Intel (INTC) Intends To Bite The Hand That Feeds It

Intel (INTC) plans to introduce a PC operating systems for low-end machines. The software is based on Linux, an open source platform that allows developers to create products that are often less expensive than those marketed by Microsoft.

Intel intends to target the netbook market where machines often sell for $300. Adding Microsoft Windows to those PCs can push their prices up 30% or 40%. The Intel operating system will be much less expensive.

Intel’s foray into the operating system business will be called Moblin v2.0 and it will work with the chip company”s netbook processor, the Atom. According toThe Wall Street Journal, “For users who are looking for an alternative to Windows, it’s disruptive,” said Guy Lunardi,  Novell’s director of client preloads.

Access to the latest versions of Windows is one of the key triggers for new PC sales although Microsoft Vista has not done terribly well advancing that legacy. But, the world’s largest software company is coming out with Windows 7 which should cause another round of PC purchases.

Intel walks a fine line by competing with Microsoft, but it has an advantage. Many people will buy netbooks whether the are loaded with Windows or not. Consumers need an operating system that has basic features. Intel is making sure that Microsoft is not the only alternative. To strike back at Intel, Microsoft would have to begin making its own processors. There is no chance of that happening and Intel knows it.

Douglas A. McIntyre