HP and its Linux-based Thai PC

When the Thai government teamed up with HP to launch a cheap 'People's PC' it probably didn't expect such demand. But the computer wouldn't have met the country's price criteria if Linux hadn't been chosen. John Lui looks at the implications around the world and for Microsoft...

Hewlett-Packard's low-cost, Linux-based notebook launched in Thailand last week is a one-of-a-kind product created for a unique market, according to HP and analysts.

So the message is clear to those living outside Thailand hoping to pick up a HP notebook for around $450: Don't hold your breath.

A week ago in Bangkok, HP began selling a $450 'people's notebook' that runs Linux. It is believed to be the first time a major US-based PC maker has sold a consumer machine with the open source operating system pre-loaded.

The act led to speculation as to whether a new Linux-based HP product line would be offered in other parts of Asia and the rest of the world.

HP's set guarded response is that the firm will "continue to evaluate future opportunities in Asia-Pacific".

Such opportunities are not likely to come along very often. Gartner Asia-Pacific research director Dion Wiggins pointed out that the Linux products would never have been created if the Thai government had not started the ball rolling, helped by the urging of Prime Minister Thaksin Shinawatra.

"Prime Minister Thaksin is computer-savvy and understands the need for a knowledge-based economy," he said.

The Information, Communications and Technology (ICT) ministry led the drive to increase computer ownership in a country where many cannot afford one, and got banks to offer easy repayment plans.

Why did HP take the Linux path? To look after the bottom line, said Martin Gilliland, a principal analyst with Gartner.

"The government set the minimum hardware specifications and the price, and the only way vendors could meet that was to go Linux," he said.

Microsoft's Windows licence fees could have sent the price upwards. Even if the additional cost were, say, $20 this is a significant increase in such a low-priced item, said Gilliland.

Not only are many of the Thai buyers of the Linux desktop first-time computer users, they will also be faced with an operating system not in common use.

There is likely to be a large number of tech support calls, which will wipe out any profit, said Wiggins. But Gilliland noted that in the Thai case, because the ICT had agreed to take over the service and support of the Linux notebook, it probably made it easier for HP to agree to take part.

Another factor to be considered in launching a Linux consumer computer is relations with a certain giant from Redmond.

Microsoft considers Linux to be a rival to its Windows operating system and will not take mass sales of PCs loaded with the open source operating system lightly.

However, Gilliland observed that Microsoft business allies such as IBM wholeheartedly support Linux, though some pundits frequently exaggerate the software giant's power over an influential vendor like HP.

He noted that in sales of PCs, which all run Windows, HP is number one globally. "While HP has to be careful how they treat Microsoft, Microsoft has to be careful how they treat HP," he said.

However, in considering whether to sell a Linux computer in software piracy-plagued countries such as Malaysia, Indonesia, Singapore, the Philippines and Taiwan, HP will have to manage its relations with Microsoft well, said Gilliland.

"Thailand is a market where pirated software is freely available. It's to be expected that a significant number of buyers of those Linux PCs will go home and reload them with a pirated copy of Windows," he said.

While HP has a right to sell a computer with Linux installed and has no control over what a buyer does with it, those rights will probably be balanced by a consideration for Microsoft's business, said Gilliland.

John Lui writes for CNETAsia.