NY Times: Will cheap and free prevail?

analysis
Jan 26, 20092 mins

The New York Times reports on how "creative destruction" is driving adoption of netbooks, open source and virtualization software among consumers and enterprise IT.

Over the weekend, New York Times writer Ashlee Vance published an interesting article, “$200 Laptops Break a Business Model,” that describes how consumer and enterprises are making do with lower-priced solutions. (Vance used to write for The Register, where the headline might have been “Consumer to Microsoft: Drop Dead.”)

“We’ve reached one of those moments in tech history when there are low-priced and free alternatives that are both user-friendly and reliable enough to make the switch,” Mr. Title said. “Then there’s the extra bonus of saving some cash…”

But the fear now is that consumers like Mr. Title, and businesses operating with the same cost-cutting mind-set, will erode the high-margin businesses of the information technology industry — slowing some technologies and companies but giving new momentum to others.

A normally confident Steven A. Ballmer, chief executive of Microsoft, expressed this very fear last week after announcing the company’s first big reduction of its work force. “Our model is not for a quick rebound,” he said. “Our model is things go down, and then they reset. The economy shrinks.”

As Vance points out, this isn’t the first time that “creative destruction” has impacted the fate of once-great tech companies and propelled new disruptive companies to the forefront. It may be that the current economic crunch propels netbooks, cloud computing, open source, and virtualization software to even higher levels of adoption. There’s nothing like an economic crisis to change behavior, whether in consumers or in IT directors.