It Doesn't Have To Be Like This
If you repeat the above cost-to-market analysis for a humble $20 (retail) four-port 10/100 Ethernet hub, you find that shipping costs are only 3% or so. That's better value for nearly everyone involved: the manufacturer, the distributor, and the consumer. No Windows licenses in a hub, either. Hubs are cheap, quiet, instant-on, and always-on. They don't get viruses and they don't crash. They're just about perfect. I feel good buying a hub because I know that a fair portion of my $20 actually lives in the hub itself, not in some shipping lane. No strangled otters involved, either. The beauty of a hub is in the compact physical size crammed with value. It's free of baggage.
It's time that PC hardware vendors relearned how to concentrate value like this, especially in the easy-to-ship PC items like thin screens and keyboards. There are plenty of easy-ship industry examples to study:
Apple iMac G5nothing but a value-added thin monitor and keyboard
Sun Microsystems Sun Raya compact monitor that receives screen updates across a LAN from a server
I could go on. The way forward to cheap PCs is better networking and more valuable, smaller devices. The Japanese say it best: Shrink it.
The new tools available to PC manufacturers are newer networks based on open standards and integration technologies based on open software. These fields are rich in opportunity. To quote Sun Microsystems' Scott McNeally: "There's money to be made in not being Microsoft."
Gigabit Ethernet, for example, is a well-established standard, and the even faster Fast Gigabit is maturing. These networking standards are speedy enough to carry all the other protocols that modern PCs devices use. That includes WiFi, USB, Bluetooth, monitor signals, keyboard, mouse, microphone, speakers, headphones, camera, everything. It's possible to run all those other protocols through a single Gigabit Ethernet cable, on top of Ethernet. Gigabit Ethernet is a "one size fits all" transport. That means that the ports used for all of those other standards can now be moved away from the PC case. They can be placed on any device that has a single Gigabit port. That makes the PC nothing but a brick.
Secondly, free hardware integration software is now widely available. Open source products such as OpenBIOS, FreeBIOS, LinuxBIOS, FreeDOS, embedded Linux, Virtual Network Computing (VNC), X11, and many others are just a download away. There's no need to rely on Windows coordinating everything for you. That's an artifact of the past. Mobile phones get by without Windows, Palmtops get by without Windows, iPod gets by, Linux gets by. Why do we need Windows as a hardware integration solution? Perhaps for some things, but not for everything.