As Microsoft prepares to announce its third-quarter earnings on Thursday, it's likely that net income will be down like last quarter, partly driven by the diminished profits the company gets from sales of Windows XP as a netbook operating system.

That's not likely to change soon, partly due to the increasing popularity of netbooks -- small, low-cost notebook PC fit chiefly for light-duty computing, Web surfing, and e-mail. They also bear a smaller price tag than regular laptops, often $300 or less.

The problem? Microsoft (NASDAQ: MSFT) can't charge netbook makers as much as it does for Windows Vista because the operating system of choice is the nearly eight-year-old Windows XP. Vista just has too large a resource footprint to run on most netbooks.

That is not true about the upcoming Windows 7, however.

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