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.