OLPC's Netbook Impact on Laptop PC Industry

   
   
   
   
   

I will list the ways in which OLPC has influenced the target market which probably defines the interest of most readers of OLPC News, the angle from which most bloggers and industry commentators have been talking about the OLPC project for the past 4 years, which is how OLPC technology may affect the rich Western country's PC/Laptop industry.

Said in another way, how OLPC has influenced the whole bunch of adults in rich countries reading Engadget and Gizmodo egoistically thinking: "When can I buy and use this for myself". These are the PC/Laptop industry related developments of the last 4 years that we can thank OLPC for:

1. Windows XP would have been discontinued in 2007 or 2008 as was Microsoft's original plan. Every so often, Microsoft would release a new OS requiring more powerful hardware to even run the same apps, all being one scheme that Microsoft and Intel have been cooperating on for decades, to make it so that consumers would buy a new computer every 2-3 years or so. Wintel and the PC industry really needed Windows Vista to generate a whole lot of new revenues, profits and sale. But OLPC helped stop it and Windows XP is still for sale.

2. The Windows XP licence for netbooks was lowered to $30 per device. Until then, Microsoft had never licensed Windows for less than $60 per unit, even in bulk to OEM manufacturers. Microsoft has even declared that the Windows XP licence was to be only $3 in third world countries. All that thanks to the pressure from Linux OS in netbooks which was kick-started by the OLPC project.

3. Netbooks are selling at a rate of 35 million units per year and represent more than 30% of the notebook market and this share is increasing. It's pretty much indisputable that the whole Netbook market segment happened as a response to the disruptive OLPC project. Intel could simply not let the MIT sell a billion AMD Geode powered laptops.

If it weren't for the artificial restrictions imposed by Intel and Microsoft for the affordable licensing of Intel Atom and Windows XP netbook edition, on screen size, keyboard size, RAM, hard drive space, HDMI output, then the so-called (by Intel) netbook market would have been even much bigger, selling probably twice as many at this point and disrupting the notebook market even further.

Cause who can provide actual bill of material to argue that 12.1" or 13.3" screens, larger keyboards, HDMI output should cost that much more that it should not be allowed to be categorized with the inferior "netbooks"? The fact is Intel and Microsoft are very careful trying to limit the success of the netbooks.

4. Intel's profits shrank 90% between Q4 2007 and Q4 2008. Intel is making much lower profit margins on netbooks than they ever have.

5. Google is now planning the Chrome OS. Educated from the netbooks, the demand from the mass consumer market has now definitely shifted from performance and bloat, towards just asking to have the bare minimum. Google is seeing the convergence of market trends and are as a result building a very optimized OS to boot in 5 seconds and run on $50 ARM powered laptops.

OLPC has thus influenced the mass consumer and geek markets of rich countries in all these ways. But I do think OLPC has still a long way to go in the coming months to influence the industry even more.

OLPC's Future Impact on the PC Industry

The next influences by OLPC on the industry will have to be opening up the Netbook market to X86 alternatives to Intel Atom. With XO-1.5, OLPC is making of VIA a usable alternative to Intel's near monopoly. Competition in the X86 netbook market will help lower prices more rapidly.

In addition, OLPC will need to make ARM Laptops as good as X86 ones for web browsing and basic applications. With XO-1.75, OLPC is going to make the PC/Laptop industry realize that there is an alternative to X86 for full sized keyboard/screen computing.

The ARM alternative is not only about lower power consumption, smaller size and weight, it is most importantly about a different architecture which ARM is licensing to several semi-conductor makers, among Texas Instruments, Qualcomm, Freescale, Marvell, Broadcom, Nvidia, Samsung and others.

All those competitors in the ARM based platform manufacture, means that prices will be lowered even that much faster than with X86, where Intel alone can basically dictate prices regardless of the actual cost of manufacture and regardless of Moore's law, which states that a Laptop cost should nearly be halved every 18 months when keeping it at the same performance and power consumption.

OLPC could demonstrate that an XO can be ARM powered and perform just as well for the basic tasks that XO laptops need to perform.

All these western geek market aspects do matter for the IT based plans for the better education of children, since the OLPC project is all about sourcing those laptops to the children, so prices and market trends obviously do matter for the education aspect of the OLPC project.

This is the first installment of Charbax's two-part response to "What Have We Learned From OLPC? Have your own answer? Submit it as a Guest Post today!

