Where there are more or less standardized interfaces and software truly can be interchangeable, Linux and other free systems have largely taken over. Proprietary POSIX systems have been forced either to the margin (AIX, UnixWare) or to change to a free license (Solaris). Obviously the big more-or-less standard interface driving commoditization of personal systems is the web. I’m writing this using the latest beta of Firefox 3, and I’d say Windows and Mac OS X don’t have anything in the browser department that Linux does not have. The number of systems and users that only need a browser is growing, and where cost matters, free systems will take over these users.

The big interfaces that Microsoft owns are the Office file formats and the Exchange server. If these areas are to be ‘commoditized’, I think it’ll be done by large corporate and institutional users switching to open standards, not individual home users. OpenOffice seems to have a growing list of large institutional adopters, but I’m not sure it is significant compared to Microsoft’s installed base.

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While the pioneering companies you mentioned certainly did make computing accessible to the masses, that’s not the same as commoditizing the market. Operating systems are widely available, but they are not “interchangeable” – and this is critical for commoditization. You seem to be discounting this aspect of the definition. Ask yourself – if Windows, OS X, and Linux were truly interchangeable, why would anyone buy OS X or Windows when they could get Linux for free?

Your last statement implies that in order for a good to be affordable, it must be a commodity. Further, your comment in general, suggest that any good which is affordable is a commodity. This isn’t the case at all. Gasoline, strawberries, electricity, and natural gas are all commodities. Yes they are affordable, but this is a function of the cost to produce and deliver them to market. Other commodities are quite expensive: silver, gold, and diamonds for instance. In a free market, low margins are a necessary effect of commoditization, low prices are not.

Beer, soup, breakfast cereal, and soda are also all very affordable, but they are not commodities because consumers do not see the alternatives in the market as being interchangeable. Think back to the last time you bought a beer or a soda. Did you buy a generic brand? Most folks don’t – even though by doing so they could save 40% or more on the purchase. The distinguishing characteristic of a commoditized market is that the companies playing there compete primarily on price. That doesn’t mean the price is low, it just means that the margins are small.

Finally, while I disagree with you that the desktop market in general is commoditized, my gut instinct is to agree with you that UNIX-like operating systems are now commodities. Some research there might be in order though.

In a sense, Heathkit, Zenith, Commodore and Tandy commoditized the operating system.

Webster says:
1: commodify; specifically : to render (a good or service) widely available and interchangeable with one provided by another company
2: to affect (as a brand or a market) by commoditizing goods or services

The above named companies commoditized the OS by the second definition. Linux commoditizes the OS by the first *and* second definitions.

Examples:
Bike tires
the ford model T
digital audio workstations
x86 hardware (once IBM opened the spec)

Technically, the “Operating System” was commoditized with the Commodore64, Tandy, Atari, Texas Instruments and Zenith computers and has remained so since the late 70’s. Once these came out, anyone with $200 could have a working computer, including the operating system. While very minimal and a lot like a BIOS these still meet the definition of what an OS is.

DOS commoditized the OS on x86 hardware and really started the ball rolling.

FOSS operating systems have taken this commoditization further, not created it. Linux is available to anyone regardless of financial means, like air and you can compile and run a given piece of linux compatible software on any company’s distro, which meets the first definition. That being said, Linux and BSD *did* commoditize “UNIX like Operating Systems”, just not “Operating Systems”.

Couldn’t resist this because I was there. I watched computers and OS’s become commoditized as it happened. Commodity does not mean free, just common, cheap, and sometimes interoperable.

By contrast z/OS running on a mainframe is not commoditized, though often large companies use mainframes to run commodity OS’s as virtual machines.

If OS’s were not a commodity, only the very wealthy could afford them.

-Viz

well, quite!

thats exactly the problem. with the eeepc and the likes, consumers are for the first time having the option of purchasing a computer with a non-MS operating system, or at least not having to pay MS for an operating system (even if they choose to run a different one thereafter).

The OEM-lockin monopoly is an _absolute scandal_, but once this is over, MS will fade away deservedly!

moving from having a choice and competing against a billion-dollar marketing budget with something free and good will take some time!

My point in quoting the revenue figures from Microsoft & Apple was to illustrate that this is still a highly differentiated market. So much so, that the primary players are making billions even while competing against a product that is being given away.

Nathan, you forgot a core design criteria methodology; Application to be run –> OS required to run them –> OS purchased. People don’t buy pipes for pipe, they buy pipes to have water. The same can be said for OS’s. People buy the OS so that they can run applications like MS Office and Quicken on it.

Don’t be fooled by the numbers you quote. Back out 5% for inflation. Then back out a 17% premium for the cost of Vista over the previous OS, XP. If anything Vista is flat. What you really want to quote is unit sales not revenue. Nor does $$ sales growth have a correlation with commodization unless you know what is the unit sales cost for an OEM license.

Marginal cost of software is ZERO