Submitted by The Guardian has a piece examining the impact of cheap sub-notebooks on Microsoft’s OS business. “The price differential has been slight. The Asus Eee PC changes all that. The price differential between the basic Eee PC running GNU/Linux and one running Windows XP is now significant as a proportion of the total cost.”
As hardware in general becomes cheaper and cheaper this will be a huge advantage to Linux.
The discounts that Microsoft provides to OEMs have sort of masked the cost to this point, but the markup will become more obvious over time.
Edited 2008-03-08 00:41 UTC
I agree with that, but Microsoft can lower their prices quite a bit before they actually start hurting.
Financial times had an article around 2004 (I think) where they wrote that when you’re bying Windows, 85% of the price is pure profit for Microsoft.
With margins like that, they can lower their price quite a bit and still make tonnes of money.
Even if it is 85%, that would still be too much to be able to compete. 1% to 5% may be – but even 10% would be too high.
And Microsoft’s OS has only gone up in price, and considerably so. Win9x/Me was decently priced ($200 Full OS, $90 upgrades; but I think that was even higher than previous editions.) And then WinXP took on WinNT’s pricing structure, jumping it up further. Now, Vista has doubled that! No, Microsoft isn’t showing any restraint in pricing, or signs of keeping the cost down, though…
That is exactly why they have Vista Home Basic – to keep the cost down, and to give people a reason to upgrade older OS’s – ones that would only run NT4, or Win2k. As a result, you get something that won’t do what you really want it to do.
Vista Home Premium Upgrade (equivalent to the XP Home you priced out):
http://www.amazon.com/Microsoft-Windows-Premium-UPGRADE-Version/dp/….
As far as I can tell, features keep getting added to Windows but the price doesn’t change. Office has always been in its current price range too.
I heard a funny thing happened with SQL Server: their sales actually went up when they increased the prices for their high-end editions, because people didn’t take them seriously since they were too cheap. I heard this at third hand, so it might not be exactly accurate, but it’s a funny phenomenon nonetheless.
… I guess I’d see RMS becoming a proprietary software lobbyist first. 😀
Interesting article, and about the first thing I’ve read in a while that realistically posits MS being properly threatened in any real sense.
If the sub-notebook category becomes a significant market opportunity, why is it unthinkable that Microsoft would lower prices for those OEMs? I mean, seriously, folks… Microsoft can certainly afford to take lower profits in certain markets. XP Starter Edition for emerging markets is a perfect examnple where Microsoft has lowered prices to respond to adapt to new markets.
It’s not unthinkable. And I imagine they will. People often think that for FOSS to “win” it has to become as ubiquitous as Windows. But the way I see it, if FOSS forces Microsoft accept a smaller profit margin, that’s a victory for everyone… except MS, of course.
Microsoft acts differently in markets it doesn’t control than in markets it does control. The really interesting thing about the new UMPC market is that right in Microsoft’s own backyard Windows was not the first choice of the manufacturers. And UMPCs really *are* just small laptops. Standard Phoenix BIOS, x86 processor, standard sodimms.
I mentioned to my boss the other day that the current crop of UMPCs all have Linux preinstalled. His first comment was that it must be because of the ARM processors. I just said, “Nope, mine’s a Celeron D”. He didn’t have much else to say.
It’s a testimony to the prolonged lack of competition we have seen in the x86 PC OS market that I can honestly say that I am delighted to see even this limited amount of it.
I agree.
Anything which promotes real competition is a good thing. Here’s hoping that these devices continue to improve.
Have you been drinking Tomcat ?
That post is probably the most sense I have heard from you on this site.
Oh wait, you went for coffee and left your machine unlocked !!!
I’ve been drinking tomcat.
But I haven’t been drinking, tomcat.
have you nothing better to do with your time ?
Lol! My thoughts exactly! And this from the guy who recond the eeePC was nothing more than a glorified smartphone.
Funny to see someone who so venemently denied the usability and worth of the device suddenly do an about face and start singing it’s praise.
