Saturday, April 7, 2007

Vista Sags, Flexgo Soars

You're probably thinking the same thing I did when I saw that article in an EETimes magazine from last summer - Flexgo???? What the heck is that??? Is this some new OS MicroSoft is working on that no one knows about yet? Well, yes, sort of.

At a recent Windows Hardware Engineering Conference, a 'new' system concept (FlexGo) for emerging markets from MicroSoft stole the show, while Vista looked like a snoozer. Vista offers a roster of technologically impressive features such as improved security architecture that has earned the OS CableLabs sanctioned access to premium digital cable TV content, and a new photo format that MS claims will replace the JPEG - despite the fact that it has virtually no industry backing so far. However, enthusiasm was far higher for Microsoft's FlexGo concept which borrows heavily from the cell phone industries' business model.

Several years back Microsoft floated the idea of a subscription based Operating System and the public basically gave it a big thumbs down. We in the US and Europe, want to own ALL of our PC, not just the hardware. Well, now they are trying it again from a different angle. Market research shows that in developing countries only 6% of people own PC's but 27% own cell phones - that fact, along with some ethnographic research, has led MS to the concept of subsidizing PC hardware in emerging markets, the way cell phones are subsidized today. FlexGo systems may sell for as little as $250, although they may have a value of $600 or more (These numbers make me wonder - have these guys priced a low cost Dell/Emachines/Gateway system lately?) and the cost difference would be made up in payments over time for internet access. Key to this effort is security, to make sure users don't hack the system to get free Internet access, or remove the components to make a quick profit by selling the system for parts. The FlexGo system would also allow service providers send a Web Services message that would cripple the systems functionality if the user didn't pay his bill.

MicroSoft kicked off a 1,000 system trial in Brazil last year and trials are planned for China, Eastern Europe, India, Mexico, Russia and Vietnam. "FlexGo will be a growth catalyst. We expect every major OEM will be building these PCs for emerging markets," said Will Poole, VP of Client systems for MicroSoft.

I really, REALLY don't like this idea at all. If this idea takes off in emerging markets, MS will certainly pressure Dell and the others to implement FlexGo here in the US and Western Europe. It will be the death knell for the independant PC builder, and the whole aftermarket PC industry.

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