5 ms·

$200 Laptops Break a Business Model

35 points by peter123 18y ago

babul 18y ago
No sign-up version... http://www.iht.com/articles/2009/01/26/technology/26spend.php http://www.iht.com/articles/2009/01/26/technology/26spend.ph...
jimbokun 18y ago
"It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive." [Traditional technology being mostly the standard Microsoft stack, replaced by various online applications.] At some point, CEOs of more conservative corporations are going to be presented with these numbers in a board meeting, and will have a very hard time defending the value they're getting for the money they're handing over to Microsoft. True, there's the "we would have to retrain our employees" argument, but young employees are already used to doing everything online and will be asking the same questions. Add to that the downward pressure on margins from netbooks (no one is going to spend $200 for an OS on a $200 computer), and I do not see any upside for Microsoft in the near future.
- gcheong 18y ago
  It's not just Microsoft, but they should be questioning the value they get from their entire IT departments when an entire infrastructure can be leased. The smarter IT departments will adapt and push for it, the dumb ones will try everything they can to block the adoption of it - fearing their own demise without regard to the best interests of the company they work for.
- AndrewWarner 18y ago
  Most people only use the web and office. Most online programs are so simple that there's no training involved.
  - olefoo 18y ago
    > Most online programs are so simple that there's no training involved. That is manifestly not the case; complex work is complex regardless of the delivery method. I have worked on and with a couple of web applications where it took several days to train someone to use the application; mostly because of the sheer number of variables they controlled. What I think you are trying to say is that there is no need to train people in the UI basics.
- kragen 18y ago
  no one is going to spend $200 for an OS on a $200 computer They would if they had to. Lots of people spend $200 on games for a $200 game console, don't they? I just spent $380 on a computer to run on a $20 power supply, because without the computer, the power supply is pretty useless. The difference is that Linux is now good enough that they don't have to spend $200 on an OS.
- gaius 18y ago
  no one is going to spend $200 for an OS on a $200 computer You can easily pay $20,000 for software to run on a $200 computer. Whether that represents value for money or not depends on what you're trying to do.
  - jimbokun 18y ago
    Microsoft has been successful largely because the cost of their product was hidden in the cost of the computers on which it is pre-installed. $200 total price point does not leave them much room to hide. Because consumers have been trained not to think of the operating system as a separate cost, but just part of the computer, I don't think you can convince them now that the operating system, by itself, is worth as much of the rest of the computer combined. This is not quite as true for businesses, but even there the cost of site licenses for the Microsoft product stack needs to be questioned for employees whose needs are web browsing, email, and basic document editing. And, of course, the article shows that newer companies are coming to that conclusion already.
    - Retric 18y ago
      Vista Home costs dell ~40$.
      - jimbokun 18y ago
