[sf-lug] [Fwd: Re: The holy grail for FOSS publicity: NYT on-line covers Dell GNU Linux]

Christian Einfeldt einfeldt at gmail.com
Fri Oct 5 14:55:27 PDT 2007


On 10/5/07, Rick Moen <rick at linuxmafia.com> wrote:
> Quoting Tom Haddon (tom at greenleaftech.net):
> > I see where you're coming from, but I'm not sure I'd agree totally. I
> > think Dell are pretty serious about this, and the fact that they pushed
> > it through so quickly and then followed up by rolling it out in Europe
> > as well points to that.
> Well, sure, that's the good news, but I think you're disregarding the
> substance of what I said:

No, IMHO, I *meant* to build on your main point.

Members of the general computing public are being almost 100% prevented
> from finding Dell's Ubuntu offerings in casual product shopping --
> almost exactly the same as they were last time, around year 2000.

Right.  I was totally accepting this point as true, and speculating as to
why that might be the case.  It's because Dell doesn't want to cannibalize
its main revenue stream -- sales of Microsoft Windows boxes.

> I think ideal is obviously to have a choice of Windows or Linux on any
> > machine without having to go to a specific URL (i.e. knowing about it
> > before hand), but I also think Dell is all about the numbers - if it
> > makes financial sense for them to do that, they will.
> Sure, but....
> Part of "the numbers" is Microsoft Corporation's very considerable co-op
> marketing money, which OEMs fear losing.  They fear it a _lot_.

+1  I meant that to be one of my points.  Dell is firmly in Microsoft's
value chain (as a downstream distributor).

> seem to be implying (but apologies if I'm overinterpreting) that this is
> a level playing field,

No, sorry if I didn't make that clear.

> Pretty nearly the only significant (or even non-significant) retailers
> offering Linux pre-installs are small ones that do _not_ have Windows
> OEM contracts.

+1  That is what I meant when I said that these OEM vendors, such as
Zareason, for example, are outside the Microsoft value chain.

For example, let's contrast Dell with Zareason.com.  Zareason is a local SF
Bay Area family business that offers no Microsoft solutions at all.  For the
Dell fiscal year ending 2006/02/03, Dell had earnings of $55 B.  For Dell to
grow 10% the next year, they need to find $5 B in new sales.  They most
likely *ain't* going to find it from Linux sales, at least not this year.
If Dell is going to hit its growth targets (whatever they are), it is going
to need to focus on what its best customers want now and for the next few
quarters.  Since most of Dell's customers are Microsoft Windows end users
and SMB and enterprise customers, Dell is forced to continue to meet those
customers' needs first.  None of the marketing or sales people in Dell want
to get stuck with Linux sales, because they all want to get bonuses and get
promoted, and they are not going to hit their sales numbers by selling
Linux, for the same reason.

Now by contrast, let's think about Zareason.  Let's assume that they have
been in business for about one year, and that they have sold, say, 10 units
per month at $500.00 per unit.  That is $5,000.00 in gross sales per month
for 12 months, or $60,000.00 per year.  For Zareason to grow 10% next year,
they only need to find $6,000.00 of new sales per year for the upcoming
year.  Unlike salespersons at Dell, the Zareason sales team does not get
punished for focusing on FOSS sales, because Microsoft is only going to give
them a small margin for selling Microsoft products pre-installed, and how
can Zareason possibly compete with the reach and sales teams of HP and
Dell?  They can't.

So Zareason is highly motivated to focus on getting more sales for FOSS
installs. As FOSS gets better functionality and better "brand name"
acceptance, Zareason will probably benefit in disproportionate measure,
relatively speaking, from the growth of FOSS than will Dell.  Zareason is
more likely to get into deals with Linspire for a share of Linspire's
commercialized CNR apt-get solution.  Dell will probably continue to ignore
commercial implementations of apt-get for a long time.  It is entirely
possible that by the time that apt-get has commercial implementations,
someone like Zareason or System76 or EmperorLinux or Amazon or Google will
have made sufficient in-roads to commercializing apt-get such that said
company will have the key industry contacts, contracts, branding and key
employees to lock a Dell-type company out of the value chain.
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