Don't let me put words in other mouths, but the reason tomsaffell is saying that if MS sells a $y-priced version of Windows for netbooks that they'll end up losing $(x-y)(# of non-netbook PCs) is this: if there is a fully-functional* Windows version on the market then all contemporary Windows versions will tend to that price. Users will say "why do I pay $x for Windows when John Q. Otherguy got it for $y on his netbook?".
The only way that users won't say that is if the "Windows for Netbooks" is lousy in some way or another.
*(Means something like "works the same, except for feature Z" where Z is sufficiently obscure)
Users don't know how much OEMs pay for the copy of Windows that's on their machines. MS just simply wouldn't sell it to end users at that price, just like they don't sell regular Windows to end users at OEM prices now.
The only way that users won't say that is if the "Windows for Netbooks" is lousy in some way or another.
*(Means something like "works the same, except for feature Z" where Z is sufficiently obscure)