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Michael's Minute: Predictions for 2005

Announcing PhoneGaim for Windows - the best instant messenger client for AOL, MSN, Yahoo! and ICQ, now with free calling! Many of you have said you love PhoneGaim for Linux, but it would be more useful if you could call your friends on Microsoft Windows computers for free. Well now you can!

Predictions for 2005

It's a new year, so time for a predictions column. But first,we'll do a review of last year's predictions to see what I got right - and what I got wrong.

1) Software and movie companies embrace P2P = Cheaper products for consumers
Some entertainment companies are using P2P to deliver TV-quality video and games through companies like RedSwoosh. But sadly, the majority are seemingly following in the footsteps of the music labels by trying to sue to slow or block the technology rather than figure out how to use it to make more money. This is a miss.

2) Microsoft moves from growth to profit
This year, Microsoft announced the biggest ever one-time dividend, which is the classic move of a "value" company. Growth companies never pay dividends because they use their cash to continue to grow. In spite of a wide range of efforts spanning TV, PDA, game consoles, etc. Microsoft cannot find another profitable venture outside their core operating system and office suite business. This was a hit.
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3) $499 Linux laptops under the Christmas tree
On December 17th, began selling a Linspire laptop for $498. I was $1 off, but this is a definite hit.

4) Microsoft announces plans for Microsoft Office for Linux

This was my President, Kevin Carmony's prediction. Microsoft has not yet announced any products for Linux. With OpenOffice continuing to make great strides and OpenOffice 2.0 on the horizon, there will be more pressure for Microsoft to respond. But for now, this is a miss.
Remember that OpenOffice 2.0 will be on display at the Desktop Summit on February 9-11th, in San Diego. So, register now!

50% accuracy from 2004, so let's look at 2005.

1) After buying IBM, Lenovo leans toward Linux

China-based Lenovo just received US government clearance to purchase IBM's PC business. IBM executives have assured the IT world that the quality and service will remain, and I hope it does because I'm a big Thinkpad fan and own several of the X series laptops. But something must change or Lenovo will have paid $1.75 billion for the right to lose money on every IBM PC they sell. Over the last 3.5 years, IBM has sold about 30 million computers and lost $965 million dollars - or approximately $33 per computer. To reverse their fortune, Lenovo needs to find a way to have $50 better economics on every PC so will they not only break even, but they will generate some profits. IBM already uses Chinese labor in their plant in Shenzen to manufacture their PCs - so there won't be much savings there. Lenovo may be able to buy hard disks, memory or other parts slightly cheaper than IBM because of greater economies of scales, but at best this will be less than $10 per machine. The only place where significant savings can be generated to turn their PC business around is the operating system and office suite. Instead of paying Microsoft $100-$300 per machine for Microsoft Windows XP and Microsoft Office, they will ship Linux with an office suite and pay just $5-$10 on some of their product line. This will give them distinction from the well-entrenched Dell and HP computers they must compete with.

2) Windows Media Center suffers BSOD (Blue Screen Of Death)

You don't have one mega kitchen appliance, you have dedicated appliances tuned to each task. The same is true in your living room. The Windows Media Center is an admirable goal, but misguided implementation. They are trying to cram every function into one box and it makes the device expensive and unreliable. That was illustrated with Bill Gates' recent high-profile demo at CES (Consumer Electronics Show) of Windows Media Center, which suffered an embarrassing BSOD. Remember this is the third generation of this product and Mr. Gates has a team of people to make it work, yet it still crashed. It will become increasingly clear that Windows Media Center is not the right approach.

PC devices will be in your living room controlling various media, but we believe there will be many low-cost machines, each dedicated to perform one task well instead of one super-size device intended to do it all. The devices will seamlessly interconnect with each other, but it's critical that they be low-cost, stable, secure and customized for each task. Linux has all of these things, while Windows Media Center has none of them. This is already happening with PVR (Personal Video Recorders). These are PC-like devices that are designed to do one function well - display and record video. And now they are starting to interconnect with other devices in your network such as multiple TVs and PC. Now, picture one for your music, your photos, your web pages, and your files, and you'll have what the future of your living room looks like.

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3) Ease-of-use seen as major factor for widespread desktop Linux acceptance
Apple's easy interface ushered in the modern PC era. Wordperfect's WYSIWYG design revolutionized word processing. AOL's point-and-click approach brought ISP/net access to the masses. Interface and ease-of-use are critically important to reach widespread adoption of any complex new technology, yet it's typically overlooked by the technical world because they are inherently, well, technical. As reporters and reviewers gain more familiarity with Linux, they are now doing more than just running the installation when writing about desktop Linux. They are beginning to actually use it for their daily computing and witnessing first hand how it handles Internet communication, multimedia files, software installations and upgrades. This is where the nearly 1,000 changes that Linspire has implemented to make Linux usable by the masses become evident. Influential columnist, Robert Cringely, mentioned this in HIS 2005 prediction column here
after he bought a Linspire computer and put it to use. Reports on desktop Linux will begin to focus on ease-of-use because that's imperative when discussing business, home, or school use and comparing it to Microsoft Windows XP.

4) Every NFL city will have a store you can walk into and buy a Linux desktop or laptop
Linux is making meaningful inroads with retailers who are beginning to stock Linux desktops and soon laptops on their shelves. It started with the Mom-and-Pop PC assemblers. Now it has graduated to the larger retail chains like Frys, Microcenter and PC Club, which are selling Linspire computers. By the end of the year, 32 NFL cities (those cities which have an American football team) will have stores carrying pre-installed Linux laptops and desktops. This will be an enormous achievement for Linux and proof positive Linux is reaching the masses.

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5) CNR for Longhorn, in 2007
CNR stands for "click and run" and it's the way software should work. One click and you've installed any software program from the 1,900 title software library we call the "Warehouse." You also get notifications when updates exist and you can update one or all of the software on your computer with a swipe of the mouse. Just one experience and it becomes clear this is how software should work! Complete software delivery is a terrifically complex thing to do and something we've been working on for several years and have now done more than 4.5 million remote installs using CNR. Microsoft has assessed our service and talked internally about a CNR type of service for Microsoft Windows. We might see such a service for Longhorn, but Longhorn is going to slip to 2007.

6) The number of commercial desktop Linux companies shrinks through attrition and consolidation.
Building an operating system, courting PC partners, garnering distribution, servicing retailers and supporting end users is an enormous undertaking. It takes a large amount of capital, focus and commitment. Over the next 12 months, you will see some commercial desktop Linux companies go away and others will join forces. This is a positive trend for the desktop since a couple of larger competitors will be in a much better position to compete with Microsoft's might than a dozen smaller players.

Those are my predictions. Let me hear yours in the forum!

-- Michael

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