Attack of the GNU/Linux Ultraportables, Part 2

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As I noted the other day, ultraportables are not only hot, but they've changed the dynamics of the entire desktop sector. With the imminent arrival of the Dell effort in this sector, we've clearly reached a significant milestone, but that doesn't mean that things are going to get boring. Here's what marks the start of phase 2:

Acer announced just before the weekend that it will slash the prices of two netbook models by $50.

The world's fourth largest computer brand said Friday morning that it will cut the price of its Aspire netbook from $399 to $349 and that its Linpus Linux Lite netbook will drop in price from $379 to $329.

This means two things. First, that there is likely to be a full-scale price war in this sector, with many - perhaps most – of the players dropping out as margins drop to wafer-thin levels. That's probably healthy, since the current state resembles the heady early days of the British micro sector, when every man, woman and dog came out with their own model, leading to consumer confusion and market fragmentation. But just as important will be the effect on the relative attractiveness of the GNU/Linux and Windows XP models that are currently on offer.

To see why, consider the figures quoted above. Until today, the GNU/Linux version was $50 cheaper – or, to put it another way – cost 100*379/399 = 95% of the XP model. Today, the same machine still costs $50 less, but the proportion is now 100*329/349 = 94%. That may not seem much, but it's a number that will continue to decline as prices are reduced. Assuming the same price differential is maintained – and it should, since it's determined by the extra cost of Windows – a machine costing $250 for XP and $200 for GNU/Linux gives a percentage of 80%, which is pretty significant.

Clearly, these numbers are only rough indications, but I believe the trend is correct: the cheaper these systems become, the more attractive the GNU/Linux version becomes over the XP one, especially as an impulse buy, or for people looking not to replace their desktops or laptops, but for an incredibly cheap reference device to keep by their side as they watch TV, read a book, or just chat with friends. This is a new market, where a new kind of ultra-portable, ultra-easy, and ultra-ultra-cheap device is required. GNU/Linux ultraportables with ever-smaller price tags look like a perfect fit.