Saturday, November 26, 2005

Why the Xbox 360 and the Web 2.0 are awful news for the retail PC industry

Very low end PCs do a quite adequate job with almost all computer applications, save games. Modern games require a monster machine; even children's games require a relatively decent box. So games have been a major driver of non-laptop retail PC purchases -- and, because of their software quality issues, a major source of pain for parents.

Thurott suggests that this trend will soon end. The Xbox 360 is relatively inexpensive, and, for the first time, the gaming experience exceeds that of even a high end Wintel PC. Consumers will keep their old machines, and buy an Xbox. Good news for Microsoft, very bad news for companies that sell into the home market.

In the old days a new version of Windows would drive PC sales. It's clear that Windows Vista will require a honking machine. But why bother? What does Vista promise the home user that Web 2.0 (Google, Yahoo, etc) apps can't deliver better for less money? Sure there's digital photography, home video, etc -- but for all that OS X is a better bet (and a good Intel OS X laptop may be cheaper than a Vista laptop.) In fact the Xbox 360 is good for Apple; by negating the 'games' advantage PC's have had, it really levels the software playing field.

Good comments from Thurott. If the logic holds expect Dell and HP to experience many more bad moments. Apple should weather this well, while Microsft should do just fine. They'll make their rent money from leasing Vista and Office to businesses, and grow with Xbox for home video and gaming.

It is interesting that, with Xbox, Microsoft is becoming more like Apple. They own the hardware platform and the XBox OS ...

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