Cheap laptops will drive growth of web and cloud

The NY Times has a great article today about the impact of $200 laptops on the IT industry.

The first, and most obvious point is that they are bad news for desktop software companies like Microsoft.  These laptops achieve their pricepoint by running open source software and cutting down on local processing power.  And MSFT is already feeling the heat – they recently had their first big work force reduction and sales of Windows fell for the first time in history in Q42008.

High end chip companies are also feeling the pain, with Intel’s revenue down 23% last quarter, the steepest decline since 1985.

We are witnessing the commoditisation of much of traditional IT.

But as I’ve said before, this is a cycle.  In the words of the NYT:

This has happened before. The dot-com bust earlier in the decade dragged down high-fliers like Sun Microsystems and America Online but set the stage for a new generation of Web powerhouses like Google and other innovative Internet software companies like Salesforce.com, founded on disrupting the status quo.

The recession of the early 1990s sent I.B.M., then the dominant force in technology, into a five-year tailspin. But it also propelled Microsoft and Compaq, later acquired by Hewlett-Packard, and Dell to the forefront of computing.

As I’ve been writing about a bit recently, one area that I think has potential is shared data services.  As the cost of computing comes down, so more people will use it, but they will be using hosted apps leading to the creation of lots of data that is ripe for sharing and a source of huge potential value creation.

  • Nic – I think the smartphone/cheap laptop fight is going to get very interesting now. If you look at low internet penetration of large developing countries, this makes for a major gamechanger

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  • I agree as cheap laptops means more usuage in developing countries.The growth on the web will not necessarily have much to do with cheap laptops.By cloud do you mean the online space – networking – that will grow independent of laptop prices..Thanks for sharing. Michelle

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  • Todd_Bida

    For those who will be in Boston later this month, the Massachusetts Technology Leadership Council's annual meeting might be of additional interest on this topic. From their agenda:

    Cloud Computing: The Game Changing Disruptive Technology Driving Innovation and Capital Efficiency
    With the advent of cloud computing, the cost of computation, application hosting, and content storage and delivery is plummeting and entrepreneurial opportunities abound. This disruptive technology has moved past its infancy and established itself as a game changing resource for small medium, and large sized enterprise. At the Council's 2009 Annual Meeting an interactive panel of thought leaders representing the cloud OS platforms of the future and leading edge next generation applications will explore the opportunities cloud computing presents for those willing to lead the way.

    John Landry, Founder and Managing Director, Lead Dog Ventures (moderator)

    Cloud OS Platforms
    · Mike Fienberg, Senior Vice President, Cloud Infrastructure Group, EMC
    · Dave Mitchell, Director of Strategy and Emerging Business in ISV & Developer Relations, IBM
    · Jinesh Varia, Web Services Evangelist, Amazon
    · Plus executives from Google & Microsoft

    New Cloud Applications
    · Larry Bohn, Managing Director, General Catalyst
    · Steve Clifton, Co-founder and CEO, Animoto
    · George Nichols, President and CEO, Sonian
    · Nicos Vekiarides, CEO, TwinStrata

    Wednesday, February 25, 2009
    Program: 8:30-11:30am
    Registration: 7:45am
    Westin Waltham, 70 Third Avenue, Waltham, MA
    Non-members may attend by also registering via their website: http://annualmeeting090225.eventbrite.com/

    Thanks for calling-out this NY Times article Nic. I would have missed it otherwise.
    Cloud computing is clearly one of the trends profoundly altering the decades-old 'more, bigger, faster' desktop horsepower race.
    Todd Bida

  • Thanks Tony. Very interesting.

  • I think that this trend may have a profound effect on PC gaming, as the PC shifts from being the post powerful gaming platform to one of the less powerful (t least at the economically-attractive lowest common denominator level)

    This will drive the continued growth of browser-based games such as those run by Jagex, Bigpoint and GameForge, and the continued interest from VCs in investing in these businesses.

    I've put more detail around these thoughts at http://www.gamesbrief.com/2009/01/the-pc-is-dea

  • tony

    I bought my cheap laptop from http://www.laptopbids.co.uk and the delivery was quickly and safe

  • one area that I think has potential is shared data services. As the cost of computing comes down,

  • I think that this trend may have a profound effect on PC gaming, as the PC shifts from being the post powerful gaming platform

  • Nic – I think the smartphone/cheap laptop fight is going to get very interesting now. I agree as cheap laptops means more usuage in developing countries.

  • tony

    I bought my cheap laptop from http://www.laptopbids.co.uk and the delivery was quickly and safe

  • one area that I think has potential is shared data services. As the cost of computing comes down,

  • I think that this trend may have a profound effect on PC gaming, as the PC shifts from being the post powerful gaming platform

  • Nic – I think the smartphone/cheap laptop fight is going to get very interesting now. I agree as cheap laptops means more usuage in developing countries.

  • Anonymous

    thanks for sharing this great information.