During its last conference call Microsoft told the world + dog that netbook sales had seen a sharp slump in Q1.

Sales dropped by 40 percent, claims Microsoft, and the trend it set to continue. Overall PC shipments dropped 8 percent. However, Intel and AMD are still upbeat about the netbook market, despite the sizable drop in sales and the emergence of tablets.

The negative netbook trend is hardly surprising. Intel has done little to improve Atom performance since mind-2008 and AMD entered the market just recently, with its Brazos platform. In terms of technology, most Atom netbooks have offered marginal performance boosts over the past two years.

Vendors were forced to use slow CPUs, small hard drives and just 1GB of memory in entry level models, rendering them rather pointless in a Windows 7 environment. A large number of cheap netbooks still ship with Windows XP, while the majority of pricier ones simply do not offer good value for money in this day and age.

More here.