Why Windows-based Asus Eee PCs are a Mistake

Whatever Asus’ reasons may be for offering Asus Eee PCs with pre-installed Windows XP, whether it be perceived market demand or an irresistible deal with Microsoft, the move simply isn’t in sync with its stated marketing strategies vis-à-vis the Eee PC.

When Asus first announced the Eee PC at Computex back in June 2007 and in subsequent press releases, it emphasized certain things –

1. The target market of the so-called 2nd billion.
2. The Asus Eee PC as a consumer electronic appliance and not as a notebook
3. The psychological $200 price point that defines an impulse buy for a significant portion of the market.

In a reply to a comment posted in the blog post, 2008 Asus Eee PC related Predictions, I described the 2nd billion segment as those who are currently non-owners/users either because they have found computers too difficult to use or can’t afford one. (If you previously didn’t have any use for computers, then chances are you still don’t have any use for one and do not count in the 2nd billion.)

For those who have shunned using computers before, that implies they found Windows too hard to use, Windows being the overwhelming dominant OS for PCs for quite sometime now. Hence there is no reason for them to want Windows.

For those with financial reasons, they will often settle for so-called alternatives if it means cheaper because it is what they can afford. For them, a $50 or $70 difference could possibly mean the difference between affordability and non-affordability. (Think long-term/lifetime savings.)

Thus the Windows version may not necessarily appeal to them. That Windows have a lot more accessible software for it will most likely not even be an issue because for the 2nd billion, the Asus Eee PC already comes with just about all the programs they will need for quite sometime – email, word processing, spreadsheet, IM, and some entertaining games. With the trend towards online applications, and free at that, they will also most likely find what they will additionally need, if ever they do, on the Internet.

Having Windows also unnecessarily complicates the user experience for the new Eee PC owner. For all the criticisms Xandros have received, its Easy Mode is actually extremely easy to use, especially for first time users. Windows doesn’t have anything that remotely resembles Easy Mode. It also boots up much slower, reinforcing the notion that the Eee PC is a computer and not a consumer electronics appliance. Of course, the BSOD (Blue Screen of Death) will always be a reminder every now and then.

Put it simply, Windows just doesn’t cut it as a consumer electronics appliance. Heck, even Windows CE, the simpler, faster, easier to use junior version that exists on PDAs and mobile phones, has never caught on. These devices have never really become mainstream, their successes quite limited to techies and geeks.

Thus, having Windows XP actually goes against Asus’ stated market position, in that it emphasizes the Eee PC as a computer, as a notebook, and not as a consumer electronics appliance.

Having Windows XP also requires Asus to come out with higher-end models simply because it requires more hardware. That means bumping up prices again - yet another move away from the psychological price point of USD200. While competitors are all trying to achieve this holy grail of pricing, Asus is dangerously inching the Eee PC’s price range to within that of low-end more conventionally sized notebooks. While to purists, the Eee PC can’t be compared to the larger models, a lot of potential buyers will find better value in the latter – not because they are knowledgeable but precisely because they are not.

But don’t get me wrong. With its aggressive pricing of $470 (at least, so far in Japan) Asus can expect to sell a lot of Windows-based Eee PCs, probably more than the original Xandros-based models. Only the buyers are not the targeted 2nd billion but Windows users who have spent so much time learning the OS that they don’t want to waste their efforts by shifting to a simpler OS now. But for Asus, everything will still be fine. After all, the Eee PC is the first certified bestseller notebook that carries the brand.

That is, until one of the competition introduces a model that is just as small and just as light, costs $200 - $250, and just as easy to use as a true consumer electronics appliance. Which is likely to happen sometime this year.

Depending on the time interval, the new competition could very well unseat the Asus Eee PC as the dominant model in the very category (low-cost ultralight subnotebook) it has created. Because if the Windows-based Asus Eee PC becomes a bestseller, and I think it will be if the introductory pricing is maintained, then the longer it stays on as a bestseller, the more Asus Eee PCs in general will no longer be perceived as low-cost ($470 is definitely not low-cost, especially if other models will be offered at below $300.)

It will also no longer be perceived as a consumer electronics appliance that is easy to use. (Windows has never been considered easy to use.)

And it will therefore, no longer be perceived as a device intended for the 2nd billion. When that happens Asus will be left out looking back in at the very market segment it created wondering what went wrong and why people have stopped buying Eee PCs just when the market have picked up steam and millions of customers.