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Tipping Point - PC Club

A recent book by Malcolm Gladwell popularized the term "tipping point." It refers to the moment of time when growth in a certain phenomenon explodes, bringing it to critical mass. Gladwell's book talked extensively about the fact that seemingly small developments can trigger a tipping point. I think desktop Linux could be tipping this week, with the announcement of physical retailers getting behind LindowsOS.

PC Club is now carrying computers running LindowsOS in more than 50 stores!

Today, we announced that PC Club is now stocking LindowsOS computers on store shelves in more than 50 stores. This marks the first time that a retail chain has committed to desktop Linux by putting computers on their store shelves. Up until now, desktop Linux computers have only been available in the US through online outlets and mail-order catalogs. Those are important distribution channels, but until desktop Linux is in retail stores it won't reach the masses. Microsoft has worked hard to put up road-blocks to prevent desktop Linux from moving into retail channels, by alternating between heavy handed tactics and financial 'carrots' (and sometimes both simultaneously). Their belief is that every day they delay the appearance of desktop Linux in retail stores is one more day that they maintain their monopoly power and oversized profits. The allure of computers priced $50-$300 cheaper than comparably equipped Microsoft Windows computers is a reality that no amount of Microsoft money can deny. Ultimately, retailers will give into consumers' demands for more value-priced offerings, and that is what PC Club has done.

Customize your system online, pick it up at a local PC Club

PC Club is a personal computer retailer with stores primarily on the West Coast that emphasize the best prices and great service. Those stores now stock LindowsOS computers that you can pick up and take home, positioning them as a leader in Linux products. In addition, they offer a unique service that allows you to order online and then pick up the computer from the store. This is the best of both worlds, since you get the ease and customization of online ordering, plus the immediacy of an actual store so you don't have to wait or pay for delivery. LindowsOS 4.0 is now available on the Sparx line of PCs at PC Club. Be sure to use the zip code locator to look for stores near you.

Get a LindowsOS computer from PC Club

I believe we'll look back on PC Club as the tipping point for desktop Linux, because of the chain reaction it will create. Most retailers are reactive, not proactive meaning they don't change unless the competitive landscape around them compels them to. PC Club is the first major retail chain to respond to consumer demand for affordable computers. This gives them a true pricing advantage, since LindowsOS software and add-ons cost a fraction of similar Microsoft products. Other retailers will not be able to compete with PC Club's product lineup unless they too offer Linux. As long as retailers are selling only Microsoft Windows XP computers - they are all on similar footing. They all pay about the same for every PC component: hard disks, memory, processors, and software.

Imagine if one computer retailer was able to get hard disks for $1 each and everyone else still had to pay $100 or more. That retailer would have an unbeatable pricing advantage and would garner large sales from competitors who could not match their prices. It's impossible for any company to get such a pricing advantage on any individual hardware component like a hard disk, since they all use similar suppliers and costs are fundamentally the same. The one area where a manufacturer can gain a pricing advantage is in the software, and that's exactly what PC Club is doing. They have an immediate $100 pricing advantage over all other retailers because they are saving the $100 that Microsoft Windows XP costs, which they are forced to buy for any computer. They can offer a LindowsOS computer for $75 less than an identical Microsoft computer and actually make a higher profit margin (since there is an extra $25 of savings they are keeping for themselves).

Demand is booming for desktop Linux computers, and PC Club will do solid business with these computers. In addition, they'll take business away from retailers that are slower to react to this new trend in PC computing. I'm confident that a year or two from now, when the experts are retrospectively examining the success of desktop Linux, they will look at PC Club as the tipping point.

-- Michael

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