We have seen the netbook PC category explode over the last two years and Microsoft was forced to make a key decision. Give up market share to Linux or lower the price of Windows. With the average price of a netbook selling for around $400 Microsoft made a smart business decision and sold Windows XP at a discount. Microsoft now has over 80% of the netbook running Windows. But Windows Vista would never be a credible alternative on netbooks. It required too much hardware to run optimally and Microsoft was worried about cannibalization.

 In comes Windows 7, when I first booted Windows 7 the first time I could tell something was different. It was snappier and more responsive. Applications loaded fast and even with the minimum hardware requirements the Windows Aero interface was enabled and performed like my desktop running Vista. After using it for a while I can only describe it with one word, solid. There are not any flashy features but several enhancements that you quickly become accustom to. Microsoft has clearly taken a different approach with the design of Windows 7 and it shows running on netbooks. Windows 7 is by far the best Windows beta I have ever seen come out of Redmond. It looks like Microsoft is starting to get its mojo back.

In a new booked called The Race For A New Game Machine, he describes how the project went off the rails, ending up with IBM engineers creating the processing chips for two rival video game consoles. In the process IBM sold parts of the cell processor design to Microsoft for their Xbox 360 and Microsoft benefited from over $400 million in R&D funded by IBM, Sony, and Toshiba. The R&D teams worked in the same building and in some cases Shippy met with Microsoft engineers right after meeting with Sony engineers. Ultimately Microsoft benefited a great deal from Sony’s work on the cell processor. Microsoft launched their Xbox 360 a year before Sony launched their PlayStation 3 and the rest is history.

The Flip Video MinoHD is definitely geared towards the social netowrking crazed genreation. With just one click I can upload my videos to YouTube, MySpace, and AOL. It includes FlipShare software that runs on the MAC and PC. HD recoridng is getting cheaper and cheaper. The Flip Video MinoHD, can be bought for around $200 and is a red hot gift for the holidays.

The best part of the product is just watching movies. Netflix (NFLX) has standard definition movies and a limited selection of HD movies. I went on a 30 Rock marathon watching the HD version of season 1 and 2. The video quality was very good on a 1080p Samsung LCD. The speed of using the service was also impressive. Movies loaded fast and the navigation was pretty intuitive. But there were some areas that need improvement.  The setup process was a little complicated. I had to install the app on Xbox 360. Then I could sign up for Netflix in the Xbox 360 UI or sign in to my Netflixaccount. Once I signed into my Netflix account I had to go to my Netflix account and get a code to authenticate my Xbox 360 with my Netflix subscription. After that I thought I could just start browsing the movie catalogue from my Xbox 360. Wrong. I had to add the movies from Netflix.com to my Instant Queue. Once I added the movies they instantly show up in the Netflix app on Xbox 360. Once I got everything setup I was really happy with my experience. After watching several movies through the service I begin to wonder if Sony didn’t just waste a few billion dollars winning the HD DVD War. We might be getting closer to the world where I can get all my content digitally and I don’t need to go physically buy it any more.

With all the success the Wii has brought Nintendo, they still are not fully realizing the opportuntiy and taking advantege of the mometum. Supply has been one of the Wii’s biggest missed opportunities. The demand has always outpaced supply and even last year you could not find a Wii any for Christmas. Now, two years later instead of the Wii console being the #1 seller on Amazon its not its the Wii Nunchuck controller. The Wii console is sold out again on Amazon.

The next miss step Nintendo made was not making the Wii fully support HD TV. With sales of HD LCDs and plasmas increasing dramatically people get a poor experience and its not merely a software update to support higher resolutions. The last and most important mistake was not taking full advantage of the massive online community that could be created with 35 million people. Just like Sony missed the boat on building world class online service, Xbox Live has really set the bar on this one and it has proven to be a real competitive advantage.

The Kindle has become the Wii of Christmas 2008. The Kindle ranks #4 on Amazon’s most popular list. Back in August TechCrunch estimated that Amazon had sold over 240K Kindles. Amazon is certainly well on its way to sell over a 1 million Kindles. The Kindle “frenzy” has alreay taken to eBay and Craigslist where people are trying to get up to $1K for this little device.

This emerging category of devices will begin to blur the boundaries of netbooks and laptops. Hardware will continue to become more powerful and more affordable and soon the form factor will really drive the differentiation.

For the company that created the “crackberry” and popularized the qwerty keyboard creating a touch screen in a sense goes against their DNA. In a time where the Apple (AAPL) iPhone outsold the entire BlackBerry mobile line of devices in the third quarter, I guess RIM is a little scared about the traction Apple seems to be getting.