This computer is the future, and it has arrived at the right place in the market at exactly the right time. That is being at the low end of the market, at the beginning of a long down turn, and also oozing “coolness”. It’s Tiffany at a Wal-Mart price.
The success of this device will inspire others, and once a company like Dell moves in, I think we can see the adoption of linux in a whole new class of devices starting very quickly. The large PC companies will not sit on the sidelines and let an upstart like ASUS have a new market to themselves. They will push in, rapidly. The price point and the diminutive specs of this unit make it rather unlikely that MSWindows will be the OS of choice for this new platform, unless MS radically changes their pricing structure, which is rather doubtful.
As noted over at Canalys 10 September 2009:
H1 2009 research highlights
The PC industry is undergoing a more dramatic transformation than seen at any time in the last 15 years. The netbook category was invented as recently as 18 months ago by the likes of Asus and Acer and is the only PC segment enjoying growth this year. The impact of netbooks has been profound. It has forced Microsoft to fend off a threat from Linux by reducing its operating system prices and to continue promoting its aging XP brand. Netbooks have dramatically lowered industry price points, attracting new categories of consumer buyers….The market shares of PC vendors are changing rapidly on the back of their willingness to commit to the netbook category and their agility in chasing these new, substantial telco deals.
The one thing that I did not predict correctly is that MS would really change the price of Windows. But in a sense, I am right about that too, because although they temporarily changed the price of Windows, it seems MS have back tracked from that also:
After publicly advertising the idea that Windows PCs are cheaper than Macs in its “Laptop Hunter” ads, Microsoft CEO Steve Ballmer told an audience of financial analysts that the company’s attempts to cut prices of Windows to induce demand in emerging markets had failed over the previous year, and that the solution to the company’s woes will be to increase the price of computers.
“The theory was wrong,” Ballmer said, explaining that there wasn’t enough new demand to make up for the drop in profits. “You’ll see us address the theory. We’re going to readjust those prices north [using Windows 7].”
MS is in a lose-lose situation: lower the price of Windows, and they will hurt their profits dramatically, especially since it turns out that netbooks are the only PC sector that is growing–all the others are actually shrinking. Raise the price, and Linux will be the choice on netbooks.