Small laptops are becoming a big problem for Microsoft Corp's Windows business.

A new breed of lightweight computers called netbooks are beginning to crack the company's dominance of operating systems. Acer Inc and Asustek Computer Inc, which together account for 90 percent of the netbook market, are using the rival Linux software on about 30 percent of their low-cost notebooks.

The devices, which usually cost less than $500, are the fastest-growing segment of the personal-computer industry - a trend that's eating into Microsoft's revenue.