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14 Comments

That is all very nice but at the end of the day nothing much has changed. Microsoft maintains its virtual monopoly at the OS front ( http://marketshare.hitslink.com/os-market-share.aspx?qprid=9&qptimeframe=M&qpsp=107&qpnp=24&qpdt=1&qpct=4 ) and Intel expands in the consumer CPUs ( http://www.cpubenchmark.net/market_share.html ).
The fact that they may have lower profits does not say anything if you do not compare with the other guys...
Regarding XP's survival I would say the Vista's trouble was a considerably more serious contributor.
Now regarding Chrome/ARM as the computer OS/CPU, at the moment they are mostly wish-ware and have a long way before we can tell how far they could go.
So yes, OLPC showed that you may not need 4 cores and 4GB Ram to surf the web but I wouldn't add much more to that, at least for the adult developed world market.
Let's not forget what is really making or breaking the IT market (from computers to video consoles to smart phones) is neither hardware nor the OS, is the "Killer Apps". Hardware/OS is important to the extend that support these Killer Apps.

@mavrothal:
"That is all very nice but at the end of the day nothing much has changed."

Not quite. The netbook market is yet another market where Linux is really available preloaded. And it is a market where the quality differences between MS Windows and Linux are making a real difference, even for non-technical people. See below

And the effects are spilling over. ARM gets a boost as they are better equipped for netbooks and are already inside smartphones. And the likes of Dell are now actually selling Linux systems beyond netbooks.

See:
Linux Is Regaining Netbook Market Share Quickly
By Caitlyn Martin

http://broadcast.oreilly.com/2009/12/linux-regaining-netbook-market.html

"
Despite this ABI Research published some new data last month and the results may surprise you. They place the 2009 market share for Linux on netbooks at 32% with 11 million units preloaded with Linux shipping this year. In an interview with DesktopLinux.com, Jeffrey Orr of ABI makes clear that dual boot machines (i.e.: the Acer Aspire One AOD250-1613) and machines that are purchased with Windows but later have Linux loaded do not count in the 32% number. That number is pure Linux sales. This data confirms comments made first by Jay Pinkert and later by Todd Finch of Dell that one third of their netbooks sales are Linux machines and that there is no higher return rate for Linux systems than there is for ones sold with Windows preloaded.
"

Winter

I wish you are right.
However I'd rather go with data than "analysis". As the article says another "analysis" shows 4% for linux and a 3rd may show something different.
Data shows that Linux-based hits on the web increased by 0.3% the last 2 years and the major part of the 3% decrease in MS-based hits went to Apple (Mac+iPhone), that does not even have a netbook (yet ;).
And let's wait and see few months with Windows 7 before we pop the champagnes.

@mavrothal:
"However I'd rather go with data than "analysis"."

This is a world where the chairman of Asustek apologizes in public for having showed an android device the whole show was drooling over and Intel pays billions for having forced OEMs to kill off rival producers.
http://www.computerworld.com/s/article/9133813/Asustek_puts_Android_netbook_on_ice_for_now

http://www.pcworld.com/businesscenter/article/166016/microsoft_strikes_back_at_linux_netbook_push.html

http://www.upi.com/Business_News/2009/11/12/Intel-to-pay-AMD-125B-settlement/UPI-62311258067396/

The very data you point out were carefully constructed to exclude any channel that might sell Linux preloaded.

Seeing that, I am extremely suspicious about any "data" produced by people with a big stake in the outcome.

Winter

Look, all I'm saying is that if we do not see things in their right dimension we'll never do the right things to change them.

Yes Info outlets can be biased and big companies can influence the results etc, but if you do not believe their data go to your local MegaStore that sells computers for an hour and see what people are buying. If is 33% would be pretty easy to spot...

Again, my point is that if we believe that the world has changed or is changing fast as far as MS/Intel/ICT/Linux is going, we'll just keep doing the same old things.

@mavrothal:
"Look, all I'm saying is that if we do not see things in their right dimension we'll never do the right things to change them. "

You are right, obviously. However, I would like to point out that there is a reason MS and MS-friendly media are falling over themselves pronouncing the death of Linux every other month.

The same for Intel paying billions in settlements for denying customers a choice in products.

The same for a chairman of a computer company apologizing for showing a product everybody wants to buy at a trade show. Then claiming they could not spare developers to build this absolute wanna-have gadget.

