2 Nov 2007 dmarti   » (Master)

Desktop Linux and hardware as ad space

Matthew Aslett covers the irrelevance of desktop Linux.

He has some good points. The problem with breaking into the Microsoft-dominated desktop market is that it's sort of like competing with Soviet-style central planning on the technical side, which is good for Linux, but on the business side it's like competing with FedEx. In order to start a competing service, you'd have to go around to thousands of companies and convince them to let you put a box next to the FedEx one. And until you got enough boxes in enough places, users would complain. The equivalent for desktop Linux is hardware and software compatibility lists.

So far, so bad. But the news behind the latest "desktop Linux this year, honest" buzz is the trend that more and more software vendors no longer matter because most users just use a web browser plus a few little things that are already available on desktop Linux.

That leaves the hardware vendors. There, the story is a little more complicated. Sure, hardware compatibility is a pain, but PC hardware isn't just a product any more. It's also sellable ad space. The biggest example today is in the Microsoft Windows market, where PC vendors earn money bundling "crapware," demo versions of proprietary software.

Today, Everex is leaving money on the table with the gPC by not getting Google to pay for its users' eyeballs. That's not going to last. Next version, and this is just my prediction here, the gPC is likely to get two things: first, PAM integrated with the users' Google accounts, and second, some thanks-for-the-eyeballs money from Google to Everex.

That throws the full might of the online ad auction winner-take-all market share war (there can be only one) into the quiet cash cow pasture of desktop OS pricing.

As soon as Everex has an offer from Google to make the desktop OS into a profit center rather than a cost, Microsoft digs up the old ad-supported Windows idea, starts paying manufacturers to install it, and it's "Step 3. Profit!" for Everex. And the OS is a complementary good to the hardware that Everex puts in the box, so a falling OS price tends to increase the price that Everex pays for parts. More money for the component
vendors, too.

So everyone on the hardware side can make money with desktop Linux without actually selling much of it, as long as it's just good enough that it could potentially satisfy enough users to tip the online ad struggle Google's way. This is why it's important that the gPC isn't just a cheap box that people buy to put a different OS on. Everex needs the numbers on how many users are actually using the thing out of the box in order to get Google and Microsoft to pay attention to the Everex Threat.

Paul Kim from Everex is not going to be on any conference programs as an "Open Source Business Visionary," but his job could be changing, a lot. Get this thing to the point where it will work for the least demanding 5% of users, and in a few years he'll be sending sales reps to call on the OS companies with glossy media kits all about Everex customers' online shopping habits, and making money from the OS companies and from the hardware buyers.

Syndicated 2007-11-02 17:15:06 from dmarti's blog

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