Jonathan Schwartz thinks that PC's will run south in price and end up in the same boat as mobile phones - mostly nominal cost followed by long term subscription (broadband) plans:
And as I was saying on Steve's Gillmor Gang, give it a year, I'll make a big bet, you're going to see the same thing begin to happen in the PC industry. Will the average selling price (ASP) of a PC continue to meander south? Yes. Unrelated to component cost. Will it go to free, like handsets? Absolutely. In exchange, consumers will sign up for network plans, DSL, cable, you name it. On PC's, or more likely equivalent dedicated devices branded by carriers - just as in the handset industry, where carriers are increasingly deploying 'branded' handsets. It's been a tad tougher on PC's when they didn't control the software load, but it's just a matter of time.
There are a few problems with that - the biggest being inertia. Mind you, I think people would generally like the idea of being able to easily upgrade their PC's every 18-24 months (as they can do with cell phones) - on the other hand, I see no real sign of the big providers - cable or dsl providers - taking steps into those waters. Mainly though, Schwartz is either misreading the IBM sale, or trying to make it fit his preferred world view. The IBM sale is about something very, very simple - access to the exploding Chinese market for PC's. Consider:
Under the deal, IBM will take an 18.9 percent stake in Lenovo. Lenovo will pay $1.25 billion for the IBM PC unit and assume debt, which will bring the total cost to $1.75 billion.
The combined venture will have roughly 10,000 IBM employees and 9,200 Lenovo employees. It will be headquartered in New York, with operations in Beijing and in Raleigh, N.C.
IBM gets a major stake in a firm that has access to the Chinese market, and has managed to move their management team to the US. That will make it easier to work with them, while (they hope) maintaining access to the lucrative Chinese market. That market's appetite for PC's is growing much faster than the US market is - if this all works, IBM will rake in a nice sum of cash from Asian sales while not having to do a whole lot of work for it.
Now, there are obstacles to this - there are numerous stories out like this one, hinting at security related concerns on the part of the US government. It's not guaranteed to happen - but if it does, IBM gets a huge jumpstart over their competition in terms of access to the Chinese market. Meanwhile, Schwartz is - again - either misreading or attempting to skew the story to fit his preferred worldview:
To me, the sale of IBM's PC business proves the point - the company that invented the category (me, I like to believe they cloned Apple's business), is now exiting due to poor financials. And attempting to sell it to a company whose principle competitive differentiator is cost (and geographic/political proximity to a growth market). It's my view that operating a PC only business doesn't really make a lot of sense - at least in the long run (which is why Dell's moving ever closer to selling microwave ovens, and still trying to convince the world they can run their supply chain on 1-way Xeons - hm, note to self, someone should ask their CFO on their next earnings call what systems run their supply chain).
Yes, he's correct about handset sales outstripping the sales of PC's, and he's right that the margin there will only grow. I'm not convinced that he's right about who will benefit on the back end of that - I know of plenty of large outfits in the network space that are retiring Sun boxes and bringing in commodity Linux as a replacement. This strategy from Sun looks a lot like the one they ran (successfully) during the dot com boom - back then, the expanding number of websites drove a lot of hardware sales to Sun. I wasn't convinced then that their huge investment in Java was helping them a lot - those websites were going to go up regardless, and Sun could have sold a lot of hardware without the huge software investment in Java. Likewise, I'm not at all convinced that the prevalence of Java phones helps them a lot here, either. Even if they do succeed in selling lots of hardware, the simple fact is that said hardware would sell with or without Sun's Java investment - Java's existence is not a pre-requisite for the mobile phone space. The point is - the JavaSoft group is a huge brick weighing down Sun's business, because the hardware sales they hope to make are almost completely independent of its existence. At the same time, other vendors - IBM, for instance - have used Java quite successfully as a shovel to pile money into their maw.
Sun is as obsessed with IBM now as they were with Microsoft over the last decade. I suspect that said obsession will be every bit as useful for them.