LG Electronics India recently announced its decision to launch branded Linux-based PCs in India. In a stagnant market, will LG’s attempt to break into the branded PC market succeed? Srikanth R P reports on LG’s move to extend Linux to the desktop

R Manikandan says the Linux OS is not only relatively stable and bug-free, but also offers stronger memory management to the end-customer

While Linux has always been hailed as a great operating system, the popularity of Linux has been restricted to the enterprise segment. On the desktop front, Linux is very poorly represented. Maybe this is why large companies like IBM are aggressively pushing the adoption of Linux in the server space, but not much activity has taken place on the desktop front. Red Hat, the leader in Linux distributions, has only recently ensured that Linux can prove a serious challenge on the desktop, with Red Hat 8.

So when LG Electronics India, a significant player in the PC components business, recently announced that it was launching a branded PC christened, ‘MY PC,’ with Linux as the OS, it caught a lot of market players by surprise.

Surprise, because till now Linux as an OS has not made a dent in the desktop space because of the perception that the Linux OS is primarily meant for geeks and is difficult to operate. So has LG Electronics made a rash move by entering into a market whose time has not come? Well not entirely, especially if you look at the recent trends taking place in the Linux space.

The number of applications developed on the Linux OS for the home user is on the increase—home users are getting more comfortable with Linux and are willing to look at it as an OS.

Says R Manikandan, deputy general manager for sales & marketing at LG, “We already have a leading presence in most of the components that go into a PC. Our move into the desktop PC segment with the Linux OS is part of our strategy to create a difference in whatever market we operate in. The Linux OS is not only relatively stable and bug-free, but also offers stronger memory management to the end-customer. The Linux OS is fast catching up globally and we expect this trend to pick up in India too.”

Currently, LG is offering the ‘LG MY PC’ range of PCs in two configurations—basic and multimedia. The basic model consists of a Pentium IV processor, 128 MB RAM, 40 GB HDD, 15” LG monitor, an optical mouse and keyboard. In addition to this configuration, the multimedia model has a LG 52X CD-ROM drive and free Internet hours.

After taking into consideration the prevailing prices, especially those of MNC players, LG has priced the basic model at Rs 33,900 and the multimedia model at Rs 36,500.

But while LG may succeed in the branded PC market, due to its price and value proposition, in the unbranded market it is sure to face tough competition. One, the price competitiveness that LG has with respect to Linux will not be an advantage in the home segment as most assemblers use pirated software. Unless the piracy levels in India are greatly reduced, analysts feel that the cost advantage offered by Linux vis-à-vis other operating systems or software will not be too significant.

While LG may or may not succeed in a big way in the unbranded market, it certainly has reasons to smile in the corporate segment. As most applications based on Linux are free, LG believes that corporates can benefit from the huge cost savings.

Also, as most Indian state governments are looking at adopting Linux, the ambitious decision to launch Linux-based PCs could well turn out to be a winning strategy. In a cluttered and stagnant PC market, analysts believe that LG has nothing to lose, but everything to gain with its latest PC offerings.

And unlike the past, where it was said that the lack of Linux applications on the desktop was restricting growth in that segment, today the scenario is improving. For example, LG is bundling OpenOffice, along with the Linux OS. OpenOffice is an open source version of Sun’s StarOffice and includes key desktop applications such as a word processor, spreadsheet, a presentation manager and drawing programs.

Moreover, being a multi-platform suite it has the ability to run on a variety of operating systems and supports a variety of file formats, including Microsoft Office. As it is available at no additional cost, LG believes that this open source productivity software, combined with its PC, is ideal for small businesses, schools, or any other organisation that runs mixed operating systems.

Analysing LG’s strategy, market analysts believe that in the first phase LG is trying to make a dent in a market dominated by MNC players. They also say that the adoption of the Linux OS gives LG a crucial differentiating factor in an otherwise cluttered marketplace.

As Linux-based PCs would be cheaper by about eight to 10 percent, compared to foreign brands running Windows, LG believes that the value proposition would make a huge difference in a price sensitive market like India.

For instance, the lion’s share of Microsoft’s sales comes from Windows and Office licenses that are pre-installed on new PCs. But while PC prices have fallen, there has not been any substantial reduction in the prices of software or the OS. Hence, software as a percentage of the total system cost is increasingly rising.

This trend has forced PC makers to look at alternative systems which lower the costs of delivery to the end-customer. A Linux-based system, as it comes almost free of cost, gives a vendor like LG immense savings on the software front.

Conclusion
While the market for Linux-based desktops might not take off exponentially in the short term, kudos should be given to LG for at least the initiative to launch such a product. Also significant is the fact that this brainwave is the work of LG’s Indian arm. If the move succeeds in the Indian market, the future could well see LG launching similar PCs in other geographies as well.