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A Linux Laptop: Has Its Time Come?

By Jim Kerstetter Linux is tiptoeing into the PC mainstream. On Aug. 3, Hewlett-Packard (HPQ) execs said the Silicon Valley giant will be the first major PC manufacturer to ship a laptop computer that comes pre-installed with the open source operating system. HP execs call the new Linux laptop a "market test," and figure it will sell well among software developers interested in working on Linux computers.

The $1,140 notebook is the latest -- and perhaps the most important -- product debut in a year-long stream of Linux-PC developments. Over the last year, HP rival Sun Microsystems (SUNW) has aggressively been marketing a Linux PC, even selling it on retail king Wal-Mart's (WMT) Web site. IBM is also starting to push Linux PC sales internationally.

LITTLE CONSUMER INTEREST. However, HP is the first major PC maker to put Linux on a laptop computer, the fastest-growing segment of the PC market. With a 15.7% market share in the second quarter, according to researcher IDC, HP trails only Dell (DELL) in PC shipments.

By dribs and drabs, Linux is gaining some traction on the desktop. Depending on who's counting, Linux claims nearly 3% of PC sales. That's expected to double within the next three years, easily overtaking Apple's (AAPL) sales. But it's still a blip compared to Microsoft's (MSFT) better than 90% share of the market. It's also a far cry from Linux' progress in the computer rooms of corporations. Linux's share of the market for server operating systems has nearly topped 20% at this point.

Still, the PC market, so thoroughly dominated by Microsoft's Windows, has proven far slower going. Three major factors hold back Linux on the PC, particularly among consumers, says Martin Fink, HP's vice-president for Linux. There are few video games for Linux PCs, little personal finance software, and even less media software for things like music. "Until that happens, I don't see a major market there," he says.

CATCHING ON? Even within HP's business, Linux is still a fraction of PC sales. HP has had a Linux desktop computer for about four years. It ships about 400,000 Linux PCs per year -- nearly all of them outside of the U.S. By comparison, it ships about 10 million Windows PCs. HP is only selling the new notebook computer over the Internet, and Fink says it's impossible to make a good guess as to how well it will sell. Fink doesn't think there's much of a retail opportunity for the Linux laptop. "At least not yet," he says.

HP execs are eager to see if the Linux notebook catches on. If software developers like it and start marketing more of the programs to run on top of it, this product debut could turn out to be far more than a piddling market test. Kerstetter is a writer for BusinessWeek in the Silicon Valley bureau

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