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I've just bought a new laptop and I have also just purchased a new pair of shoes, both are pictured in the chart above.  The reason for my telling you about this is that the shoes cost significantly more than the laptop computer and both are marketed as high-technology products.  True, the laptop that I purchased at £179 is the bottom of the price range but with great usability, and the shoes at £250, although by no means the most expensive that money can buy, are hand-made by the French company Mephisto, lined with expensive, waterproof Gore-Tex,  Now, not so many years ago, for the price of a laptop one could have bought several pairs of Mephisto shoes.  Times have changed – the price of well-made shoes has kept up with inflation, yet the price of a well-made and very capable laptop computer has dropped considerably.  Let me explain how and why this laptop computer is low cost.  Partly it’s due to technological improvement, partly because of the move to low cost labour production in Asia, and partly due to the current highly competitive market where conditions demand the paring of profits to the bone.  The laptop computer I purchased is an Asus X205, not by any means the most powerful computer available, but more than fast enough for web browsing and word processing.  Yet this Asus model provides a clear example of what has been happening recently in the personal computer industry.  I chose to buy the Asus X205 because it has seven attractive attributes in one package – it’s solid state instead of a conventional hard disk, it’s small and light (only 980 grams), it has a battery life of around 12 hours, it runs 64 bit Windows, it can cleverly continually receive emails in a low battery state, and it’s low cost.  These factors combine to make it the ideal laptop for carrying in a backpack, (stowed safely in a neoprene sleeve), when I am out and about.  There’s never been a computer that will run a 64 bit version of Windows available at such a low price before now, and I'm sure I'm not the only one who’ll appreciate how useful the X205 is, so doubtless Asus will have a hit with it. Like many people I know I have a more powerful laptop tethered to a large monitor and a backup hard drive in my study at home.  I know from usability studies that I’m not alone in finding that the hassle of disconnecting this set-up and then having to carry a comparatively weighty laptop is a bother for most of us.  Nowadays we are far less likely to be carrying a heavy laptop computer and tend to opt to carry a convenient tablet instead.  As I wrote in last month's article, Microsoft's Surface 3 proposition that a tablet can replace a laptop is just plain wrong.  I'm setting out to prove that a light, cheap, netbook-format computer can act as a natural companion to a home computer, something that Microsoft should have considered.  I’m sure that Asus will sell a lot more of their low cost netbooks than Microsoft will end up selling its costly Surface 3 tablets despite all the expensive advertising.  To produce such a fall in the price of a small portable computer so that it’s cheaper than a pair of Mephisto shoes has taken the imaginative design skill of Asus, as well as a fundamental change in strategy from Intel and Microsoft.  The Intel and Microsoft hardware and software partnership, Wintel, was so successful that the two companies became “fat” margin corporations dedicated to making large profits at any cost. They were been so intent on keeping their share price high, they missed the bandwagon as the mobile phone merged into a pocket computer, and are now having to respond to leaner “lower” margin competitors, and free products.  As you can see from the chart, the size of the transistors that make up the neurons of a personal computer have been continually shrinking over the last decade.  As the transistor size gets smaller, more microprocessors can be fitted onto the same size silicon wafer.  The result is a tiny yet powerful chip that is potentially more profitable to produce or able to be sold at a lower cost.  Instead of concentrating on profit levels Intel is finally learning to lower its prices.  In order to prevent a fall in their market share because of low-priced ARM microprocessors, (the kind you find in every iPhone or Samsung smart-phone), Intel has dropped the price of their bottom of the range chips even further.  The microprocessor that Asus uses in the X205 is a Z3735F manufactured using 22 nano- meter lithography and it’s bang up-to-date with four processing cores.  Intel's list price for the Z3735F is $17, (although rumour has it that Asus is paying only $5 per processor), as Intel seeks to compete/be more competitive against ARM.  These microprocessors are impressively tiny and, unlike previous two-dimensional (planar) designs, the transistors are actually fabricated in three dimensions to keep the size as small as possible, so the power requirements are low.  This technological advance also means that the computer microprocessor doesn't require a fan to cool the chip, thereby saving even more money and weight.  As a consequence of these innovations, many future computer products will not need fans as the heat generated can be dissipated through the casing.  