Windows Decline – Success for the Linux PC
If you pick apart the recent set of Microsoft results (Q1/08) you discover that sales of Microsoft Windows fell by 24% (from $5.3 billion to $4 billion). When the PC market worldwide is growing at 12%, a collapse of 24% sounds disastrous, but those figures provide a distorted view. The $5.3 billion figure from a year ago included $1.2 billion of presales prior to Vista’s release, which actually took place in the previous quarter. So it is more accurate to view it as a revenue decline from $4.1 billion to $4 billion (2.4%) in a market that’s growing at around 12%.
Clearly Vista has not been a success (see 10 Reasons Why Vista Is A Disaster). It never provoked much immediate growth in PC sales when it was released, as previous releases of Windows did, and it isn’t particularly appealing to customers now that a year has passed. Aside from this, the decline is Windows revenues is caused by a combination of 4 factors:
- Microsoft is probably discounting Windows in some markets.
- There is an increase in the level of Windows piracy.
- The growth in the sales of Apple’s OS X – it now accounts for about 3.5% of the market as a whole and 6.6% of the US market. OS X is currently growing at 51% by units.
- Growth in the sale of Linux PCs – but no-one’s sure how much….
Linux in the PC Market
Linux PC market share and growth is difficult to gauge at the best of times. I’m not aware of any analyst company measuring units shipped directly, but I believe that the growth has now become significant. Figures from W3Counter.com, which counts by measuring Internet usage, indicate that Linux has undergone 61.6% growth since May of 2007 (from 1.25% to 2.01% of Internet users in March of 2008). This is a poor way of measuring numbers of users, but nevertheless there is no other explanation for the growth other than: Linux PCs are selling. Here are some other “straws in the wind”:
- The One Laptop Per Child (OLPC) initiative delivered over 200,000 Linux laptops to users, mostly children around the world last year.
- Asus has clearly had success with its Eee Linux PC. It is predicting it will sell 2 million of its Eee Linux PCs in 2008. The Eee PC has appeared at the top or near the top of the Amazon bestselling computer list for quite a while now. It is also sold by Best Buy.
- Sears now sells the Linspire Mirus PC, with Linux loaded.
- Wal Mart sells the Everex PC with the gOS version of Linux loaded.
- Both Dell and Lenovo now supply Linux laptops and PCs, and HP is expected to join them.
In the posting Has Linux Finally Broken Through? I suggested a number of things that needed to happen before the Linux PC could gain traction and most of them have now happened.
Linux has become a disruptive influence that is provoking innovation. Linux rather than Windows defined the category of the low cost laptop. The OLPC initiated this, but this in turn motivated Asus and now there’s a product category called “low cost Linux Laptop.”
Differentiation in the PC Market
Apple has smashed the homogeneity of the PC market with the success of the iMac and now its competitors are worrying about how to compete. In this they are no different to the vendors of mobile phones responding to the success of the iPhone – except for one thing. The ability of PC vendors to compete with the iMac is paralyzed by Windows. Right now PCs all run Vista, and they all live in little boxes and they all look just the same.
Vendors don’t have to be constrained in that way if they load Linux and it’s clear that some of them choose not to be constrained. Everex has just released a very differentiated Linux PC; the MyMiniPC. It’s offered as a “limited edition MySpace PC”. It runs the gOS (Good OS) version of Linux and the whole desktop environment is designed for MySpace users. You could think of it as a “MySpace appliance.”
There’s no reason not to produce similar PCs tailored to FaceBook users or eBay fanatics or surfer/shoppers or news junkies or some combination of these. In time there will be well crafted Office Linux PCs and Media Linux PCs.
With Linux, PC vendors can differentiate and given the dramatic growth in Mac sales, they surely will. They’re going to need some edge as they set out to kill the great white whale.
The idea of a PC oriented around one service, FaceBook, MySpace, etc, is pretty interesting. I wonder if anyone has thought of something akin to skins to achieve this. Such an approach would cope with the phrenomenon my colleague David Tebbutt talks about of social media audiences herding from one service to another. So, you might buy the MySpace version of the PC initially, then when you get bored or all of your friends have migrated to FaceBook, then you just download the FaceBook skin (new set of widgets, config, etc) and away you go.
I had an interesting experience when I took my 10 year old daughter to PC World to choose a laptop. We were looking across the various machines and she it was clear she was choosing on two things – whether it had an in built webcam (video is pretty important to kids nowadays) and what it looked like. The comment “Don’t like that one because it looks like Dad’s” was made when I pointed out a couple of machines that I thought would be good from a price/spec/size perspective (my criteria). Then, after looking thoughtfully at a pink PC with no camera, she moved along and said, in a very definate tone, “I want that one”. And the reason? It had the in built webcam (check) but also had interchangeable covers so you could personalise the lid. There were lots to choose from with various designs, and even one that allowed you to display your own photo or graphic.
Anyway, I have no idea how well these personalisable PCs sell, but the concept was a hit in my sample of one, and extending the idea to software config, look and feel sounds quite interesting, so I think you are onto something there when you highlight that all Vista machines tend to look the same.
And that’s the whole point, I guess. While to some users (like myself) there may be fundamental usage differences between the Mac and Vista, to many users the difference may be so small that it doesn’t matter – given how they use the PC. In that instance “skins” (both around the screen and on the screen) become the deciding point. Most people would agree that Apple has the preferred skin right now – but until Everex moved in, it was the only company with an alternative.
Note that this is a consumer differentiation and has nothing to do with the business market and also note that ring tones is a $billion business.