        1. Did Microsoft charge more than that before Dell started seriously supporting Linux on their computers? (Honest question, I don't know the answer.) 2. $40 is a big cost to absorb when you are selling a $200 or $300 netbook.
    - gaius 18y ago
      You might be surprised at the economics of Microsoft volume licensing. Businesses are not paying retail price for every copy of Windows and Office. And neither are most consumers. In fact I wouldn't be surprised if retail revenue of these products was insignificant and they exist only to implant the idea of "value" in people's minds.
ojbyrne 18y ago
I find this a little misleading, because netbooks are very rarely someone's sole computer, and they seem to deliberately omit the growing sales of Macbooks and Macbook Pros (which aren't cheap) to make the story more convincing. In fact, I'd say that this is a bit of a microsoft biased story in that the emphasis is "Microsoft can't compete on price" (which they can frame as "we don't want to compete on price") when in fact MS is losing at both the top end and the bottom end of the market.
- tdavis 18y ago
  I have a laptop myself, but they can have my multiple monitors and powerful desktop when they pry them from my cold, dead fingers...
  - eru 18y ago
    Perhaps you should get a heated mouse?
    - tdavis 18y ago
      No central heat + Boston winter = Many days I wish for a heated keyboard... not sure how you'd heat a trackball, but that would be appreciated as well!
      - eru 18y ago
        Induction cooking.
      - lsb 18y ago
        A couple ways -- USB-powered electric gloves, combined with enough not-typing and cardio to make sure the blood's still flowing. (Mozart and his wife, for example, used to dance in their cold apartment to keep warm.)
  - hs 18y ago
    laptop's keyboard is pretty warm ... could save your cold, dead fingers
kwamenum86 18y ago
Cheap alternatives that eat into revenue generated from their more expensive counterparts are not really business model busters. They just compete better using the same business model in this economy.
rokhayakebe 18y ago
In parallel, economic downturn means more innovation as individuals and companies get very creative to meet the changing expectations from consumers. When resources are scarce, thinking becomes abundant. This is the same reason why poor and hungry startups are always more innovative then large and stable companies.
indiejade 18y ago
Maybe some people are missing the point of the article: hardware is cheap, getting cheaper: Moore's Law in action. Software only becomes expensive when it is based upon this intangible notion of "sales," a per-unit figure that becomes largely irrelevant when factoring in dollars spent on marketing and advertising, licensing fees and things of that sort. OSS has the unique ability to put both categories in somewhat of a corner. Not really intentionally, either; simply by being honest.
c1sc0 18y ago
This is a great time to set up a business that helps small to medium businesses shave some of the IT costs; that's exactly what I am trying to do as a side-project. So not all is black and gloomy in this depression.
jrockway 18y ago
I noticed the article started out by talking about Asus' EEE PC, but then went on to talk about how Acer is stealing Apple's market position. Is this a typo? I know Acer still exists, but I'm pretty sure Asus still sells the most netbooks.
hs 18y ago
couple years ago netbook was luxury asus makes luxury into commodity the price of netbooks should drop (esp over last 2 yrs) but didn't, suggesting there's a lot of demands
deleted 18y ago
[deleted]