Product designs will therefore also be thinner though that has a practical limit, as Apple as recently discovered with the iPhone 6, if a product is too thin it can be bent out of shape. Meanwhile, just as Intel has been forced to lower prices, Microsoft has now produced Bing Windows, a cheaper version of Windows, to counter the rising popularity of low cost Google Chromebooks with their free operating systems.  Bing Windows is a full version of the Windows operating system with the default search engine set to Microsoft's Bing.  As I have previously written: Bing and Microsoft's Internet advertising division has always lost large amounts of money, and this is yet another marketing attempt to promote Bing usage as well as to counter Chrome, Google's free cloud operating system.   Interestingly, because of previous legal rulings, particularly in the Europe Union, if you don't want to use Bing it is easy enough to change and use Google as your preferred search engine.  Asus shrewdly combined the lower costs from Intel and Microsoft with a lightweight design using a slimmer version of the netbook format they invented a few years ago.  To ensure the X205 weighs in at just 980 grams there is no optical disk (CD drive), nor a conventional hard drive, just a small amount of cheap solid state memory.  As I’m sure you know, solid state memory is more reliable as there are no moving parts. There is also no touch screen, just keyboard and mouse input, ready to take advantage of the next iteration of Windows when it is finally released next year.  Windows 10 promises to be much better optimised for keyboard and tablet use.  Microsoft has finally realised the error they made with Windows 8 and 8.1 and are keen to correct this mistake by 2015.  All of this should help Asus survive in the cruel, low margin personal computer hardware business where making a profit and maintaining market share is a desperately hard trick to pull off.  To prove the point, three of Asus's competitors, Sony, Toshiba and Samsung, are stopping production of personal computers for the global market.  These Japanese companies have decided their squeezed resources should be devoted to more profitable ventures, and the Korean company Samsung has also decided not to go head to head with successful Chinese manufacturer Lenovo.  It is not only the size of transistors that are shrinking, the global personal computer market as a whole is declining.  As measured by IDC, the market shrank 4% in 2012, 9.8% in 2013 and it’s expected to contract a further 3.7% in 2014, and 2.3% in 2015.  It’s interesting to consider the comparative costs of my Asus and my Mephistos, which last at least five years.  So, all things considered, am I likely to still be using my new lightweight Asus when I eventually have to go to Piccadilly to replace my Mephistos. October 2014
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Of laptops and shoes...

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I've just bought a new laptop and I have also just purchased a new pair of shoes, both are pictured in the chart above.  The reason for my telling you about this is that the shoes cost significantly more than the laptop computer and both are marketed as high-technology products.  True, the laptop that I purchased at £179 is the bottom of the price range but with great usability, and the shoes at £250, although by no means the most expensive that money can buy, are hand-made by the French company Mephisto, lined with expensive, waterproof Gore-Tex,  Now, not so many years ago, for the price of a laptop one could have bought several pairs of Mephisto shoes.  Times have changed – the price of well-made shoes has kept up with inflation, yet the price of a well-made and very capable laptop computer has dropped considerably.  Let me explain how and why this laptop computer is low cost.  Partly it’s due to technological improvement, partly because of the move to low cost labour production in Asia, and partly due to the current highly competitive market where conditions demand the paring of profits to the bone.  The laptop computer I purchased is an Asus X205, not by any means the most powerful computer available, but more than fast enough for web browsing and word processing.  Yet this Asus model provides a clear example of what has been happening recently in the personal computer industry.  I chose to buy the Asus X205 because it has seven attractive attributes in one package – it’s solid state instead of a conventional hard disk, it’s small and light (only 980 grams), it has a battery life of around 12 hours, it runs 64 bit Windows, it can cleverly continually receive emails in a low battery state, and it’s low cost.  These factors combine to make it the ideal laptop for carrying in a backpack, (stowed safely in a neoprene sleeve), when I am out and about.  There’s never been a computer that will run a 64 bit version of Windows available at such a low price before now, and I'm sure I'm not the only one who’ll appreciate how useful the X205 is, so doubtless Asus will have a hit with it. Like many people I know I have a more powerful laptop tethered to a large monitor and a backup hard drive in my study at home.  I know from usability studies that I’m not alone in finding that the hassle of disconnecting this set-up and then having to carry a comparatively weighty laptop is a bother for most of us.  Nowadays we are far less likely to be carrying a heavy laptop computer and tend to opt to carry a convenient tablet instead.  As I wrote in last month's article, Microsoft's Surface 3 proposition that a tablet can replace a laptop is just plain wrong.  