GNU/Linux Is Catching Fire On The Desktop, But It’s Not Your Daddy’s GNU/Linux

Despite nearly 20 years of enduring FUD and mud-slinging and astroturfing, GNU/Linux is finally taking off on the desktop.“Consumers are hungry for a product that is cost effective but also provides the versatility and functionality of a laptop. The growth of the Chromebook market demonstrates a niche that is gaining traction among consumers.” What M$ feared ~1997 has come true, the world is finally seeing the price of Wintel. Bill Gates’ vision was to hide the price with the OEM so the consumer would not be able to comparison-shop and would not know the true cost. That was then. Now, low-end PCs are ~$100 with no room left for a hair-drying CPU from Intel and a licence from M$.

While the shares of page-views due to ChromeOS recorded by StatCounter are still small, Chromebooks are still not sold everywhere and the installed base of legacy PCs is ~1500 million units. While the base is modest for Chromebooks, at ~100% growth of shipments per annum, it won’t take long to make a big dent.

GNU/Linux
Chrome OS


If we thought your Dad’s GNU/Linux desktop was a threat to Wintel, ChromeOS is Armageddon. It took a decade for Wintel to ship as many PCs as ChromeOS is shipping in one year and it’s still just starting out. Wintel’s huge installed base is only 6-8 years’ production… Further, it’s not just about price. Consumers and businesses don’t want to be IT people. M$ forced that on them. With ChromeOS, folks will have the freedom they’ve been enjoying on their smartphones on their desktops.

See Chromebook shipments leap by 67 percent.

About Robert Pogson

I am a retired teacher in Canada. I taught in the subject areas where I have worked for almost forty years: maths, physics, chemistry and computers. I love hunting, fishing, picking berries and mushrooms, too.
This entry was posted in technology and tagged , , , , , , , . Bookmark the permalink.

31 Responses to GNU/Linux Is Catching Fire On The Desktop, But It’s Not Your Daddy’s GNU/Linux

  1. Joe.M wrote, “their profits are going down so what other choice they have”.

    M$ has so much cash and so much other revenue they can probably take a huge cut in client licensing for years and still carry on. The cuts in staff are just window-dressing to reassure investors that M$ has control. Whatever happens, M$ will try to put the brakes on so as not to alarm investors.

  2. Joe.M says:

    M$ have to fire tens of thousands of employees to keep their costs down, their profits are going down so what other choice they have.

  3. DrLoser wrote, ” those restructuring charges?… Explain to us all how they could possibly affect the earnings per share next year?”

    Well, if they restructure next year and the year after that trying to keep the monopoly relevant… Look how much restructuring they’ve done recently. What’s this? The second round of lay-offs? Then there was a big writeoff. Also, every second release has struggled at the pumps. Things just aren’t going well for a monopolist like M$.

    One of the things that is going well is that other OS on servers and that other OS on desktops in business. While many believe that lock-in is solid, I think that there’s a growing recognition of how much of a burden M$ is. Folks are looking for the exits, like XP to GNU/Linux or XP to Android/Linux or thin clients or ChromeBooks… The consumers space has lost ground for M$ for two years now. They are back to revenues they had (Gross revenue for client licensing, $4billion per quarter) around 2008.

  4. DrLoser says:

    I hereby correct myself. Return on equity, not return on investment.

    By which measure, Google is sailing along at 26.17%.

    Pretty good for a company that strives for a monopoly on advertising and doesn’t really have to work for a living.

    Remind you of any other bête noir in particular, Robert?

    Oh, wait, you personally do not have to pay for advertising.

    Then again, you don’t actually pay a dime towards Microsoft’s “illegal” profits, do you?

    Some beef, that. Very principled.

  5. DrLoser says:

    (Nice joke, ram.)

    If only the Matrix had run on Linux. I’m pretty sure the machines would have won, what with Heartbleed and Shellshock and so on.

    But that’s not fair to you. I don’t, really, believe that the machines are out to get us.

    Not me.

    I believe that idiots are out to get us. And, just as with the first two instalments of the Matrix trilogy, they seem to think that they’re winning.

