Summary
1. Economy forces partners to go it alone. 2. Does Intel know software?
Analysis
For over 20 years, Microsoft and Intel have partnered to grow the PC industry. Now, Intel is launching a netbook that will use the Linux operating system and not Microsoft. Could it be the economy and the need for more revenue? Or could it be such a huge revenue opportunity for Intel that they can not let the high price of an operating system slow them down?
I actually think it is neither. I think the linux operating system has reached a stage of "good enough" for what people need. How fancy do we need our machines to be to run a web browser? Not very fancy is the obvious answer. And for most home users, there are good enough applications available for netbooks.
Will this change encourage other PC manufacturers to move away from Windows and offer home computers based on Linux? Historically, most PC's have been sold with Windows. But will the change that is happening with Netbooks spill over into the notebook. If it does this would be a real problem for Microsoft. This trend is worth noting as Microsoft does not have any significant new products to replace the revenue lost by a move away from their operating system.
But before we write off Microsoft, there are still a lot of questions to be raised. For example, does Intel really have enough experience with consumer software to support this kind of device? Will PC OEM's move to rival AMD processors because Intel is moving into the PC consumer business?
I believe the first test of this new environment will come when the back to school promotion happen in the summer. Then we will know if there is an acceleration of the move toward netbooks. We will also see if Microsoft lowers its price on the System 7 at the low end of the market.
It could be a very interesting summer indeed.
