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A New PC OEM, a Tired Business Model

French startup Jolicloud is launching a netbook that it says offers {complink 2657|Intel Corp.}'s Atom dual-core n550 in a box that retails for less than competing PCs. The netbook is cheaper because it does not run Windows as its operating system, which Jolicloud has replaced with a very elegant-looking Linux-based OS that offers free access to more than 750 office, multimedia, and other applications.

The netbook meets what Jolicloud (which means “pretty cloud” when translated directly from French) sees as pent-up demand for a PC that performs the tasks of what the vast majority of computer users need, for a much lower cost. The company’s CEO and founder, Tariq Krim, says PC software is needlessly expensive. Jolicloud hopes to offer an alternative to Windows and {complink 3426|Microsoft Corp.}'s Office applications, which are largely responsible for inflated PC prices (although Krim did not come out and say this).

Krim summed it up this way in an email: “We believe that people should either buy cheap computers or recycle their existing [systems] with Jolicloud. The expensive PC model with software will be replaced by a cloud-centric and cheaper model.”

To put Jolicloud’s netbook in context, Windows PCs have offered merely incremental improvements, at best, in performance for several years for word processing, spreadsheets, Internet access (which Microsoft continues to dominate, of course), and other PC apps. It is possible to spend a lot of money on high-speed CPUs with multiple cores and the latest version of Windows, but how much does computing experience change when using cheaper PCs to draft an email or surf the Web?

Jolicloud is certainly not the first OEM to offer a non-Windows PC alternative for a cheaper price. {complink 500|AsusTek Computer Inc.}'s Eee initially generated a lot of excitement with its Linux distribution, solid-state drive, and low price of just a few hundred dollars when it launched in 2007. Since then, {complink 38|Acer Inc.}, {complink 9284|Lenovo Group Ltd.}, and even {complink 1544|Dell Inc.} have also begun to offer inexpensive laptops or netbooks with low-power Atom processors that often come without Windows. But as Microsoft maintains its legally disputed monopoly for PC operating systems, non-Windows alternatives have failed to catch on. According to Net Applications, Windows machines still dominate the sector with over 90 percent of the total PC market share, while the Mac OS accounts for most of the rest.

So where does that leave Jolicloud? The launch has generated a fair amount of interest in the press, with coverage by EBN’s sister site InformationWeek.com, The Wall Street Journal, PCWorld.com, and The Inquirer. The French firm’s VC seed money comes from {complink 6979|Mangrove Capital Partners}, a Skype investor, and {complink 12501|Atomico Ventures}, which is headed by Skype founder Niklas Zennström, who obviously must think Jolicloud has a fighting chance. But the netbook is only available in the UK for £279.99 (US$371), with no immediate plans for it to see distribution anywhere else.

Meanwhile, the PC sector continues to muddle along with very few real improvements in performance, although Jolicloud and others are at least attempting to accelerate the downward pricing curve. But how long it will be before the PC business model dies as we know it and is replaced with something really exciting for personal computing applications is anybody’s guess.

9 comments on “A New PC OEM, a Tired Business Model

  1. DBertke
    December 9, 2010

    I wonder how many people have realized that the 'CLOUD' is basically the 1960's IBM business model?  I understand that the younger generation has no memory of the Big Mainframe era, but that is essentially where the CLOUD is taking us.

    As for a Linix based PC, I think they will remain a small fringe aspect for the average user.  Even with a good Windows Like shell, few people are brave enough to step out of the mainstream to enter into the Linix world.  Yes, very good technical people can appreciate the efficiency in Linix verses Windows, but if I am going to write an application, I am going to work on something that can instantly be used by hundreds of millions of Windows based PC's.

    As for PC's being a tired business model, it still fills the needs of most people, especially the cautious and paranoid, for local computing on their data without worry that it could be stolen by others.  I understand that the CLOUD is promising safety and security, but you will excuse me if I yawn.  I have heard it all before.

    I will concede that with the saturation of the PC market and the rise of the Tablet generation, I think the PC market has probably peaked.  For most people, they need something small to communicate with and access information world wide.  The Tablet model does just that, so it will eat into the PC market very quickly, especially in the emerging markets where an established PC presence does not exist.

    DAB

     

  2. stochastic excursion
    December 9, 2010

    Seems like the market for PC's could split up.  The users who traditionally preferred the PC over the Mac for its customizability and open architecture may tend toward Linux.  Especially as Linux becomes more user-friendly, the benefits of the open-source software model make sense for technically inclined users.

    Users who prefer their computing platform to be more “automagic” are likely to subscribe to the cloud model with thin clients (i.e. tablets).

  3. SP
    December 9, 2010

    The price is competitive. But Linux OS, not sure how many users would go for it. Almost all applications are designed keeping Windows or MAC in mind. Its a brave move to swim against the tide.

  4. AnalyzeThis
    December 9, 2010

    I doubt I'll ever read about Jolicloud again… what I think has far more potential is Google's Netbook, which is currently in a pilot program.

    Somewhat similar concept, just with a far more powerful company behind it.

    Anyhow, you can find more about the Google project here. You can even apply to test it out, if you're feeling lucky.

  5. t.alex
    December 9, 2010

    I would say lots of people won't mind using a Linux-based OS (remember Android is also a linux-based OS), given the rapid improvement in user-friendliness in the past few years. However, low-cost netbooks are dying fast nowadays, as hardly any of them are making differences from the others.

    Given the strong waves of tablets, netbooks will have a hard time.

  6. itguyphil
    December 11, 2010

    SP,

    Most users have a comfort level and apart from a major pain, ($$$ or failures), they will not deviate from what they know. Most will not venture to try a completely different OS just for the sake of something new. Do you know how many people are still running XP??? It's astounding with the new ne OSs that have been released since then.

  7. elctrnx_lyf
    December 12, 2010

    I personally like the open source software since it reduces the cost of the any computing device that needs an OS. My strong opinion is that the PC business model is definitely moving in a right direction since the users who don’t really need the computational power of the high priced OS can ignore those PC’s. The net book market will serve many number of users compared to the traditional computers that we have been using for the long time now. There will be two distinct computers, one is net book, which will be replace low-end computers, and leaving the traditional PC’s for the customers who really unleash the high end graphics and accelerated application processing.

  8. itguyphil
    December 12, 2010

    And it's always good to have options. I think there is even separation in the latter PC user category. Even within the power users, you have a good range to choose from when it comes to performance of the system from low-cost functioning machine to the high-end workstation.

  9. prabhakar_deosthali
    January 29, 2011

    The open source Linux based PC are good for corporates where a huge savings in license costs can be achieved . In todays “Windows world” , corporates have to cough up large sums of money every year for thousands of their PC as Windows OS and MS other products licensing costs. Many of the corporates try to save this money by loading pirated  software ( especially in developing countries like India). Such software is prone to virus attacks and in turn indrectly there is a huge loss of man-days because of data corruption and PC down time.

     

    In my opinion as far as corporates are concerned there is no alternative to desktops in  coming years

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