  6. DrLoser says:

    Oh dear, what a hostage to fortune that was.

    Apple has a ROE of 31.56%.

    And we all know how much you love Apple, Robert.

    Google is bumping along at 14.18%, no doubt because of their somewhat inflated stock price.

    Must try harder, Google. Anywhere between 10% and 30% ROI is considered investment grade, but let’s be honest …

    … this is just not good enough, is it?

  7. DrLoser says:

    M$’s earnings per share was not 65₵ but 55₵, down 8₵ from last year.

    Excluding restructuring charges. Otherwise, 65¢

    I congratulate you on your mulish obstinacy and complete inability to accept any contrary evidence put in front of you, Robert.

    Now, those restructuring charges? You’re (pro tem) the accountant here. Explain to us all how they could possibly affect the earnings per share next year?

  8. DrLoser says:

    The Bible suggests 10% is a good rate of return.

    I’d go further than the Bible, a Book Written Directly By The Hand Of God, Robert.

    I believe that nothing less than 100% per annum will do. Sadly, I do not work for God. (I failed the interview. Something to do with the Third or Fourth Freedom, I forget which.) I work for some useless dingbat called Warren Buffett.

    Do you know what the current rate of return for Berkshire Hathaway is, Robert? No? Then let me enlighten you. It’s 9.66%.

    Which is 0.34% less than God. But still better than 2012, when it was only 6.5%.

    I’m a total n00b on this stuff, so let’s consider Return On Equity. In fact, let’s have a quick look at Microsoft’s return on equity. Oh dear, a very disappointing 24.61%.

    For Dougie’s benefit:

    ROE shows how well a company uses investment funds to generate growth. Return on equity is useful for comparing the profitability of companies within a sector or industry.

    This seems a fair comparable, Robert. Find me another giant utility* IT company that has a 25% ROE, and we can talk about relative decline.

    * (utility meaning pipes and clouds and bits and stuff in massive volume: not everyday “I use this.” Although that works for most of us, too.)

  9. DrLoser wrote, “I can’t easily imagine anybody else finding these results disappointing or threatening in any way.”

    The Bible suggests 10% is a good rate of return. That’s what the averages do. M$’s earnings per share was not 65₵ but 55₵, down 8₵ from last year. 55₵ per quarter X 4 = $2.20 on an investment of $40, 5%. They only gave a dividend of 32₵ to offset that so the total return to the investor was much less than 10%. As the unit sales of licences declines, it is natural to assume earnings per share will not take off. So, the chief merit of the stock to investors was the rise in share price which was not supported by the bottom line… This is a speculative stock and could drop just as well and perhaps faster than it rose. It’s certainly not true that the client division inspires confidence. All the upside for M$ is in the server stuff and the cloud. Phoney “7” is still tiny although showing some growth but M$ will probably never have the kind of monopoly on phones that it has enjoyed on PCs. The monopoly on PCs is essentially dead as only businesses still seem committed to doing things M$’s way. That’s a potential 50% decline in seats. I can’t see business sticking to that when all their employees see Android/Linux or MacOS or GNU/Linux as the future. M$ is far from getting all its business customers to suck on their cloud. That is, M$ faces real competition rather than getting “the bye”. That means lower margins even for the business stuff. It costs M$ money to set up and service their servers. That’s not like the “let’s print money” way they had with the desktop. So, there’s no upside for M$. They can live ages on their cash however, becoming less relevant each year just like some old folks.

  10. DrLoser says:

    All this thread needs is for oiaohm to chip in and explain how market capitalism works, and basically we’re done and dusted down the old “throw thruppence at the loonies” show, aren’t we?

  11. DrLoser says:

    $44?..so what! Google shares the same market cap as does M$, but yet their stock price is at least twelve times greater. Apple’s market cap is both M$ and Google combined, but the stock price is ~$105/share.

    Put as simply as I can, Dougie (I have no wish to tax your limited understanding of how things work):

    Google and Apple are not utility stocks.

    Microsoft very obviously is.

  12. DrLoser says:

    They could lose $1billion+ annually if software patents are killed.

