Once again, comments made by Microsoft CEO Steve Ballmer during an analysts' briefing two weeks ago are being bandied about by the press as "confirmation" that the company plans to produce a slimmed-down, netbook-ready SKU of Windows 7. However, a complete read of Ballmer's comments, as transcribed by Microsoft (Word document available here), indicate that this isn't what Ballmer said at all. In fact, he seemed intentionally vague on the topic, making clear the company was certainly thinking about the prospect of a netbook Win7 SKU, but confirming nothing.

"I think we have an opportunity when we ship Windows 7, which will fit on a netbook, we have an opportunity to rethink the product lineup for netbooks, product lineup and price lineup, and we get a chance to engage in that dialogue, both with the OEM, and potentially with the OEM and the end user," stated Ballmer last Tuesday, in response to a question from a J.P. Morgan analyst. "Today when you buy a netbook with XP you don't really get a full XP version, you get some restrictions on XP. Some people might say, hey, look, I'm happy with the restrictions, some people might want Windows 7 instead of XP, some might be happy with the restrictions, some end users might not be happy with the same restrictions.

"I think it's important for us, we have some time before we are actually in market, and as we have more to say you'll hear it, but we have a real opportunity given that Windows 7 fits on netbooks, to think about having a special netbook edition, but maybe somebody will want home, or maybe somebody will even, for example, want the business edition of Windows 7 on a netbook," the CEO continued. "I want to make sure we facilitate letting the customer, OEM or end customer, trade up if they want to trade up."

But when pressed further on the issue by the analyst, Ballmer restricted his response to saying that he does intend for Microsoft to offer some version of Windows 7 at the same price point as Windows XP today, so that netbook owners can trade up from Windows 7. That does assume a few things, one of which being a facility for current netbook owners using XP to hop over Windows Vista altogether -- a trade-up which the current Windows 7 betas do not directly offer. As Betanews discovered last month, it is technically possible for an XP user to eventually install Windows 7, though as the beta is currently organized, he does have to install Vista first. He doesn't have to purchase Vista; in fact, he can install a borrowed copy without registering or activating it prior to starting Win7 setup.

The other assumption Ballmer points to is that a Windows 7 SKU will be available at about $100, which is the average price that XP Home Edition sells for today. This does not mean that a "slimmed down" Windows 7 would sell for around $100; that would assume that a more full-bodied version would be priced more expensively.

Ballmer's response did not rule out the possibility of a Windows 7 for netbook package or bundle at some future date, perhaps even later than Microsoft's Win7 premiere. But it didn't confirm the eventuality of it either.

The misinterpretation of Ballmer's comments two weeks ago may have been exacerbated after the company's Business Division President Stephen Elop, during a Morgan Stanley technology conference last week, referred back to Ballmer as perhaps saying more than he did...and then followed up with an exercise in backpedaling that made Harry Potter's Hagrid seem downright deceptive by comparison.

Elop started by talking about the first netbooks being 80% Linux-based (Word document available here), but shifting toward Windows very rapidly. "Yes, it took some time to get things in order and to get those deals in place, and so forth, but clearly we have a very aggressive mind-set towards ensuring that we're attaching well to the netbook environment. And that means different things. Steve talked about different SKU opportunities, and so forth, that target netbooks at the discussion last week. So there's a lot of opportunity there."

Oops, he shouldn't have said that, he should not have said that. Quickly, Elop made it look as though he'd been referring to Office 14, referred to sometimes as "Wave 14:" "So there are new ways of packaging, and monetizing SKUs, again, without saying too much, that are unique and new opportunities in the netbook marketplace that we believe we'll be able to capture with Wave 14."

If Microsoft is indeed planning a netbook-specific Windows 7-based SKU, why doesn't it announce its existence along with all the other buildouts? Because publicizing a "scaled down" Win7 for netbooks emphasizes the need for Win7 to be scaled down in order to fit -- a problem which Windows XP doesn't face.