“Does Linux stand a chance now that Windows 7 will run on netbooks?”, Shane O’Neill asks in an article in ComputerWorld on 15 January 2009 that overall sounds fairly optimistic on Microsoft’s prospects. However it largely avoids one crucial subject that matters for Microsoft in the struggle over market share in the booming nettop market: Money.
In 1985 Jack Tramiel, head of Atari Corporation came to visit Digital Research Inc. (DRI) to license its GEM graphical desktop environment for the new Atari 520ST. It was going to be a low-cost machine based on the same Motoroloa 68K CPU as Apple’s much more expensive Macintosh, which itself was a low-cost derivative of the Apple Lisa (that was long before Microsoft Windows became a viable product). Tramiel had a reputation as a fierce negotiator, so his counterpart at DRI, then the main competitor of Microsoft and Apple, was only half joking when he said to Tramiel: “Jack, I know you’ll probably start off by offering us a dollar per copy.” – “No,” replied Tramiel dryly. “50 cents.”
Tramiel knew that by coming out with a fully-functional product at rock-bottom prices he could grow the PC market. In the segment he envisaged there simply was no margin for a $50 operating system license. What was true when an Atari machine cost around $1000 is even more true today with $250-$450 netbooks, and future netbooks will be even cheaper than that. Soon we will also see netbooks based on the same low-power, low-cost ARM processors that power virtually all mobile phones.
Commentators cited by Computerworld on Windows 7 don’t really talk about money:
Analyst Rob Enderle, president of technology research firm The Enderle Group, agrees that Microsoft doesn’t see Linux as much of a threat and that refocusing on the netbook market is more about “Microsoft addressing the problem of having to keep shipping Windows XP long after its expiration date.”
Enderle says that getting XP on netbooks was clearly a response to Linux gaining traction, but that Microsoft is not afraid of consumers or OEMs having a preference for Linux.
“The problem was that Linux could run on a netbook and Vista couldn’t, not any consumer or OEM love for Linux,” he adds.
But Microsoft’s real problem wasn’t just that Vista was too big to fit on a 4 GB flash drive and too slow and bulky to run on an Intel Atom with 512 MB of RAM. It was also too expensive. So Microsoft could save face by charging next to nothing for its 5 year old Windows XP, but it didn’t make any real money on it. So what’s going to happen when Windows Vista 1.1 aka Windows 7 hits the streets in volume maybe a year from now?
Does it really matter to Microsoft shareholders and employees if the 21 million or so netbooks expected to be sold this year (and the even bigger numbers in 2010) will be running some version of Windows or a version of Linux (which is free), if previously those buyers would have picked up a more powerful machine that netted Microsoft $40-$100 per license?
Whether Windows 7 will run with decent performance on low-cost machines is really only half the question. The other is, how much Asus, Acer and the other netbook OEMs will offer to pay Steve Ballmer of Microsoft. Is it going to be $1 or 50c per copy? That is no way to sustain a business with a market capitalization of $150 billion and almost 90,000 employees worldwide (Jan 2009 numbers), as Microsoft is realizing to its horror.
The tipping point comes when there are enough Linux netbooks in use that it’s cheaper for peripherals makers to support Linux from day 1 than to handle returns from Linux netbook owners who couldn’t get the devices to work.
MSFT will give the OS away, or pay netbook vendors to take it with co-op marketing money, to keep the Linux market share below whatever that point is.
Don,
I think we’re gradually seeing more peripheral makers come on board.
It’s certainly a good sign when a major player such as HP who is not only big in PCs but also printers and scanners, signs a partnership with Canonical, as well as supporting Red Hat and SUSE Linux on their servers.
All this to-do about Linux verses Windows. For all of us who use Linux we know that it is a superior operating system, but should we be rooting for Linux to come main stream? Leave Windows for the occasional user, the malware writer, and rank beginner. I like using a operating system where I don’t have to be encumbered with security issues, service packs, and untold other problems. I want an operating system that lets me fly…
Interesting flashback on Jack’s Atari …
yes, even those Motorola 68xxx’s were light years ahead on Intel’s 808?’s in their day.
Its a shamefull wonder that those piece’s of junk PC-x86 architecture’s ever made it. ?!
But if you’re smart, you can sell anything!, and M$ was smart.
That was then, I think These Windows’ days are slowly but surely coming to an end.
(PC) Hardware and Software has become much more interchangeable, modular, virtualized, especially across the myriad of “open” OS’s, and “RIGHTFULLY” so. -It just can’t be ignored anymore.
It’ll be Linux/Windux for PC scrap, and already it has become the BSD/Unix derivatives for the Apples, … .
Just the Administration/Maintenance of these is a no-brainer comparison.
“…telephone Microsoft support to Activate your copy of …” blah blah blah what a _____ wa$te of resources for shite. -goodbye !
Yup, Microsoft will probably dwindle away slowly with their Applications, and they are already buying/investing up in hardware companies- who are themselves building more and more for Linux compatability anyway.
Windows servers will be a joke of the past.
As far as the Home/Desktop goes, well lets face it, once those “really-big” Gaming/Multimedia application companies finally-start seeing the light then that’ll be the last scale-tipper needed.
thats fine by me.
😉
Linux still isn’t ready for prime time…
I had to revert back to XP because linux kept disconnection my WIFI. Plus you can’t run Microsoft Office with out a great deal of pain or wineing. Open office is nice but its spread sheet sucks.
Jeff,
sorry to hear about your WiFi driver problems.
I messed around with RedHat Linux around 2000 and honestly think Linux has come a long way over the last decade, while Microsoft has gone backwards: In some ways Windows 2000 Professional was the best desktop operating system they ever offered.
In most cases, trying to install Linux on a machine that came bundled with an OEM version of Vista Home will not cause you more grief than say trying to install XP on it. Yes, some devices will take some hunting for drivers, but most if not all will work eventually.
It’s easier when you buy from a manufacturer who bundles Linux, such as Dell who offer a range of machines with Ubuntu already preinstalled.
As for Microsoft Office, I have only installed OpenOffice on my new machines for several years and even removed trial version of Office when came bundled because I didn’t need them. OfficeOffice.org Calc is the main app I use from the package, mostly for things like expense reports or income & company tax preparation. I am not a heavy duty user, but I rarely have any problems.
The other day I had problems printing a Word document on a machine that still has Office, so I loaded it under OpenOffice on my main machine and it printed fine 🙂