    Let’s wait for that eventuality with bated breath. It’s genuinely the sort of thing that frightens a company with a market capitalization of $380 billion to death.

    Time to reduce the toilet paper in the executive bathrooms from the luxury 3-ply variety to the sort you buy in bulk from Walmart, I think.

    “Surface” has not yet broken even if it ever will…

    Speaking of ~$1 billion, how d’you like them apples? $908 million in a single quarter.

    I’ll have to ping my mate Nadella and let him know he’s back on the good 3-ply stuff after all.

    … and damage to relations with OEMs and consumers is probably irreparable.

    At which point you will presumably trot out that quote from the chairman of that loser OEM Acer again. Because, other than that, you have nothing here at all, do you?

  13. DrLoser says:

    That’s why they are diversifying like mad.

    What, because the share price has moved from ~$30 to something north of $40? What sort of sense does that make? I think you have your premise and your conclusion the wrong way round, Robert.

    The client OS won’t carry the load.

    What “load?” You yourself have repeatedly pointed out that it costs M$ cents on the dollar to send out a single client install, whereas they rake $30 or more back in.

    That’s the sort of “load” that multinational businesses would die for. It’s called a cash cow. And, specifically in this case, it’s a huge generator of cash-flow. Businesses and investors love cash-flow.

    While the diversification is raising revenue, margins are much lower for the new services because M$ actually has to work for a living like a normal business and really compete.

    Oh, I don’t know; margins look pretty healthy from here. And are you seriously complaining that the M$ share price has shot up 50% on the back of following your advice and “working for a living” like “a normal business” and “really competing?”

    That sounds a little weird to me. Here you have an entire 90,000 company bending the collective knee to the Business Model of Robert Pogson, and you’re still complaining?

    Very weird, in fact.

    I think the share-price might fall after folks figure out that reality is returning with the end of monopoly. You can see that in the earnings per share, 55₵ versus 63₵ last year.

    Leaving aside the fact that earnings per share have no obvious correlation with turnover and EBITDA, it’s pretty obvious that your accounting is distinctly, shall we say, “selective.” The earnings per share you quote are based upon a net income discounted for the recent large layoffs, the acquisition costs of various large targets, and so on. According to Bloomberg as cited by DeafSpy:

    “Profit in the period ended Sept. 30, excluding restructuring charges, was 65 cents a share.”

    Show me an investor who would willingly forgo that sort of earnings-per-share dependability and at the same time be disappointed by a mere 50% rise in a massively liquid asset like M$ stock, and I’ll show you …

    … A Robert Pogson, basically. I can’t easily imagine anybody else finding these results disappointing or threatening in any way.

  14. matchrocket says:

    Microsoft’s stock has barely kept pace with inflation.

  15. Joe.M says:

    Indeed. M$ ironically has become one of the largest Linux cloud vendors. So maybe M$ is thriving, but their monopoly business model is not. Consequently it’s a great time to be a Linux professional, they’ll even need your help in M$-only shops. 🙂

  16. dougman says:

    $44?..so what! Google shares the same market cap as does M$, but yet their stock price is at least twelve times greater. Apple’s market cap is both M$ and Google combined, but the stock price is ~$105/share.

    Since 2000, M$ stock has been fairly flat overall and back then they held a great share of the entire computer and device market, now 14 years later that has seriously declined, so much so that it needs upgrade it’s marketing or take the chance of failing.

    Here are ten reason, the next iteration of Windows will fail.

    1. The ill-legacy of Windows 8, need I say more?
    2. Even more annoying tiles, for your displeasure.
    3. It’ll be might be free for some people, but not laggards that refused to update when so ordered.
    4. Not giving users what they want, ever.
    5. Offering an unappealing, flat and ugly UI.
    6. Earlier features are missing, gutted and gone forever. You learned how to do something, tough!… you now must relearn everything all over again.
    7. There’s no compelling reason to upgrade, ever.
    7. Users are forced (OK, strongly coerced), to use more privacy-leaking, bandwidth-soaking online services.
    8. Crappy apps in the Microsoft store.
    9. Not everyone is using a 7″ screen, Windows 10 stuff is still way over sized.
    10. The newest Windows, is just a new shell of Windows 8 with a hybrid-half functional start menu and a bunch of duplicated things that make no-sense.

