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Michael's Minute: Predictions

 

I've learned a lot about the desktop Linux business over the last year that we've been doing Lindows.com. I've talked with industry experts, consumers, CEOs from many of the major software and hardware companies and our own Insiders. Using the knowledge I've learned from these people, I'm going to make a few predictions about what you'll see in the desktop computer business in the upcoming year.

 1) PCs will cost $0.00

Customers will soon be provided with free computers if they sign-up for services. With the price of computers finally under $200, offers will start emerging that will provide a complimentary PC when committing to services such as Internet connectivity, cable, online banking, or even a software service similar to our Click-N-Run Warehouse, which provides all the basic software needed for a flat fee. This is similar to the cell phone business which provides a free or heavily subsidized phone, if you'll promise to stick with their service for an extended period of time. AOL might be a likely candidate as they watch subscriber numbers plateau. Sign up for a 2 year commitment with AOL and receive an AOL-equipped computer. Plummeting hardware prices are going to make different business propositions related to PC ownership possible. 

2) Microsoft Windows XPLite 

You'll see a series of design wins for Linux powering many of the sub-$500 computers as you've seen with Walmart.com. The cost of hardware is dropping so steeply, that manufacturers are unwilling to pay Microsoft $100 per copy of Microsoft Windows XP as well as deal with their onerous auditing and accounting demands which make the true price much higher. In the second half of 2003, Microsoft will unveil XPL which is a stripped down version of Microsoft Windows XP designed to be less than half the price of the current operating system licensing. This still won't be cheap enough for the majority of hardware manufacturers and by the end of ‘03 Linux will be firmly entrenched in the low-end market.

Microsoft won't be happy about doing this (and giving up their monopolistic windfall profit margins), but because LindowsOS and others are bringing choice to the desktop computer, they'll be forced to. 

3) Desktop Linux Adoption Will Achieve 10%

According to Netcraft, more than half of the web servers today are running Linux. Most of the server operators selected Linux because of its low-cost and robustness. Those same compelling factors will propel the adoption of Linux on the desktop in schools, in homes and in cost-conscience businesses around the globe. Since it does take a bit more inertia to standardize an office or household with Linux than a headless, faceless server, the adoption will be a bit slower than we saw on the server side, but will still see healthy growth. If you want to see it first hand, plan to attend the Desktop Linux Summit February 20-21st in San Diego. 

4) Return of the Windows Wars

In the 80s, there was healthy competition as many companies offered windows based products. Microsoft's ferocious competition and illegal tactics eventually wiped out these companies and their window manager products. This year we'll see several of the larger hardware companies adopt their own window managers based on Linux which will invigorate the software business with some much needed competition. Can you imagine a car company that didn't design the interior of cars they manufactured?

Worse, what if all cars had identical interiors and there was only one supplier who marked them up so that they made more profits than all the actual car companies combined? That sounds like a preposterous idea, but that's the PC business today. PC builders are relegated to commodity vendors because their interiors are all identical and Microsoft makes more profits then all the computer companies combined. Instead of giving the lion's share of the profits in the computing industry to Microsoft, it makes much more sense to invest a portion of those monies into a product they can own and use as a competitive advantage. They'll be able to not only customize this product to their own tastes, but also generate revenues from it through upgrades and other sales opportunities such as software subscriptions. Today's computer builders pay massive fees to Microsoft for the privilege of making cheap razors while Microsoft makes all the profits by selling the razor blades. Management of PC companies will eventually tire of selling low-margin hardware while Microsoft reaps all the profits from high-margin software. They'll start shipping computers with their own operating system tailored to their customers needs and designed to give them a healthier profit margin. The enormous strides that Linux has made over the last few years (driver support, ease-of-use, hardware support) has made this a practical business decision where in the past it was a very difficult proposition.

Before "Gateway Windows," "Dell Windows," "AOL Windows" or others can label their own operating systems with the windows moniker without reprisal from Microsoft (as was commonplace in the early PC era), Lindows.com will have to prevail in our lawsuit fight  so the word 'windows' will be returned to the public domain of computing.

Special note: Thanks to all those who responded to our requests for pre-1983 materials using the word 'windows'. You provided us with many very helpful materials which we plan on introducing to the court. If you find more mentions in your personal libraries, please, let us know!

5) No all-in-one personal computers 

Over the past few years many pundits have put forth the notion that your personal computer will be your telephone, game station, music center, TV set, alongside the list of duties it already admirably performs. At Lindows.com, we see it differently. We don't dispute that PC architecture will power many, if not all of those devices. But we don't believe you'll see a consolidation of devices into one monolithic machine. Just as you have many kitchen appliances all designed to do separate things instead of an all-in-one toaster/blender/microwave/waffle iron, your house will be the same.  

You'll see a proliferation of inexpensive personal computer powered devices where each one is dedicated to a specific purpose. In fact, that's what you're already seeing. An Xbox is actually a personal computer masquerading as a game console (and some people are even trying to run Linux on it). Your Tivo or ReplayTV may look like a souped-up VCR, but it's really just a personal computer with a specialized case, remote and software. Expect to see more personal computers appearing in your home designed with specific purposes such as your music library, kitchen duties, home finances, etc. Some may remember the Internet appliance disasters a few years ago. The difference now is that the equipment will be based on existing low-cost PC hardware and run Linux software, which will keep the price low. 

Those are my predictions for what will be an exciting year for desktop Linux. As a special thank you to all our Insiders who are helping us shape the direction of LindowsOS, we are allowing free admission to  Desktop Linux Summit. Insiders also receive a TWO-year membership to the Lindows.com "Click-N-Run Warehouse" (a $198 value) for $99. You'll want to hurry though, as this offer ends with the General Release of LindowsOS later this year.

As always, thanks for your support.

Michael Robertson

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