Netbooks are laptops which are designed to be small in size. They come with less powerful processors and are meant to be used as second computer at home.
They are also designed for use for basic purposes like checking emails, surfing the web etc.
Current generation of Netbooks are not powerful enough to run the Windows Vista operating system.
So PC manufacturers are loading them with either Windows XP or one of the versions of Linux.
This means less revenues for Microsoft in the longer run.
The company aims to fix this with Windows 7 which is expected to be released in the next two years.