    Eh…

  17. DrLoser wrote, “it’s shot up to $44 now. Not bad for a stock I would personally regard as a utility”.

    That’s why they are diversifying like mad. The client OS won’t carry the load. While the diversification is raising revenue, margins are much lower for the new services because M$ actually has to work for a living like a normal business and really compete. I think the share-price might fall after folks figure out that reality is returning with the end of monopoly. You can see that in the earnings per share, 55₵ versus 63₵ last year. Investors may feel there is some upside after one-time costs pass but I see those costs as continuing. Almost all businesses in a competitive environment and with falling revenue will cut staff. That’s the case with the client division. They could lose $1billion+ annually if software patents are killed. “Surface” has not yet broken even if it ever will, and damage to relations with OEMs and consumers is probably irreparable. The old days of steady 10% growth and cash-cows are gone. I think the decline will accelerate as many legacy PCs die and are not replaced or are replaced with thin clients.

    See Microsoft: Cloud-o-bile still only small slice of softening revenue pie

  18. DrLoser says:

    A small note on the Microsoft share price, btw, Robert.

    Remember all those graphs you used to present that “proved” the share price was practically dormant at $30 or so?

    Apparently it’s shot up to $44 now. Not bad for a stock I would personally regard as a utility (in stock market terms, not in IT terms).

  19. DrLoser says:

    Incidentally, Robert, I don’t think the notion of Chromebooks “catching fire” is all that much of a marketing slogan. Do you?

  20. DrLoser says:

    Some of my wife’s friends are now buying Chromebooks. They had completely avoided dealing with PC’s before. Now THAT is Chromebooks catching on with the general public.

    True, ram, but it doesn’t exactly tally with the notion that Chromebooks are replacing Windows boxen one-for-one, does it?

    Chromebooks are actually (and pace Robert) an interesting new market. I can see a niche for them, possibly even a large (though inherently unprofitable) one for them.

    OTOH they could be this year’s fad. Who knows? Let’s see how the page-view share stands up.

  21. DrLoser says:

    I suspect you’re letting the side down here, Robert. If you take the trouble to read DeafSpy’s cite, which rather annoyingly points out that Microsoft is winning big in the Cloud, that Lumia bettered analyst’s profit estimates by 20%, etc etc, you will find this one glaring statement:

    Unearned revenue, which comes from sales of multiyear deals that will be recognized in the future, was $22.5 billion for the fiscal first quarter.

    .

    If there’s a granite turd in the silver lining of this profit report, that would be it, wouldn’t it?

  22. Deaf Spy says:

    These are rather strange suppositions, Mr. Pogson, when faced with the 128% sales growth of cloud services. (See my original reference).

    You see, Mr. Pogson, Microsoft are changing. They have now quite a bunch of income sources, and they use the money from the strong old ones to invent and develop new, while old ones may wane.

    But I am glad you like the fact that Microsoft are the only one of the IT monsters (Oracle, SAP…) who manages to score such a wonderful profits again.

  23. dougman says:

    Let the trolls come up with some new “can’t do” for Chromebooks.

    http://www.pcworld.com/article/2691209/5-powerful-things-you-didnt-know-chromebooks-could-do.html

    “By adopting Chromebooks and cloud computing, businesses can benefit; they can shift their focus from managing devices to managing something much more important — their data.”

    http://news.investors.com/technology-click/081114-712668-chromebooks-being-checked-out-by-banking-hotel-industries.htm

  24. Deaf Spy wrote, “PC market is down less than expected”

    Devices and Consumer Licensing revenue, which used to have 10% quarterly growth for long periods of time is now down 9% compared to a year ago. I like it. The slide increases in speed and that represents many millions of consumers free of M$ each year. OEM revenue is down 3%. Down or flat is deadly for an industry growing rapidly like client operating systems. There are likely more than a billion new users of */Linux this year alone and M$ is losing out of that. When software patents are finally killed off, M$ could be down another ~$billion or so in client licensing revenue.

