limits imposed by Microsoft on OEMs. I bought a Dell Mini 9 just before they switched to the Mini 10. The Mini 10 actually had half the memory capacity of the Mini 9 (1GB vs 2GB in the Mini 9), because Microsoft defined "netbook" to have a maximum memory size and CPU power, which was lower than what netbooks had already climbed up to. Microsoft didn't want to see their margins decrease on "real" computers, but didn't want to cede the low end market to Linux. They saw the power of cheap then, and will probably see the power of cheap now. The difference is they don't have enough clout with enough manufacturers to dumb down these small computers.
So, yeah, I'd be surprised if they don't respond. They already have very low cost Windows Phone licenses in order to compete with Android (but it's not really working). Honestly, I believe we're entering a post-Microsoft world, even on the desktop. It'll be five or ten more years before Windows is no longer commonly seen, but it's already not really a foregone conclusion that computers should have Windows on them.
The people who downvoted SwellJoe: Can you explain? The facts about the "netbooks" are verifiable facts, see e.g. [0]. That's a business version of "embrace, extinguish" (no extension here), and it's classic for the Bill Gates / Ballmer era.
Microsoft was strongarming the manufacturers - in 2009, they could still do that easily (and they might still be able to today). The carrot and stick was reduced Windows licensing - but only if you make netbooks unusable. And thus netbooks died. I hope that Nadella's Microsoft is not like that - it looks way better than the Ballmer days - but having been bitten multiple times, I'll wait until I trust Microsoft again.
I have a theory about humans having a generally short memory for corporate malfeasance, or to put it in a better light, having a much more forgiving nature than I do.
I also tend to get down-voted whenever I talk about nasty stuff Apple has done.
And, occasionally, when I do get a reply rather than or in addition to a downvote it will be of the form: "Well, X also does what you accused Y of." i.e., complaints about the monopolistic practices of Microsoft will result in, "Well, Google is also a monopoly, and I think they're worse because of this other thing." Which, while often true statements, do not provide any reason to dismiss the assertions about Microsoft they are responding to.
I am occasionally disappointed in HN. But, that's OK, because HN is occasionally disappointed in me.
Consider the HN audience and the disproportionate percentage of megacorps employees in it. Actionable community consensus that is being critical of Microsoft/Apple/Google is now nearly non-existent on HN.
MS/intel already have some incredibly cheap tablets (and Windows 8.1 reportedly runs well on them). Seems logical that MS will discount again. All they have to lose is everything.