I'm setting out to prove that a light, cheap, netbook- format computer can act as a natural companion to a home computer, something that Microsoft should have considered.  I’m sure that Asus will sell a lot more of their low cost netbooks than Microsoft will end up selling its costly Surface 3 tablets despite all the expensive advertising.  To produce such a fall in the price of a small portable computer so that it’s cheaper than a pair of Mephisto shoes has taken the imaginative design skill of Asus, as well as a fundamental change in strategy from Intel and Microsoft.  The Intel and Microsoft hardware and software partnership, Wintel, was so successful that the two companies became “fat” margin corporations dedicated to making large profits at any cost. They were been so intent on keeping their share price high, they missed the bandwagon as the mobile phone merged into a pocket computer, and are now having to respond to leaner “lower” margin competitors, and free products.  As you can see from the chart, the size of the transistors that make up the neurons of a personal computer have been continually shrinking over the last decade.  As the transistor size gets smaller, more microprocessors can be fitted onto the same size silicon wafer.  The result is a tiny yet powerful chip that is potentially more profitable to produce or able to be sold at a lower cost.  Instead of concentrating on profit levels Intel is finally learning to lower its prices.  In order to prevent a fall in their market share because of low-priced ARM microprocessors, (the kind you find in every iPhone or Samsung smart-phone), Intel has dropped the price of their bottom of the range chips even further.  The microprocessor that Asus uses in the X205 is a Z3735F manufactured using 22 nano-meter lithography and it’s bang up-to-date with four processing cores.  Intel's list price for the Z3735F is $17, (although rumour has it that Asus is paying only $5 per processor), as Intel seeks to compete/be more competitive against ARM.  These microprocessors are impressively tiny and, unlike previous two- dimensional (planar) designs, the transistors are actually fabricated in three dimensions to keep the size as small as possible, so the power requirements are low.  This technological advance also means that the computer microprocessor doesn't require a fan to cool the chip, thereby saving even more money and weight.  As a consequence of these innovations, many future computer products will not need fans as the heat generated can be dissipated through the casing.  Product designs will therefore also be thinner though that has a practical limit, as Apple as recently discovered with the iPhone 6, if a product is too thin it can be bent out of shape. Meanwhile, just as Intel has been forced to lower prices, Microsoft has now produced Bing Windows, a cheaper version of Windows, to counter the rising popularity of low cost Google Chromebooks with their free operating systems.  Bing Windows is a full version of the Windows operating system with the default search engine set to Microsoft's Bing.  As I have previously written: Bing and Microsoft's Internet advertising division has always lost large amounts of money, and this is yet another marketing attempt to promote Bing usage as well as to counter Chrome, Google's free cloud operating system.   Interestingly, because of previous legal rulings, particularly in the Europe Union, if you don't want to use Bing it is easy enough to change and use Google as your preferred search engine.  Asus shrewdly combined the lower costs from Intel and Microsoft with a lightweight design using a slimmer version of the netbook format they invented a few years ago.  To ensure the X205 weighs in at just 980 grams there is no optical disk (CD drive), nor a conventional hard drive, just a small amount of cheap solid state memory.  As I’m sure you know, solid state memory is more reliable as there are no moving parts. There is also no touch screen, just keyboard and mouse input, ready to take advantage of the next iteration of Windows when it is finally released next year.  Windows 10 promises to be much better optimised for keyboard and tablet use.  Microsoft has finally realised the error they made with Windows 8 and 8.1 and are keen to correct this mistake by 2015.  All of this should help Asus survive in the cruel, low margin personal computer hardware business where making a profit and maintaining market share is a desperately hard trick to pull off.  To prove the point, three of Asus's competitors, Sony, Toshiba and Samsung, are stopping production of personal computers for the global market.  These Japanese companies have decided their squeezed resources should be devoted to more profitable ventures, and the Korean company Samsung has also decided not to go head to head with successful Chinese manufacturer Lenovo.  It is not only the size of transistors that are shrinking, the global personal computer market as a whole is declining.  As measured by IDC, the market shrank 4% in 2012, 9.8% in 2013 and it’s expected to contract a further 3.7% in 2014, and 2.3% in 2015.  It’s interesting to consider the comparative costs of my Asus and my Mephistos, which last at least five years.  So, all things considered, am I likely to still be using my new lightweight Asus when I eventually have to go to Piccadilly to replace my Mephistos. October 2014

Of laptops and shoes...

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