“By entering the domain of the appliance — the games console,
video engine, wireless PDA or whatever — Microsoft is recognising
one crucial fact. With appliances, nobody cares about what is
under the bonnet, the external functionality is more important
than the internal components. This is the rationale behind other
companies (such as these) using Linux — there is no operating
system sell, it is the box that counts. Also, with Linux there is
no operating system buy as it is license- and cost-free. Microsoft
cannot compete at the OS level as others are giving it away, hence
they are competing at the level of the complete device. This is a
dangerous game — hardware margins are notoriously lower than
software margins — but the company has no other choice.”
“By bundling Windows with the device, Microsoft is
essentially giving it away. In doing so it gives itself an exit
strategy from the oncoming drought in the OS space. Perhaps
more importantly, it can move on without losing face — a necessity
in the technology market, where image counts for far more than
people give it credit.”
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