Of course, the one company who is likely most unhappy about the whole gig is Microsoft, since every copy of Linux is one less copy of a Windows product in your house, in this case, Windows CE. If you stop to consider the potential for upgrading to a new Linksys router at $50-100 every other you, you might see why. I started off with a Linksys 802.11b router a couple of years ago. If I was a true gadget head, I could have first dumped the 802.11b router for a g model in 2003, and then moved up to a G with SpeedBoost in 2004. This year, I'll be buying an 802.11G router with VoIP support in a VoIP service bundle - one of the Ethernet ports is ditched to add a pair of RJ-11 jacks. Call it purchasing 3 routers over the past 5 years. So, net-net, three copies of Windows CE that didn't get sold to me. Multiple by multiple consumers, and someone in Windows CE land can't be too happy.
While you can find Linux appearing in low-ball laptops from Wal-Mart (here at http://media.linspire.com/walmart/) for $498, the upcoming battle between Microsoft and Linux will be on the hordes of VoIP phone debuting at CES in under two weeks that will flood the market in 2005. It's going to be a bunch of handsets and "smart phones" plus the latest gizmo, the Wi-Fi VoIP phone. Microsoft is going to push the ability for CE to integrate with Outlook and other Vole services while the Linux people will have the advantage of $10-15 per unit cheaper.
Another area where Linux will show up is in home-style NAS storage servers. Linksys already has a gizmo that is essentially an Ethernet port with a couple of USB ports on it to attach USB hard drives for network access, but I think this is a half-baked solution. Expect something in the Shuttle form factor that can take a pair of 5.25 inch drives plus a double-layer DVD drive (or two) for backup purposes. PCs are so cheap it almost makes sense to just buy a low-end PC and toss a couple of drives in, but the cost of Windows XP (and the associated licensing headaches) isn't worth the extra $100 in the long run. A stripped down and "hardened" Linux will almost always be a more secure solution than Windows XP for any given situation.
Beyond 2005, Linux may be the baseline OS load in low-cost thin-clients built around cheap chips and Firefox for both home and enterprise use. Since the web browser is the baseline interface to access remote servers, be they sitting on a corporate WAN or in the home to program the TiVo and play stored audio, video, and pictures, you don't need a lot of hardware overhead and expense. µ
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