Last week, Microsoft blogger Paul Thurrott reported that Microsoft has decided to jettison its previous limit of three simultaneously running applications in Windows 7 Starter, the cheapest of the six Windows 7 SKUs Microsoft plans to roll out later this year.

Although the application limit probably wouldn't have been an issue for most netbook users, it could have created the impression that Microsoft was artificially crippling Windows 7. That could have tarnished Windows 7's image prior to launch, something that Microsoft desperately wants to avoid, given the disaster that was Windows Vista.

Microsoft is treading delicately as it looks for a way to get more revenue for Windows 7 on netbooks than it did for XP, and the company needs to do that without driving customers to Linux alternatives. Microsoft's apparent move to dictate the hardware specs of netbooks looks like a far better way to achieve this goal, particularly because Intel reportedly also is involved in the effort.

Microsoft hasn't yet revealed what it plans to charge for Windows 7, but according to the enthusiast blog TechARP, the company will make that information public in mid-June.

Meanwhile, vendors are moving to combat the dominance of Windows with Linux-based offerings for netbooks. Canonical, which oversees the Ubuntu Linux distribution, is working on a netbook-specific version of the operating system, and this week Intel released a public beta of Moblin 2.0, its Linux distro for Atom-powered devices such as netbooks.

For the time being, however, the netbook market looks to be Microsoft's personal playground. Windows netbooks have gone from less than 10 percent of netbook unit sales in the first half of 2008 to 96 percent in February, according to recent NPD Retail Tracking Service data.