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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.
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.
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.
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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