Business Blog: Hoover’s Business Insight Zone

Charlie Stross, über-smart science fiction writer of instant classics like Accelerando, offers some intemperate but highly germane thoughts about one possible future for the PC business:

. . . For too long, the software and CPU giants had been treating the PC market as a cash cow, with a natural floor on the price of the product; the [One Laptop Per Child Project's] XO-1 proved that they were overcharging grossly. Intel’s reaction was the Classmate reference design, their own purported rival to the XO-1; the Asus Eee is what you get when a large far eastern OEM thinks “hang on, can we commoditize this and sell it in bulk?” Microsoft, incidentally, failed to make it onto the Eee bandwagon because they wanted $40 for a Windows XP license — on a machine that starts at $250 for the stripped-down version. Mine runs Linux perfectly well, thank you, and comes with the basic stuff you need to be productive; OpenOffice, Thunderbird for email, Firefox as a web browser, and some other gadgets (like Skype and a webcam).

The Eee isn’t an order of magnitude cheaper than a normal laptop but it is close to an order of magnitude cheaper than previous ultra-lightweight subnotebooks. And I think I’m going to use it as a pointer to a future trend in the computer business, at the low end. The Eee is about 8 times as powerful as that 1998 Omnibook, at a quarter the price. That’s an improvement of half an order of magnitude in one direction and close to a full order in the other. And it’s a tipping point, I think, showing that the price points that have defined the goal posts for the personal computer business aren’t set in stone.

The dirty little fact everybody in the consumer computer trade have been trying to ignore — Dell, HP, Microsoft, Intel, AMD, Apple, all of them — is that the computer biz is overdue for commoditization. There is no intrinsic reason why a kilogram of plastic and metal with a couple of silicon chips in it should sell for more than its weight in silver. . . .

Very much worth a read, on two levels: 1. The specifics of potential PC commoditization. 2. To remind us that existing ways of doing business aren’t set in stone. We humans have these neurological quirks that get us down; one of them is that we tend to take the status quo as a given until something comes along to upset it, or unless we specifically think our way around it. Asus is doing that now with the Eee subnotebook; Johnathan Goodwin would do that to the stick-in-the-mud ways of the automotive industry (not just moribund Detroit, but all major car makers).

It usually seems like things must be the way they are only until someone — an inventor, a company, an organization, whoever — helps us to remove the scales from our eyes.