|By Mark R. Hinkle||
|April 20, 2006 08:00 AM EDT||
The benefits of commodity hardware are well known. Competition among memory, storage, and chip providers has benefited the consumer and driven down PC prices. My belief is that the next big "open opportunity" is for the Open Source commodity laptop. The consumer would be rewarded by applying to hardware, specifically laptops, the same principles that have made Open Source software a success. Desktop PCs are fairly easy to repair and your local electronics superstore likely has all the parts to repair them. There are also plenty of local repair shops competing to fix them. This isn't the case with laptops. As laptop sales surpass desktops, I believe there's growing demand for local vendors to not only sell but fully service laptops on-site.
Even though laptop parts are fairly common (storage and RAM can be bought locally), every chassis is different. This is contrary to the desktop PC where there are common form factors including ATX, MicroATX, FlexATX, and BTX. The same goes for power supplies. When it comes to laptops that's simply not the case; batteries vary by model as do screens and keyboards. Parts are usually available only from the manufacturer. What happens five years later when the laptop is no longer produced? You're stuck with a disposable product that is fixed into a short-term lifecycle.
If you're a Windows user, you could be forced into paying for an operating system as well since the license is probably not transferable to the new machine even if you want to move the hard drive (check your Windows end-user license agreement to be sure). It's an expensive perpetual upgrade cycle.
I mentioned this idea to a colleague who got very excited about this prospect of an open laptop. He then turned a critical eye towards me and asked, if this idea had merit, wouldn't this commoditization apply to automobiles? His question was, "Why did we have so many models of automobiles and not just one that could be customized?" My less-than-quick reply was, "The automobile market is more efficient with lots of competition, and due to a certain level of standardization we have many sources of parts and service. There is even an ecosystem of customizers who can and do alter the base model. I don't have those same options for my laptop."
That's the benefit I want. To buy all laptop parts locally or have them serviced at my local PC repair shop. My experience has been that most laptops require shipment to a repair facility; on-site repairs are only available under costly service contracts. If you could get your parts locally you could save transit time and lost productivity. You could also upgrade more easily since the parts would no longer be limited to a single laptop model. When your laptop gets banged up, you could cost-effectively buy a standard laptop form factor shell and migrate parts from one to another at no additional costs. Consider the time saved just moving the hard drive to the updated chassis rather than doing a full-on data migration.
Open hardware isn't an unheard of idea. Sun has open sourced its UltraSparc T1 chip. Samsung has done the same with its OneNAND embedded memory. What does that mean to vendor and consumer? I believe the potential is there for other manufacturers to fabricate these chips as alternatives to Sun's contracted suppliers and introduce competition into the market. Sun would welcome other vendors selling the chip to give it multiple suppliers. In turn it would realize the benefits from increased competition and redundancy in its supply chain and be able to pass savings on to the consumer (the cynic in me might think differently but it sounds good in theory). Sun would still make a profit supporting and selling software for this commoditized hardware, as Microsoft does on Intel and AMD chips.
If you advance this idea one step forward, consider a laptop builder who did the same for a standard laptop design, giving the specs for power supplies, compatible motherboards, and other details that entrepreneurially minded components makers could produce. In the beginning they might make the whole laptop, a baseline model ripe for upgrades; others could join the supply chain. Each one could provide its own value-added services. For example, one vendor could specialize in making cool neon colors or titanium cases. Another could focus solely on designing power supplies that reduce the amount of heat generated. Battery companies could innovate around battery life. The result would be innovation driven by competition.
Back to my entrepreneurially minded friend, who asks, "Why would a company do this and how would it make money?" I think if you wanted to enter the laptop market and compete with Dell, Gateway, HP, and Lenovo, you'd need a lot of capital. But if you formed a co-op of sorts you could compete at that level rather quickly by distributing the capital outlay among the ecosystem, or over time it would evolve, as would the breadth and options of your product with each vendor focusing specifically on its own value-added service. Maybe it's assembly, high-end upgrades, or technical support (driver development and other services). Developing technology products can be very difficult to do well on all fronts. If you could focus on one area that would make you competitive, the end product would be better, also the laptop designers could focus on their core competency. AOpen does this to some degree already with its white box line and would be a logical company to take the concept one step further.
iGo (www.igo.com), a mobility electronics supplier, has recognized the need for competition. iGo makes mobile chargers and external batteries that connect everything from notebooks and MP3 players to mobile phones. However, it offers some interesting enhancements including modular tips to fit different models and types of electronic devices. It also addresses the different power source needs of the mobile computer by offering adapters that can draw power from standard outlets, airplanes, and automobiles. This is somewhat innovative since now you can get more use out of your charger. Actually its usable life can outlast your laptop's since it offers iTips that connect to present as well as future devices.
Besides flexibility, another benefit of an open laptop should be quality of service. In the desktop PC market, IDC's 2002 report showed that white box vendors accounted for 58% of total worldwide PC sales. With the shift from desktop to laptop, it would seem that same opportunity could and should be addressed by "whitelap" vendors. Since the parts would be more widely available, smaller service shops could specialize in servicing this new breed of laptop. Supply chains could be established in the same way as they are for RAM and storage. Also, since there would be fewer barriers to entry, these vendors could compete on service, including premium support that lives up to its billing. Repairs could be made at a local level by professionals that you have a relationship with, not a call center employee in another country. You would also have a choice not only in hardware but software where the market demand would drive operating system choices, not deals between mega-vendors. A Linux laptop could be an option that doesn't penalize vendors who are obligated to pay a fee for every machine shipped.
Even in the era of the open laptop I wouldn't say that there would be no place for the Dells of the world, in fact with their huge buying power they will probably be able to compete on price indefinitely. In fact they would likely have the same place as Wal-Mart does in household goods where its buying power and logistical efficiency allows it to be a price leader. That's where the advantage would end, however. I believe as we become more dependent on our PCs, as I am, this market would be better serviced by the local vendor who is paid for his expertise and for reselling replacement parts. I will welcome the day when I can buy my laptop from someone that I can develop a personal relationship with and can address my needs completely and locally. How about you?
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