The flow is going to slow ...
Gordon's Notes: Squeezed 2009: Netbooks, Android and MicrosoftThe King could go gently into the night, but he's not acting that way.
... what's a Netbook running Chrome and Linux but a calculator in drag? It's fundamentally complete. It's built entirely of plastic, silicon (sand) and a tiny amount of rare metals. All the technology development costs have been fully realized, and there's no vendor with true monopoly control. IP attacks won't work if China and India decide not to cooperate...
... The squeeze has been coming, but in 2009 it's going to be obvious. The price of the personal computer has been doing a Wile E. Coyote -- running on air for 27 years.
This year, gravity is going to kick in. Within another two years we'll see very crappy netbook equivalents being sold for under $75. Maybe they'll be today's netbook, maybe they'll be an iTouch with external display and bluetooth keyboard, maybe they'll be subsidized Chromestellation machines -- but it's going to happen.
This isn't all bad for Intel. The computing must be done. They can sell cheap chips to the netbooks and the phones, and lots of chips to the Cloud...
... but then there's Microsoft and Dell.
For them, this is very bad...
So what can Microsoft do?
They can do this:
- Buy the pipes, which at this time probably means building cheap to free wireless broadband networks in key markets.
- Give away XP. Charge $5 a copy for Netbook manufacturers.
- Buy a slice of Dell and start making Microsoft brand netbooks.
- Create a version of Windows 7 for the Netbook (they've probably already done this) that's tied to Windows Live.
- Become a bank.
- Build a retail/transaction service across 1-5.
That's not a bad business, but it means gutting their existing franchise. That's bloody hard to do.
Bloody hard, but the King is bloody handed ...
Update 1/27/09: I remember where I'd seen the latter part of this business strategy before. It was back in the days when Microsoft Wallet was a part of Windows 3, and MSN was the pre-Internet transaction network.