What ever will we see next? 😉
Manufacturers and businesses with vested interests hate the idea, but in a healthy market this is an inevitable consequence. The fact that we see hardware manufacturers being brave enough to move over to Linux proves that the EU and the US state department were right to go after Microsoft – they have allowed the commoditization process to begin in the software market.
being an ASUS EeePC owner, I could not agree more… the small gadget does everything well even without Windows on it… I just can not see the reason to pay another extra 40-60 USD for the computer, which costs around 200 and does the job…
{Apologies for the Who song title)
Microsoft is indeed being squeezed by the likes of the EeePC.
As has been said, the cost of the OS could easily be more that the cost of the hardware. If not, then an ever increasing proportion of the total cost.
Adding say 20GBP to the cost of a PC when the H/W costs 400GBP+ is usually a non event.
Reduce the H/W cost by 50% and suddenly people start complaining about another 10% just to be able to surf, IM & Email.
Personally, I don’t like the EeePC Keyboard. I have pretty big hands and some of the keys are just too small for me so I won’t be getting one but it is a fantastic package.
WindowsXP is going to be phased out. So XP is really not an option for the future on sub notebooks in the time to come.
I think Windows Mobile is a bit limited, so I don’t see sub notebooks running that with any sucsess.
Vista has two problems, when it comes to sub notebooks.
1. Price
Now, this one they can easily fix. Just lower the price so it can compete. That might mean that they will be loosing money.
2. Size
Vista’s huge! Vista basic needs 20 GB to install and 15 GB post install. Sub notebooks typically comes with up to 8 GB solid state disks. This one is hard for Microsoft to get past.
Now, all above being the case, Microsoft has only two options:
Either they can just drop the sub notebook market, letting the other OS-es have that one.
Not a good idea! Both since it looks like it’s going to be a big market and because users then will be more and more used to alternative OS-es. Microsoft don’t want that. They have more or less kept even the disgruntled users since they still stayed with the beast they knew.
They have also been told that Linux is hard to install. With sub notebooks there is no installation. Linux is already on the box and everything is working. Ordinary users are now in the process of finding out how easy to use Linux really is and Microsoft is pulling its hair!
They need to get into this market.
The other option is to make a new OS that’s made for sub notebooks.
It would cost Microsoft a bit, but basing it on something they’ve got, like XP, can keep the cost down. The OS must be able to do what its Linux counterparts can do at a price next to nothing – $2 -$5 is the price we’re talking about here.
Microsoft hasn’t ever made a «do it all» OS before. Well, at least if you don’t call Wordpad a word processor and «paint» a fullblown drawing program.
In this market, I think, they have no choice.
So they will need to make an operating system for sub notebooks. It will have to contain an office suite, graphics tools and all you need for Internet (www/mail/ftp). A media player with codecs is also needed. All this should ideally fit into 4GB with room to spare. It is possible – the eee’s smallest model does it in 2GB!
It’s going to be though for Microsoft though. They will need a lot of money to create this OS. Then they will have to get into a market with other players they can’t buy!
A lot of so called experts have predicted Microsofts death for a long time now – I haven’t agreed, but I think this can finally be something that will more or less dethrone Microsoft. It won’t kill it, but leaving the playing field more level is something the sub notebook will do IMHO.
Nalle Berg
./nalle.
So they will need to make an operating system for sub notebooks. It will have to contain an office suite, graphics tools and all you need for Internet (www/mail/ftp). A media player with codecs is also needed. All this should ideally fit into 4GB with room to spare. It is possible – the eee’s smallest model does it in 2GB!
Windows 2000 doesn’t actually take much disk space as far as I can remember. Sure, it’s a bit dated now, but they could work on it to bring it more to date and build on that. But, even though that would be ideal for a sub-notebook I do predict lots of people would end up using that for desktops too, mostly because of the low price and good performance. In essence, Microsoft would be creating a competing OS to their current OS line. So I doubt they will attempt that. They’ll most likely try to strip Windows XP or Vista down to bare minimum and somehow convince people to use that. It is not the best for end-users, but it’s the best for their business.
it annoys me that people always make a big thing about linux being cheaper.
i really don’t think its a good idea to keep going on about it, people equate free with rubbish.
can’t we make a point of selling linux based on how good it is, and not simply how much cheaper than windows it is?
of course being free (of charge) is a good thing, but lets not make out thats the only good thing about linux.