Is someone subsidizing the sub-$200 PC?

— 2:42 AM on October 11, 2002

Buried in the middle of this article over at WinInfo on the lack of a drop in Windows XP prices is this little gem:

In fact, Microsoft CEO Steve Ballmer suggests that something sinister is going on, and that the cost of that LindowsOS system is, in fact, more than $200. "Somebody is subsidizing that hardware," Ballmer said during an appearance at a Gartner technology conference in Florida this week. "Somebody's losing [money]. People know what power supplies and processors cost." And he should know: That's exactly the strategy Microsoft, Sony, and Nintendo employ in the video game market. The idea is to seed the market with money-losing hardware, but make it the difference in software sales. Is this the case with Wal-Mart's PCs?
Microtel's sub-$200 PC does have a pretty robust hardware spec for what you're paying, so I'm hesitant to tag this as FUD. After all, I would think that Xbox volumes command some pretty low wholesale prices for Microsoft.

The article goes on to suggest that Wal Mart may be taking a hit on the PCs just to get people in the door, which is plausible, but a PC is one heck of a loss-leader. I wouldn't think that Microtel, VIA, or Lindows would have the agenda and resources necessary to inspire and pay for this, though I have to admit that part of me wishes there was some rich, underground Linux conspiracy funding the whole thing.

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