Arrington Throws Down the Guantlet for a Linux Based Netbook

jzemlin's picture

Michael Arrington over at Techcrunch is throwing down the gauntlet to produce a “dead simple and dirt cheap touch screen web tablet to surf the web. Nothing fancy like the Dell latitude XT, which costs $2,500. Just a Macbook Air-thin touch screen machine that runs Firefox and possibly Skype on top of a Linux kernel. It doesn’t exist today, and as far as we can tell no one is creating one. So let’s design it, build a few and then open source the specs so anyone can create them.” Michael goes on to describe his ideal netbook; quick boot, skype, firefox, google widgets, good wireless connectivity, etc. This is a guy who lives online and wants a lightweight, inexpensive tool to hook up to the internet. Basically Michael is asking people to help build a netbook for people like himself and I believe there are a heck of a lot of people out there that would find this appealing.

The thing that makes his idea so interesting is that the same logic can be used to create devices for people very different than Michael but who still represent a large market. For example, why not create a device for people looking for a healthy lifestyle? Same netbook concept, but allow for interaction with sensors to monitor your heart rate, number of steps you walk in a day, calories burned, etc. Tie it into an online database of calorie information to track how much you eat. Receive customized personal training advice from a web based service that tracks your progress through the device. Between $33 billion and $55 billion is spent annually on weight loss products and services annually in the US alone. A custom branded device built on Linux and tied into online services could be a real winner. How do the folks producing a $200.00 healthy lifestyle netbook make money? Here’s a hint: Weightwatchers online charges $16.95 a month, Gymamerica.com charges $12.99 a month for a personalized fitness program, Jenny Craig charges $15.00 a month for their online service. None of these services would be able to compare with the kind of rich experience based on the user data provided by the this device.

Already thin and healthy? How about a netbook for sports enthusiast? Once again, there is a massive market and the opportunity for a rich experience with the device. The Sports business industry was estimated last year at $213 billion. It is far more than twice the size of the U.S. auto industry and seven times the size of the movie industry. Imagine a notebook where you could keep score on a tablet, have access to all players stats, be able to interact with other sports fans and more. How do you make money? How does ESPN make money? They sell advertising, content, services, etc. Casual gaming, forums for organizing local sports leagues, and more are all subscription based revenue opportunities for this type of device. Who cares how much you make on each net book when the real money comes after the sale.

Why is this all possible? Because for the first time the technology and the market allows an entrepreneur to bring this type of device to market for a relatively low investment. This allows for plenty of experimentation in vertical markets. There are plenty of ODM’s that will build you a netbook these days with short production runs with a very low cost bill of materials. We may not be at the economics that work for a $200 device yet, but we are getting there VERY quickly. In addition, the Linux community has done almost all the software development work building the underlying operating system that can be customized to meet the markets I have described whether it is the Michael Arrington’s of the world, health nuts, or sports enthusiasts. Take the bits from Moblin.org, Ubuntu Mobile, the GNOME mobile project, or OpenMoko and with just a few solid developers you can customize these to any type of user experience. No long development process, no multinational corporations needed, just a bunch of smart, hardworking folks and some inspiration.

The only catch in all this is how to market your product. The sad reality today is that most consumer laptops are Windows based sold through retail sales channels that make money off of extended warranty sales and adware removal services. This sad state of affairs does create opportunity. Simply sell the device elsewhere. First it should be sold as a new category of computing, something found closer to the cell phone section than the PC section of a store. Second, this could be something custom branded to a particular retail experience; the “Macy’s Book” the “Target Back to School Book” the “Major League Baseball Book”, etc.

This market is already starting to percolate and people generally know the requirements. Make it sub $200, give me a long battery life, it needs to be light weight, it needs wireless connectivity, it should play music & videos, it should allow me to check e-mail and surf the web and be tailored to my interests. Last year Asus sold 350000 units in there EeePC netbook in the first three months of their launch. Amazon’s Linux based Kindle product is constantly sold out. IDC is forecasting 172.5 million converged mobile devices by end of 2008 – growing at 24.7% CAGR. The best thing about this for me is that Linux is the leading if not the only answer in this market. Where else do you get the ability to custom brand your product, off the shelf support on almost any hardware architecture, a huge developer pool, cutting edge technology, and zero licensing cost?

I am looking forward to seeing what Michael and his crew come up with. This may just be the Linux desktop business model people have been trying to find. Hopefully we will see startups springing up around this opportunity faster than you can say Web 3.0.