An interesting story on National Public Radio this morning:
Lindows is a new computer operating system that’s being sold with PC’s for under $300. Its main selling point is its “click and run” application that allows users to easily download software. Although Microsoft and computer industry experts don’t think Lindows and Windows are competing for the same market, Microsoft has taken Lindows to court complaining the names are far too similar. A judge has allowed it for now, pending a trial next year.
Lindows has been developed using the open-source Linux operating system by Michael Robertson, the entrepreneur who was behind mp3.com. He has paired with Wal-Mart to offer $300 personal computers with Lindows installed. The consumer goes home, fires up the computer, and can go to a site to download three free applications (i.e., spreadsheet, word processor, presentation program) that are Microsoft-compatible and are in a user-friendly graphical interface (GUI). The business model is that access to the software and upgrades comes with an annual subscription of $99. Robertson said that the interface is so simple that his 4-year old son, who can’t read, can successfully download games and fire them up. The story does point out that the binding constraint on the success of this business model is the download speed for such software, given the 20% penetration of broadband. Another commentator in the story said that he doubts that Wal-Mart shoppers are the people who actively want operating system alternatives to Windows. Not only do I find this statement somewhat arrogant and condescending to Wal-Mart shoppers, who don’t need to follow USDOJ v. Microsoft to know that Microsoft is everywhere, but it totally misses the point of where the value proposition is here for consumers, and how essential that proposition is to Schumpeter’s perennial gale of creative destruction that keeps competitive pressure on companies like Microsoft. By partnering with Wal-Mart, whose business model has been the retailing sector’s “killer app” for the past decade, and offering customers a low-price, user friendly product, customers don’t have to think about or care about whose operating system it is, as long as the applications are interoperable and the entire integrated product works.
This is the beauty of entrepreneurship and the dynamic ways that market processes help unleash human ingeneuity. $300 computers at Wal-Mart. Life is so good.