Some time ago, I saw some statistics about browsing habits (cannot find the link anymore) that showed that people surfed on IE at work hours, but used Safari and Firefox outside work hours. Clearly showing that people use IE only when forced to do so.

The point being: Big companies ALWAYS play on the herd instincts by telling everybody everywhere that all other people use their products (and no one else, ever, had your problems).

In the same vein, it will pay off to tell the world that people who know what they are doing, as well as their children, use Linux.

“Mom, I can install Ubuntu. I bet I can. Can I try? Can I try?”
http://gnomejournal.org/article/88/the-un-scary-screwdriver

Winter

Winter do you know of any corporation that plays fair and by the book?... Only naive people, over 15, believe that. So you are not telling me anything new.
It is also a mistake to blame the "ignorance"/"herding" of the masses for Linux's stagnation. The masses can quite often recognize a good thing if they see it. Linux does have intrinsic problems, that make it hard for the "masses", that need to be addressed (a long discussion here).
So saying that is someone else's fault or that everything is fine and we are "wining", it just covers the issues.
Heck... I can be a cheerleader too, but I did not realize that this was the point of the post. Was it?...

@mavrothal:
"The masses can quite often recognize a good thing if they see it. Linux does have intrinsic problems, that make it hard for the "masses", that need to be addressed (a long discussion here)."

Indeed. And when these masses try to buy it, its gone. "No demand" I get to hear. I *have* to buy the monopolist offering.

Linux netbooks were very popular by the public, but not by the sales people (no added advertise ware).

The link I gave on netbook market share had several big suppliers giving Linux a 30% share in sales. Not estimates, but official numbers from Dell et al.. But I cannot find a single of these in the shops. Why do shops not sell me a Linux preloaded computer if I ask for it?

We know MS does use "market incentives" to prevent shops from selling competitor products. We know because it has been convicted for this practice on every continent. At a billion dollars a year for over a decade now.

So, yes, every company is staffed with crooks and con (wo)men (sounds ludicrous, doesn't it). But yes, a monopolist can block market entrance of better competitors. Both Intel and MS have been convicted for this time and again.

And I do not whine. I know we are up against criminals who break the law habitually (read the court proceedings, they lied every single time they were questioned under oath). We simply must do our own PR.

In the end, why should we believe the numbers they cook up? Their actions (panic, astroturfing, bought studies, deal with Novel, hemorrhaging developers) all tell us Linux does indeed hurt their bottom line heavily. We should simply use that in PR.

Winter

Before OLPC, Linux share in Laptop/PC market was close to 0 percent. Since OLPC, now Linux marketshare is some percent which is a huge market share jump in terms of %. Even 0% to 2% is significant jump for Linux. Talking about end user and consumer use of Linux devices.

OLPC can help accelerate that further with ARM powered laptops with a full Laptop experience on a Linux based XO 1.75, that could jump Linux share with Chrome OS and Android use on those devices to 50% or more soon. And if that forces Microsoft to release a less bloated more optimized Windows 7 for ARM, then great.

While Microsoft is close to having a monopoly, the fact that they reduced the price to $30 for certain laptops shows that they are really afraid of losing it. Cutting the price in half is obviously a very competitive measure, and Microsoft wouldn't engage in competition if it was assured of holding onto its monopoly. Keeping prices high, after all, is the whole point of having a monopoly.

I'd say we learned that you can't just stop with hardware distribution. Successful tech in education needs to come with coordinated efforts to supply teaching materials, strong teacher training operations, software development in local languages and infrastructure assistance. Having spoken with educators in W Africa, they were enthusiastic and interested in the concept but asked "Ok, so we get the laptops. Then what?" It's not just bringing in the laptops. It's hanging around for the next few years and helping them get on it. OLPC itself doesn't have to do this, but someone does.

Linux based net-books were/are almost impossible to get here. I know a number of Linux geeks who wanted one, but they were not available. Being geeks they swallowed their pride, bought machines with windows and installed Linux.

Asus started the Netbook industry.

I'd say we learned that you can't just stop with hardware distribution. Successful tech in education needs to come with coordinated efforts to supply teaching materials, strong teacher training operations, software development in local languages and infrastructure assistance. Having spoken with educators in W Africa, they were enthusiastic and interested in the concept but asked "Ok, so we get the laptops. Then what?" It's not just bringing in the laptops. It's hanging around for the next few years and helping them get on it. OLPC itself doesn't have to do this, but someone does.

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