| Linux is about to take over the low end of PCs |
Dec. 07, 2007
Opinion -- Sometimes, several unrelated changes come to a head at the same time, with a result no one could have predicted. The PC market is at such a tipping point right now and the result will be millions of Linux-powered PCs in users' hands.
The first change was the continued maturation of desktop Linux. Today, no one can argue with a straight face that people can't get their work done on Linux-powered PCs. Ubuntu, PCLinuxOS, MEPIS, OpenSUSE, Xandros, Linspire Mint, the list goes on and on of desktop Linuxes that PC owner can use without knowing a thing about Linux's technical side. People can argue that Vista or Mac OS X is better, but when Michael Dell runs Ubuntu Linux on one of his own home systems, it can't be said that Linux isn't a real choice for anyone's desktop.
Another change occurred when Nicholas Negroponte proposed the so-called $100-laptop, the OLPC (One Laptop Per Child) machine. He couldn't get them built for quite that price -- they cost about $200 -- but that's still remarkably cheap and they're available today.
Not long after OLPC was announced, Intel and other companies came up with their own take on an inexpensive PC: the Classmate PC. By 2007, it had become clear that you could build a laptop that was good enough to run desktop Linux for about $200.
That gave other hardware vendors an idea. If you could build a no-frills PCs that ran Linux, why not make sub-$500 computers with a bit more power and sell them to consumers? That's exactly what Asus did with its Xandros Linux-powered ASUS Eee UMPC (Ultra Mobile PC), which lists for about $400. At about the same time, Everex introduced its gOS TC2502 gPC. Available first only from Wal-Mart, these $199 desktop systems are also now also available from ZaReason, an open-source VAR.
And how are these sub $500 computers and laptops doing? Everex is building them as fast as it can and has announced that its forthcoming laptop version, the CloudBook, has already been picked up by a major U.S. reseller. At the same time, according to an unconfirmed report, ASUS is planning on selling 3.8 million Eees in its next fiscal year.
While all this has been going on, broadband Internet connectivity has become almost as easily available as cell phone coverage. It is a small town indeed where there's not some kind of free Wi-Fi available at a local coffee shop or library. You may have to pay for Wi-Fi at the airport or in your hotel, but Wi-Fi is almost always there. And, at home, well I'm living on a rural mountain overlooking a national forest and I have 3M-bps DSL coming in to my house.
Google has made billions from this simple fact. It's not just about search and ads anymore, though. Google has found that there's a big demand for its office Google Apps. And not just from home users; Capgemini, a multibillion dollar international consulting company, is using GAPE (Google Apps Premier Edition) for one of its offices.
Four trends: user-friendly Linux desktops, useful under-$500 laptops and desktops, near-universal broadband, and business-ready Internet office applications. Put them together and you have a revolution.
For the last two decades, we've been buying expensive desktop operating systems on business PCs running from $1,000 to $2,000. On those systems, we've been putting pricey desktop-centric office suites like Microsoft Office. That's a lot of money, and the convergence of the above trends is about to knock it for a loop.
Here's the business case. You tell me if it's not compelling. You can buy 100 $500 PCs running a free version of Linux, hook them to a high-speed Internet connection for a $1,000 a year and use GAPE at $50 per user account per year. Finally, we'll throw in a grand for a Linux server. That's $57,000 for your equipment, your connectivity, your operating system and your applications.
Now, let's say you want to run Vista Business. First, you'll need 100 PCs that can run it. The cheapest deal I can find today for machines I'd consider adequate for Vista Business, which is to say they must have at least 2GB of RAM, is for the Dell OptiPlex 320 at $707 a PC. Of course -- unlike with Linux, which always includes an office suite, OpenOffice -- for those times when the Internet is down, you'll need to buy an office suite. If you went with Microsoft Standard 2007, with a little shopping you can get it for the upgrade price of about $200 per copy. So, on the PC side alone, we're looking at $90,700.
All done? Not quite. To get the most from Microsoft Office 2007, you really need to be operating it with a minimum of Microsoft Server 2003 ($4,994 base price plus 100 CALs (client access licenses)), Exchange 2007 ($7,399 base price plus 100 CALs) and SharePoint 2007 ($13,824 base price plus 100 standard CALS). If you're running Windows you probably already have Server, so we won't count it. Throw in another two grand for the Exchange 2007 and SharePoint 2007 servers, and a grand for the Internet connection, and (insert sound of old-fashioned adding machine) the final total is $114,923.
So, by my calculations, all those trends have joined together to make a Linux-based small business using Google applications instead of Exchange and SharePoint cost less than half its Microsoft-based twin.
Worse still, if you're Microsoft, you can't really defend yourself. Linux desktops run just dandy on low-end, under-$500 PCs. Vista Basic, which comes the closest to being able to run on these systems, is unacceptable since it doesn't support business networking. Office 2007 also won't run worth a darn on these systems. And somehow, I can't see Microsoft optimizing its applications to work with Google Apps instead of Exchange and SharePoint.
Put it all together, and here's what I see happening. In the next few quarters, low-end Linux-based PCs are going to quickly take over the bottom rung of computing. Then, as businesses continue to get comfortable with SAAS (software as a service) and open-source software, the price benefits will start leading them toward switching to the new Linux/SAAS office model.
You'll see this really kick into gear once Vista Service Pack 1 appears and business customers start seriously looking at what it will cost to migrate to Vista. That Tiffany-level price tag will make all but the most Microsoft-centric businesses start considering the Linux/SAAS alternative.
Microsoft will fight this trend tooth and nail. It will cut prices to the point where it'll be bleeding ink on some of its product lines. And Windows XP is going to stick around much longer than Microsoft ever wanted it to. Still, it won't be enough. By attacking from the bottom, where Microsoft can no longer successfully compete, Linux will finally cut itself a large slice of the desktop market pie.
-- Steven J. Vaughan-Nichols
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