VANCOUVER - It was supposed to be the perfect companion for the cheap, ultra-compact computers targeted at web applications that have surged in popularity over the past year -- a free operating system that could also free consumers from the grip of Microsoft Windows.

Linux, an open-source operating system that has been around in various forms for nearly two decades, has long had a foothold in commercial applications such as mainframe computers, web servers, data centres and even ATM machines.

But it hasn't made much of a dent in the personal computer market. Last year, observers were predicting that would change, as major manufacturers started to include user-friendly versions of Linux on their compact netbooks.

But those predictions just haven't come true, says Bill Weinberg, a California-based consultant who runs LinuxPundit.com.

"It happened and then it unhappened," says Weinberg. "It's kind of like it leapt over the desktop -- or stumbled over the desktop, depending on your point of view."

Weinberg says when netbooks were first introduced, Linux was an attractive option for manufacturers looking to put out a cheap product primarily designed to surf the web and send emails.

Many jumped on board and, Weinberg says, in the first half of 2008, a large majority of netbooks included some version of Linux, which may feature graphic interfaces that remind users of Windows but won't always run the same software.

Now, Weinberg cites a report released earlier this year by the U.S.-based NPD Group that suggests more than 90 per cent of netbooks are selling with Windows. And Microsoft's newest offering, Windows 7, is being specifically targeted at the netbook market.

The obstacle for Linux, says Weinberg, is how consumers have come to see netbooks: mini laptops that need to run the same software they use at home, rather than separate devices for surfing the web that could be marketed more like cellphones.

"As long as you provision netbooks the way you provision notebooks, Windows will have a space to come in, especially in terms of user familiarity and ability to run applications," says Weinberg.

"When they're supplied like phones, that's a place when Linux is doing fine."

Linux is becoming more common in the cellphone market, where users don't pay much attention to operating systems as long as the devices do what they need them to. Palm's webOS and Google's Android mobile operating system are both based on Linux.

Weinberg says when netbooks are marketed the same way -- as mobile devices for the Internet, not personal computers -- Linux will have a future.

Netbook manufacturer Dell acknowledges its Linux sales have decreased but the company plans to keep its custom version of Ubuntu Linux in its lineup as a specialty product aimed at a small group of niche users.

"You can look at it like shelf space in a retail store. There are the products that sell very well that get the premium shelf space, and then there are the products that (fewer) people do purchase, so the store carries them but they may not get that premium shelf space," says spokeswoman Anne Camden.

Camden says Dell began its entry into netbooks with a sizable number of devices including Linux -- last winter the company put the figure at one in three -- but she called it a "snapshot in time" that has since dropped off.

"The majority of the netbooks we sell go out with one of the Microsoft (operating systems)," she says.

Ronald Cenfetelli, who teaches in the University of British Columbia's business school, suggests there will be more room for new operating systems to take hold in the near future.

Cenfetelli says the focus on so-called cloud computing -- where software is run on the web and information is stored online -- will mean users won't have to be tied to a specific system to access their information or use only the programs they're comfortable with.

That's the thinking behind Google's Android operating system, which is based on Linux and is expected to make the jump from phones to netbooks as soon as next year.

"I think companies like Microsoft, in the long-term they're going to be in trouble," says Cenfetelli. "With all this stuff moving into cloud computing, everything's out there on the Internet."