    “D&C Licensing
    D&C Licensing revenue decreased $391 million or 9%, due mainly to a $176 million decline in Windows Phone revenue, as well as lower revenue from licenses of Windows and Office Consumer. Windows Phone revenue decreased, primarily due to lower per unit royalties based upon the mix of devices sold by our licensees. Windows OEM revenue declined 2%, primarily due to declines of 4% in OEM Pro revenue and 1% in OEM non-Pro revenue, consistent with dynamics in the commercial and consumer PC markets. Office Consumer revenue declined 5%, reflecting the transition of customers to Office 365 Consumer.
    D&C Licensing gross margin decreased $102 million or 3%, primarily due to the decline in revenue, offset in part by a $289 million or 51% decrease in cost of revenue. D&C Licensing cost of revenue decreased, due mainly to a $239 million or 61% decline in traffic acquisition costs, primarily because our joint strategic initiatives with Nokia ended in conjunction with the acquisition of NDS.”

    So, I’m not worried. The monopoly is dying, not as fast as I wish, but it is dying.

  25. Deaf Spy says:

    We shall see in their quarterly report due in a week or so.
    The quarterly report is here.

    As I can see – little to worry about. PC market is down less than expected, and everything else is growing better than expected. The cloud is becoming a great source of income for MS (thin clients, eh, Mr. Pogson?), and Surface is to become a billion USD product. Nothing to worry about, I tell you.

  26. ram says:

    Some of my wife’s friends are now buying Chromebooks. They had completely avoided dealing with PC’s before. Now THAT is Chromebooks catching on with the general public.

  27. DrLoser says:

    Deaf Spy, according to Digitimes on Tuesday, “Despite Intel and Microsoft subsidies, Digitimes Research expects global notebook shipments, not including 2-in-1 models, to drop 4.4% on year and 2.6% sequentially in the fourth quarter, as Windows XP will have less of an effect on boosting demand in the enterprise segment and most of the inventory preparation for year-end shopping sales has already been completed in the second and third quarters.”

    Indeed, Robert. Quality stats, right there.

    Unfortunately they apply to notebooks and not laptops and therefore are completely irrelevant to the present argument.

    Now, that doesn’t mean legacy PCs won’t do better in some places than others…

    It doesn’t even mean that your arbitrary use of the word “legacy” has any possible value, does it?

    We await, as always, elucidation on this apparently vital concept.

  28. Deaf Spy, according to Digitimes on Tuesday, “Despite Intel and Microsoft subsidies, Digitimes Research expects global notebook shipments, not including 2-in-1 models, to drop 4.4% on year and 2.6% sequentially in the fourth quarter, as Windows XP will have less of an effect on boosting demand in the enterprise segment and most of the inventory preparation for year-end shopping sales has already been completed in the second and third quarters.”

    Now, that doesn’t mean legacy PCs won’t do better in some places than others but over all there’s not a lot of reason for M$ to be smiling. We shall see in their quarterly report due in a week or so. How long has it been since “normal” growth occurred in that market
    , two or three years? It’s just replacements at best and consumers aren’t doing that much replacing.

  29. Deaf Spy says:

    Pogson, I think I already told you about Lada in Germany.

    Anyway, some fresh news from a small East-European country. The local manager of Acer just shared that laptop sales are on the rise again. Here is a summary of his statement:
    1. We have a rise in the sales of laptops. Laptops at prices < $400 are taking 40% of the sales of all laptops and tablets in total.
    2. Tablet sales are declining: People now know that tablets are devices of limited functionality, and they need laptops for real work.
    3. The reason for the rise of cheap laptops are Windows with Bing, and (2).

    Small, cheap computers, Pogson. As you always had it. Only slightly different than your actual supposition.

    And, since I am an academic person, here is the link to the original source:
    http://money.bg/news/id_865340880/Евтиният_Windows_променя_РС_пазара_у_нас

Leave a Reply