35 points by peter123 18y ago

babul 18y ago

No sign-up version... http://www.iht.com/articles/2009/01/26/technology/26spend.php http://www.iht.com/articles/2009/01/26/technology/26spend.ph...

jimbokun 18y ago

"It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive." [Traditional technology being mostly the standard Microsoft stack, replaced by various online applications.] At some point, CEOs of more conservative corporations are going to be presented with these numbers in a board meeting, and will have a very hard time defending the value they're getting for the money they're handing over to Microsoft. True, there's the "we would have to retrain our employees" argument, but young employees are already used to doing everything online and will be asking the same questions. Add to that the downward pressure on margins from netbooks (no one is going to spend $200 for an OS on a $200 computer), and I do not see any upside for Microsoft in the near future.

gcheong 18y ago
It's not just Microsoft, but they should be questioning the value they get from their entire IT departments when an entire infrastructure can be leased. The smarter IT departments will adapt and push for it, the dumb ones will try everything they can to block the adoption of it - fearing their own demise without regard to the best interests of the company they work for.
AndrewWarner 18y ago
Most people only use the web and office. Most online programs are so simple that there's no training involved.
- olefoo 18y ago
  > Most online programs are so simple that there's no training involved. That is manifestly not the case; complex work is complex regardless of the delivery method. I have worked on and with a couple of web applications where it took several days to train someone to use the application; mostly because of the sheer number of variables they controlled. What I think you are trying to say is that there is no need to train people in the UI basics.
kragen 18y ago
no one is going to spend $200 for an OS on a $200 computer They would if they had to. Lots of people spend $200 on games for a $200 game console, don't they? I just spent $380 on a computer to run on a $20 power supply, because without the computer, the power supply is pretty useless. The difference is that Linux is now good enough that they don't have to spend $200 on an OS.
gaius 18y ago
no one is going to spend $200 for an OS on a $200 computer You can easily pay $20,000 for software to run on a $200 computer. Whether that represents value for money or not depends on what you're trying to do.
- jimbokun 18y ago
  Microsoft has been successful largely because the cost of their product was hidden in the cost of the computers on which it is pre-installed. $200 total price point does not leave them much room to hide. Because consumers have been trained not to think of the operating system as a separate cost, but just part of the computer, I don't think you can convince them now that the operating system, by itself, is worth as much of the rest of the computer combined. This is not quite as true for businesses, but even there the cost of site licenses for the Microsoft product stack needs to be questioned for employees whose needs are web browsing, email, and basic document editing. And, of course, the article shows that newer companies are coming to that conclusion already.
  - Retric 18y ago
    Vista Home costs dell ~40$.
    - jimbokun 18y ago
      1. Did Microsoft charge more than that before Dell started seriously supporting Linux on their computers? (Honest question, I don't know the answer.) 2. $40 is a big cost to absorb when you are selling a $200 or $300 netbook.
  - gaius 18y ago
    You might be surprised at the economics of Microsoft volume licensing. Businesses are not paying retail price for every copy of Windows and Office. And neither are most consumers. In fact I wouldn't be surprised if retail revenue of these products was insignificant and they exist only to implant the idea of "value" in people's minds.

ojbyrne 18y ago

I find this a little misleading, because netbooks are very rarely someone's sole computer, and they seem to deliberately omit the growing sales of Macbooks and Macbook Pros (which aren't cheap) to make the story more convincing. In fact, I'd say that this is a bit of a microsoft biased story in that the emphasis is "Microsoft can't compete on price" (which they can frame as "we don't want to compete on price") when in fact MS is losing at both the top end and the bottom end of the market.

tdavis 18y ago
I have a laptop myself, but they can have my multiple monitors and powerful desktop when they pry them from my cold, dead fingers...
- eru 18y ago
  Perhaps you should get a heated mouse?
  - tdavis 18y ago
    No central heat + Boston winter = Many days I wish for a heated keyboard... not sure how you'd heat a trackball, but that would be appreciated as well!
    - eru 18y ago
      Induction cooking.
    - lsb 18y ago
      A couple ways -- USB-powered electric gloves, combined with enough not-typing and cardio to make sure the blood's still flowing. (Mozart and his wife, for example, used to dance in their cold apartment to keep warm.)
- hs 18y ago
  laptop's keyboard is pretty warm ... could save your cold, dead fingers

kwamenum86 18y ago

Cheap alternatives that eat into revenue generated from their more expensive counterparts are not really business model busters. They just compete better using the same business model in this economy.

rokhayakebe 18y ago

In parallel, economic downturn means more innovation as individuals and companies get very creative to meet the changing expectations from consumers. When resources are scarce, thinking becomes abundant. This is the same reason why poor and hungry startups are always more innovative then large and stable companies.

indiejade 18y ago

Maybe some people are missing the point of the article: hardware is cheap, getting cheaper: Moore's Law in action. Software only becomes expensive when it is based upon this intangible notion of "sales," a per-unit figure that becomes largely irrelevant when factoring in dollars spent on marketing and advertising, licensing fees and things of that sort. OSS has the unique ability to put both categories in somewhat of a corner. Not really intentionally, either; simply by being honest.

c1sc0 18y ago

This is a great time to set up a business that helps small to medium businesses shave some of the IT costs; that's exactly what I am trying to do as a side-project. So not all is black and gloomy in this depression.

jrockway 18y ago

I noticed the article started out by talking about Asus' EEE PC, but then went on to talk about how Acer is stealing Apple's market position. Is this a typo? I know Acer still exists, but I'm pretty sure Asus still sells the most netbooks.

hs 18y ago

couple years ago netbook was luxury asus makes luxury into commodity the price of netbooks should drop (esp over last 2 yrs) but didn't, suggesting there's a lot of demands

deleted 18y ago

[deleted]