Friday, December 14, 2012

Microsoft, Apple and Intel: Disastrously Confused About the Future

If you've been following Amazon's Best Sellers in Computers & Accessories list this holiday season, you'll have noticed two very unusual things.

First occupying the #1 slot (sometimes falling as low as #5 when it is sold out) is the ARM-based Samsung Chromebook.  The normal retail price is $249 and it is so popular that companies are able to sell it in the $350 range due to limited supply.
3 Ways Chromebooks Will Alter Your Mind - Forbes
Shortage of Google Chromebooks Sparks Christmas Scramble | PAB News

The other odd thing is that the top 20 has consistently had 5 or more sub-$150 Android tablets.  The cheapest I've seen is $69.
7-inch tablets for less than $150? Expect to see more of them in 2013
A Trove of Tablets for Young Hands -

The New York Times article contains an interesting quote (talking about tablets for children):
But who wants to pay $300 for the iPod Touch 5, $329 for an iPad Mini or $400 for the lowest-priced iPad 2?
Well, I'm going to take that a bit further... who want's to pay $499-$829 for an iPad?  Who want's to pay $800-$1200 for an Ultrabook? The simple truth of the matter is that Apple, Microsoft and Intel have people believing that you actually need to be paying this much for systems, and it just isn't true. Perfectly good tablets are available for $400 and less and while a few professionals might need to spend $1,000+ on a laptop, the vast majority of people (especially at home) do not need to spend even $500 on a laptop.  Indeed if you only need to browse the web from your laptop, then get one of those nifty Chromebooks.

The common things between the tablets and the Samsung Chromebook is Google, Linux and ARM.
Google provided the money necessary to get things rolling, Linux is a free operating system that Google used to build Android and ChromeOS upon and ARM is type of computing chips that is different from the Intel/AMD computer chips you are used to buying in PCs and Macs.  Almost all tablets and smart phones today use ARM chips, not Intel chips.  ARM chips cost a lot less than Intel chips.

If you build a tablet or laptop with ARM and Linux, the cost of the Chip is around $20 and the operating systems is free.  In contrast, Microsoft charges computer manufacturers around $50 for Windows and the cheapest Intel "Atom" chips run around $40 for laptops and this chip will be slower than the $20 ARM chip. Intel chips usually cost much more, with the laptops they want you to buy costing in the $200+ range, just for the chip.  Microsoft and Intel are used to making $100+ average per computer that is sold (for Microsoft part of this comes from Microsoft Office sales).  Apple makes much more, essentially being the luxury model of computers.  These prices have been kept artificially high by the parties involved for some years now, but it is clear that is about to end.

Using ARM and Linux one could make a rather nice lightweight laptop for less than $350. It would have a 6 hour battery life.  You would run LibreOffice instead of Microsoft Office. In tablets, Android is the most common option and there are now Android tablets that more than match anything Apple has to offer for less expense (see for example the Nexus 10 - currently sold out).

Judging from Amazon's Best Seller list, consumers are starting to catch on to the world of cheaper computing.

This is very bad news for Apple, Microsoft and Intel.

For Apple, they have had to launch a iPad-mini line and keep around the older iPad 2 line.  The sales of these lesser (but still overpriced) iPads is cannibalizing the sales of the high end iPad.  The article below does not say much about the iPad 2 sales, but on Amazon, the iPad 2 far outsells the iPad mini and the high end iPad.  Sales growth for Apple in general is slowing.
Analyst: iPad, iPhone, Apple to feel squeeze in 2013 | Apple - CNET News

Microsoft... no point covering Windows 8's problems, surely you have heard.
Here is an example of them failing to come to terms with the new world of low-cost computing. The gist of the article is that Surface tablet pricing is intended to maintain Microsoft's usual per PC revenue.
'Perplexing' Surface pricing can be explained, analyst says | Microsoft - CNET News

Intel... I never thought I would see the day that a company would put out a system with more ridiculous pricing than Apple, but Intel has managed it.  Recently Intel announced the NUC line of miniature systems (it is in fact smaller than a Mac mini). You can buy the thunderbolt version at Amazon for $356.83.  Let's compare it to the lowest end Mac-mini, which costs $599.  The Mac-mini contains a processor that is 1.7 times faster than in the Intel NUC. The Intel machine has only USB 2.0 ports, the Mac-mini USB 3.0 ports. The Intel machine is missing many parts, that come with the Mac-mini: 4Gb of RAM, a 500 Gb disk drive, bluetooth, ethernet, wifi, operating system software, a power cord (yes, the NUC comes with a power brick, but no power cord).  In fact, you cannot put a normal disk drive in a NUC, you have to use a special kind of SSD. Nor is it possible to put in more than one kind of networking without using USB connections. In the end, you would spend more on the NUC than on a Mac-mini and still have less of a system. The concept that Intel would charge more for a do-it-yourself system than Apple does for a fully-supported-by-Apple-hand-holding Mac-mini is simply mind blowing.  To add insult to injury, users report that the NUC units overheat.

Intel's new, not yet really shipping in quantity, Clover Trail chip is supposed to be shipping in Windows 8 tablets real soon now. The ARM-based Exynos 5250 chip is faster than Clover Trail (1.4 x or so), it costs about $20. Intel is said to be charging OEMs $40-$45 for the Clover Trail. In a world of sub-$400 tablets, that is a lot.  Between Intel's charge and Microsoft's charge for Windows, is it any wonder why the Windows 8 tablets are so expensive?

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