Computex 2008 is a shed mark in personal computing history. This is the show where Linux and low cost, small form factor desktop and notebooks take the centre stage. This market is driven mainly by the Asus eee PC notebook, but many other OEMs are now following suit; Acer, HP, and MSI have all committed themselves to this market, which a Sony executive has described as “ a race to the bottom”. No wonder, given that Sony sells premium priced laptops, and is very keen on defending those margins.
Until the emergence of the eee-type PCs, the choice for small form factor laptops were mainly expensive laptops, or the device category, UMPCs, that Intel tried to push a few years ago with little success. It is difficult to convince cost-oriented consumers that instead of buying a traditional laptop at €600, they should instead spend €1,500 for a smaller form factor edition laptop (or UMPC), with, in many cases, less functionality. Additionally, your choice of operating system environment was limited to what Microsoft would provide, and in some cases, Apple. No large OEM would push in volume consumer Linux-based PCs, for various reasons.
Asus, with a clear strategy to grow its on-branded PC business, has seen that low cost Linux PCs is the beach head it needs to become a main player in the PC market. It already manufactures PCs and consumer electronics goods for most brands, so why not also use its design and manufacturing know-how to move down in the value chain. The Windows PC market is highly competitive, and thus using Linux to target the low cost market makes sense.
For Linux this is a big win. Linux advocates can now easily buy laptops that fully function with various Linux distributions (just see all the eee-specific distributions that have emerged in the past six months), and avoid paying the Microsoft “tax” as some may call the licensing fee OEMs pay for the Windows operating system, which is not required on Linux laptops. For Joe Average consumer it is also a viable choice. Consumers that have traditionally used the Windows environment are willing to switch; just look at the recent surge of first time buyers of Apple OS X products. If consumers find products and environments they prefer over their existing platforms, they can and will switch. Some may argue that, and rightly so, that Open Office is not as feature rich as Microsoft Office, and not fully interoperable either. However, I suspect that many consumers will find Open Office to be “good enough” for their needs, and also, when Generation Facebook sees a greater need for an office productivity tool, what will stop them from going to Facebook to Google Docs or other web-based office productivity tools?
Much of this has been driven by (the much hyped promises of) Intel's Atom chip, although Asus did launch its first eee PCs last year based on the Celeron architecture. All eyes might be on Atom at the moment, but Via will clearly not Intel have this market for itself, and is set to introduce its Nano products which aim at the same market as Atom. Nvidia is also lurking in the shadows, with its announced Arm-based architecture called Tegra. The only chip maker that has remained silent is in fact AMD, even though its Geode products could fit this market rather nicely. However, given with its many issues with Barcelona and Phenom, it makes sense that AMD has focused its engineering efforts on making sure that its 45nm manufacturing shrink and new processor architecture for the mainstream PC and server markets run flawlessly to avoid a new Barcelona fiasco.
The big question now is how successful will Linux be in the mainstream consumer market, and if Linux will be offered as a solution outside of the low cost laptop and desktop markets. Microsoft will surely not be pleased if its OEM partners decide to shift more of their focus towards Linux systems. Some may argue that Linux will be limited in market share since many games do not run on Linux, or do not run well enough even when using WINE. However, if game performance is such a big issue, then how is it possible to explain the surge in OS X products. Keep an eye out for this market, it is one to watch.
