There are rumors that Google will soon unveil their own low-cost Google-branded PC, maybe to be sold at Wal-Mart. The box would, of course, be run on a Google OS, (you know cutting Microsoft out of the deal, blah blah blah).
We have one question: Why?
The answer--because Google is desperate to expand into lower-margin areas--doesn't seem right.
a possible reason:
how much safer is google's market position if they speed the puncturing of their biggest competitor's source of capital: operating systems and the programs that run on them?
Posted by: Wil | January 04, 2006 at 12:13 PM
Two things: First, the PC market may be low margin but the PC operating system market is not. They can outsource much of the low-margin work involved in building the machine (I've heard that google does this now for other devices) and outsource the retailing to Walmart or whomever. If 10-30% of PC users are people like my mother who use the machine only for email and internet access, they could sell a lot of software. (Imagine the promise of a device without functionality you don't understand AND a lower risk of virus infection. Mom would be thrilled).
Second, cutting Microsoft out of the deal is important. Low-end users like my mother, who don't need word/excel and other PC applications still write a check to Microsoft whenever they buy a machine. Microsoft seems to be willing to use this revenue to try to narrow the margins on Google's prime business, even if they lose money for years in the process. It isn't a bad strategic move for Google to deny this revenue to Microsoft.
Posted by: Sestina | January 04, 2006 at 12:20 PM
I think y'all are missing the point. Google wants a low cost PC to get people online to use Google and generate ad revenue. This is the same reason they are working on wireless broadband, people without computers have no ability to generate revenue. They don't want to use the MS operating system because it adds too much to the cost of the computer. If you want to sell a computer for the lowest price then you use freeware to run it. I suspect that Google could care less who supplies the OS as long as it's cheap.
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