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Intel's Dot.station: Why the DOJ Was Right
Intel Enters the Linux Appliance Field
June 22, 2000
The people who thought that the DOJ lawsuit against Microsoft was bad for consumers got a wake-up call today. Intel has announced the "Dot.station" (name sponsored by the Department of Redundancy Department), a Linux-based device that comes with a hard drive, and is mostly intended for Web surfing and e-mail. A home appliance currently slated to cost around $500.
I've seen some analysts speculating that this price is too close to a modern low-end PC, and that for "about as much" a consumer can purchase a PC instead:
PC Data's Baker doesn't think countertop devices offer much to consumers. The Dot.Stations cost about as much as low-end PCs, which also get sold for next-to-nothing through subsidy service contracts. At the same time, either WebTV or AOLTV will be more economical than the Dot.Station.
The prospective market is also fairly small. Close to 60 percent of U.S. households have a computer, he noted.
"You're starting to run out of prospects," he said.
Ok, so let's accept that 60 percent figure. I do, by the way. From my experience, most people that don't have a PC today in that remaining 40 percent don't seem to want the complexity or they simply don't have the cash.
The people in the PC industry that are pointing to these so-called "low-cost" PCs are ignoring the fact that most of those contracts with ISPs heavily subsidize the high cost of the so-called modern personal computer running the Windows operating system. I've noticed a lot of these PCs lately have been coming with MSN (The Microsoft Network, a would-be competitor to AOL) contracts. Not that Microsoft would unfairly use their desktop to compete with anyone, mind you.
In other words, that $500 PC with a 36-month ISP contract down at the local software shack is really a higher cost unit with a lease option for the remaining few hundred dollars. It has a hidden price tag much higher than the one the consumer is seeing.
What that likely means is that the dot.station will be coming out at lower real costs than these PCs. That extra "few hundred dollars" mentioned above is not only going to be lower, it's likely going to cause people to think "hmm, I'd like one of these babies in the living room, and the kitchen as well."
It's possibly going to make the price as low as VCRs used to cost, and a lot of people have VCRs in their living rooms. I speculate about the percentages, but it's likely that this device will make it into more houses than PCs--very likely that remaining 40 percent mentioned above. Possibly bringing Internet services to people who today would have a really hard time affording a typical personal computer or for whom a typical PC is simply too complex.
So, what about consumer harm? Examine the trial testimony, and you will find that Intel was threatened by Microsoft last time it tried something even remotely similar. Intel at the time had an Internet software lab, and was working on products that Microsoft found were too competitive for its taste.
Oh, don't forget, Microsoft at the time wasn't all that concerned about harming consumers by eliminating competition. That only came later when its neck was at stake.
The threat was baffling to some, but obvious to me--if Intel got into the software business, it could commoditize Windows and give consumers more choice in operating systems--potentially, someday, possibly.
My, how times change. Today Intel has announced something that's competing almost directly in the PC space; in fact, other than the name it's very much a desktop PC in small form factor--it even has a hard drive.
I know I've seen other embedded Linux devices that are slated to cost half as much as Intel's unit, with no hard drive at all and that perform similar tasks. It's only a matter of time before devices like that become rather commonplace.
What of embedded Windows? What of PCs competing in this same space? Well, the answer is rather obvious. On a $250-$500 device there's very little room for a $200 O/S that requires an enormous amount of resources to perform. Linux fits the bill for many reasons, and its time has obviously come. This space is going to be huge over the next few years.
Is this new technology? Not really--people have been speculating about it for years and the enabling hardware isn't that far of a stretch from some of the PDAs that are commonplace at the moment. The only roadblocks to this market have been the unfairly positioned interests that are now somewhat curbed thanks to the current legal actions against Microsoft.
One of the greatly parroted misconceptions about the DOJ lawsuit against Microsoft centers around the idea that consumers have not been harmed by Microsoft's monopolistic actions.
As new computing paradigms appear and new markets emerge, all consumers will benefit greatly. We cannot alter history and see the effects to know if consumers were harmed in the past, but the events of today will demonstrate clearly to anyone with a grain of common sense that consumers have been helped by the recent legal actions against Microsoft.