Slide # 39 : XO Laptop needs Windows

XO Laptop needs Windows - News Story

Which is presumably why Microsoft is now making Windows available on those Intel Classbooks for $3, with Office thrown in - and as part of it's "partnership" with OLPC is saying the XO should also run Windows. They believe that slim as the margins are in the under-$200 appliance market, they have to be in it, because it soon may be most of the market.

But I really don't see how they can manage the same kind of company in that environment. Their expected $50 per box is not going to work in the under $200 world. Under $5, maybe - and only if they deliver something the free software can't. With so many new customers piling in so quickly, customers who've never used any PC before, the old lock-in may not apply. Even if it has some effect, more than $5 is very hard to see. And that's gross - distribution costs would leave less room for profit.

So I believe that the under-$200 world is going to be as hard on Microsoft and similar software companies. Remember the transition from $100,000 very custom software for workstations and minicomputers towards shrinkwrap software under-$500on PCs? That was terminally hard on many software companies, and it will be like that.

In conclusion, sell your Microsoft stock now. And use it to buy a cheap little laptop - they're a hoot.