Think Again?

The text of this article originally appeared in the December 9, 2004,
issue of

SuitWatch, a bi-monthly newsletter written by Doc Searls,
Senior Editor of Linux Journal.

The news cleared up yesterday morning. After a week of rumor, which
followed months if not years of speculation,
IBM announced its
decision to sell its PC Division to
Lenovo, a Chinese manufacturer.
The index page copy on IBM's site read:
"Breaking news: Lenovo to
acquire IBM PC Division, creating new leading PC business with global
market reach". This copy jumped to a page with

this text:

Lenovo Group Limited, the leading Personal Computer brand in China
and across Asia, and IBM today announced a definitive agreement under
which Lenovo will acquire IBM's Personal Computing Division to form
the world's third-largest PC business, bringing IBM's leading
enterprise-class PC technologies to the consumer market and giving
Lenovo global market reach beyond China and Asia.

Here are some of the details gleaned from the press release:

• Lenovo becomes the #3 PC maker in the world, with about
  $12 billion US annual revenue for 2003. (IBM+Lenovo, presumably)
• The IBM name will stay on the products.
• A "strategic alliance" has been formed, in which IBM handles servicing and
  financing and continues to sell the products.
• Lenovo will license the IBM name for five years and take ownership
  of the "Think family of trademarks".
• IBM staff moves to Lenovo. Keeps headquarters in New
  York City and offices in Raleigh, North Carolina. Adds offices, naturally, in
  Beijing.
• Sold for $1.25 billion US in cash, equity. Total transaction
  "consideration" of about $1.75 billion US.
• IBM take an 18.9% equity stake in Lenovo.
• Deal wraps in Q2 2005.

It's clear why IBM is doing this. Desktop PCs have become low-margin
commodities, and laptops, although higher-margin items, are relatively
low-volume products. Manufacturing already is done offshore, and so is
most of the sales action at this point. Lenovo can scale and manage
the manufacturing, and with its equity stake, IBM can keep a piece of
the action.

Still, I'm disappointed. I love the ThinkPad. I'm writing this on the
Emperor Linux Toucan,
which is the same IBM ThinkPad T40 to which we (Linux
Journal) gave Editors' Choice and Product of the Year awards
this past year. Using the T40 often is a PITA (look it up if you don't know), but
the rewards are worth it. The screen and keyboards are killer. The
trackpad and pointer (it has both!) are allied with five buttons,
including the middle button that's so useful in Linux and UNIX.
There isn't a more efficient and useful keyboard layout on any
laptop, by anybody--in my opinion, anyway. The little nightlight
that shines down from the lid is perfect for doing astronomy with
KStars and for
taking notes while somebody lectures in a dark room. I would like a
quieter keyboard, but the action is so nice and so positive, that
I have to say the clackety sounds seem more a feature than a bug.

Will it last?

Well, although I rarely expect Good Things out of an acquisition such as
this, I see some hope for success with this one. Mainly because I think a
Chinese center of gravity in the PC division may help pry the
ThinkPad design team away from its exclusive fealty to Microsoft.

See, while everybody bemoans the commoditization of PCs, nobody talks
about the real problem underneath that commoditization, which is a
proprietary monopoly that imposes innovation-stifling restrictions on
hardware OEMs.

This became clear to me two years ago, at Comdex 2002, which turned
out to be the penultimate Comdex. As I wrote in
"A Losing Bet: the
Last Days of Comdex":

Two of the big three hardware vendors, Dell and IBM, weren't at the
show. I'm told IBM was off in the Aladdin Hotel, but I couldn't find
them even though I spent both nights there (nice hotel, by the way;
cheap too). Nor was Sony present.

But Toshiba was there, along with HP, Acer and Fujitsu. All but Acer
were within a short walk of the vast Microsoft pavilion, and all four
were pushing their new TabletPCs.

It appears from
this
Microsoft release that IBM and Dell aren't
making TabletPCs. Coincidence?

All the boxes I saw at all HP, Acer, Fujitsu and Toshiba booths bore
the same sticker that read "designed for WindowsXP". When I asked a
Toshiba guy if it was possible to get a laptop with Linux, he
frostily said, "We don't do that". A Fujitsu guy told me the same
thing but in more friendly terms. At HP a guy told me the company had
recently set up a CTO (configure to order) system on the Web site
that would at least allow the customer to get a desktop or server
system configured with Linux. But when he tried to show me the system
at work, he couldn't bring it up...

For two consecutive Comdexes, Linux had its own big Linux Business
Expo pavilion. Now it was nowhere.

But so was Comdex itself. After Microsoft and HP, the biggest booths
were for countries and regions. Taiwan, Hong Kong, France, the UK
and Korea were all well-represented but as dull as their own
brochures.

It was clear that Comdex had become, essentially, a Microsoft
show. The biggest booth by far was Microsoft's. And Microsoft was the
biggest presence in all the featured hardware OEM booths. In her
keynote Carly Fiorina of HP talked up the TabletPC and avoided Linux,
no doubt out of respect for Microsoft honchos sitting up front.

That year, I got the clear impression that Comdex had been hollowed out by the
company and the operating system that ran everything. Room for
innovation by the OEMs was minimal, both in their products and in
their booth promotions.

Now the same thing has happened to the whole business.

Early this year, IBM folks were telling me and Jeff Gerhardt of The
Linux Show, where I'm a weekly gang member, that a for-real Linux
desktop and laptop were in the works. But over the summer, I had a talk
with Dan Frye of IBM in which he made clear that IBM was not pushing
ahead aggressively with those plans.

HP came out with one Linux laptop, a mid-level unit for enterprises
and small businesses. (See the January 2005 Linux
Journal for a review by Don Marti.) Nothing yet, though,
for the early adopters who drive market movement, namely, Linux geeks.
Although more Linux laptops are kicking around these days--the
percentage of Mac OS X laptops clearly was down a bit at November's
Apachecon, for example--no hardware company has stepped forward to
drive Linux desktop or laptop sales in a serious way. They might build
to order, but they're not going to make a real market push.

They'll say they're "waiting for demand", but that's bull. At PC
Forum in March 2003,
I asked Intel COO
Paul Otellini why Intel didn't release Linux device drivers along with ones for Windows. He
pleaded absence of demand. I replied:

There are two ways that markets happen. One is you wait for the
demand to materialize and satisfy the demand. The other is you invent
something that's killer, and the demand follows. By one, necessity
mothers your invention; by the other, your invention mothers the
necessity. And I think Intel has succeeded largely by doing the
latter, over the years.

The desktop is the big hole for the Linux space right now. Linux is
killing in the server and the embedded spaces, and there's a big hole
in the desktop space. In big companies especially there is a demand
for white box desktops, and I hear all the time that they're "waiting
for somebody to make it possible". So, I'm wondering why what I'm
hearing about demand doesn't square with what you're saying about
demand.

He said, basically, that customers are "wed" to the Windows desktop.
What he didn't say is that hardware suppliers are wed to Microsoft as
well. And as long as the rest of the world depends on that marriage,
there won't be any room for innovation on the desktop, except by
equally proprietary alternatives such as those from Apple.

Since that exchange,
Intel quietly has added more Centrino device
drivers. And on November 24, 2004,
Steven
Shankland reported in CNET that
"Intel has begun an effort to make it easier for sales partners in
China and India to sell desktop computers running Linux, starting a
more active phase in the company's help with the open-source
operating system." Specifically, he adds, " 'The chipmaker warmed up to
desktop PC makers when partners in the Asian countries started requesting
more help with desktop Linux,' company spokesman Scott McLaughlin said."

Now, when Intel ships the components out of which companies assemble
PCs--often called white box systems because they're from companies
with little-known brand names--it includes a kit of software and
instructions to ease Linux installation. It's a strategy Intel has
used for years with Windows. The kit includes driver software, which enables use of specific
hardware features; scripts to install software quickly that has been
validated to work with various versions of Linux; and a program
called the Application Version Compliance Tool that checks to make
sure programs are compatible with those Linux versions and Intel
electronics.

Note that domestic makers of non-white boxes didn't make the same
request. And those are the innovative ones, right? Who more than IBM
is innovative with computing, fergoshsakes? Yet they're avoiding
innovating with Linux laptops? Why? Only one reason, seems to me.

So maybe that will change.

On the discouraging side, I remember when GE unloaded its radio
business on Thomson in the early 1980s. At the time the company was
making some killer radios, including the legendary Superadio and the
first boom boxes and personal (Walkman-like) radios to feature
digital tuners. Those were terrific too. But, after doing a great job
of marketing a generation or two of the radios, Thomson bailed. I
don't know why, but I also don't doubt it was because it wasn't their
business in the first place.

Lenovo may be different. Maybe the best IBM PC division employees
won't leave when they suddenly find themselves working for somebody
else. Maybe they'll welcome a freedom they didn't have before. I
dunno.

Whatever the case, sooner or later somebody is going to make and
market a serious Linux laptop. I'll be at the front of the line,
waiting.

Doc Searls is Senior Editor of Linux Journal
and writes its Linux for Suits column. He also presides over
Doc Searls' IT Garage.