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Dell, HP, Microsoft, Oracle, Red Hat, IBM Vendors and operating system choices: Why is this so hard?

Originally published May 3, 2007

What's New
Key shifts by Microsoft and Oracle on Linux demonstrated their acceptance of the upstart OS as a valid solution for their enterprise customers (see “The Linux Liability Problem”). They also represented the first serious threats to Red Hat, threats it is deftly handling, (see “Bring It On, Says Red Hat”).

Meanwhile, more developments:

  • The Dell IdeaStorm site opened, giving customers an opportunity to let Dell (and the world) know what they want. Those customers made it clear that they want hardware with Linux pre-installed, instead of Windows. Should be simple, but it isn't.
  • In fact, Dell may actually be offering PCs with Linux pre-installed. I've never been able to navigate to a Dell/Linux page from Dell's homepage, but www.dell.com/linux and www.dell.com/nseries appear to function if you want to order a PC with Linux pre-installed.
  • According to CRN, HP is making money selling Linux PCs. At least, that's what the anonymous source is telling people about special corporate deals being cut at HP for thousands of units with Linux installed instead of Windows.
  • Oracle is cloning Red Hat Enterprise Linux, which should mean that Oracle Linux is functionally equivalent to RHEL; but it's not RHEL, since you didn't buy it from Red Hat. Furthermore, if you're really concerned about quality issues, then consider that IBM is not certifying Oracle Linux as a supported OS (“IBM Refuses To Certify Oracle Linux”). Does this mean anything for anyone? I think it's significant.

Does Dell really sell Linux PCs? They seem to be offering them (see www.dell.com/linux), but according to Jack Schofield at the Guardian Unlimited (“If you think selling Linux is easy, why not beat Dell to it?”), the bottom line is that it doesn't make financial sense for Dell to do so.


Schofield suggests that choosing a Linux distribution from the hundred or more available could cause problems – but only a handful of those distributions are appropriate for mass-market desktop use; likewise, Schofield says Dell must certify the distributions with all Dell's hardware – but vendors such as Red Hat and Novell already do significant hardware certification.


More telling are Schofield’s arguments about the costs: end-user support for any Linux distribution can be a problem, as most distributions include far more software than the base OS, including up to thousands of applications. Furthermore, Microsoft and Intel offer discounts and advertising co-op deals which cut costs, while crapware vendors (ISPs, virus checkers, etc.) pay Dell for each PC their software is pre-installed on, cutting the costs to the user (or, increasing Dell's profits).


So let's look at how the arguments stack up against hardware vendors selling Linux PCs.


Operating System Options
If you consider the lifetime of the universe from the advent of Windows 3.1 (the first really popular – and usable – version), then for most of history there've been at least a couple of choices for business Windows users. Shortly after 3.1 came Windows for Workgroups (Windows 3.11); there was Windows NT for heavy-duty uses overlapping 3.x and Windows 95/98. Windows XP came in two flavors, Professional and Home Edition, and Vista now comes in a staggering five different versions.


If you're ordering hardware for an enterprise, you still must decide among Vista Ultimate, Vista Business or Vista Enterprise.


In other words, Microsoft no longer offers the single, simple and no-brainer solution to OS choice: you've got to choose one of five different operating systems. That means that when a vendor tries to convince you that Linux makes things too complicated – after all, there are just so many different versions of Linux to choose from – they’re blowing smoke.


Are the different versions of Linux incompatible somehow? It all depends on what you mean by “compatible,” but generally, Linux-based computers are all going to interoperate in a predictable and stable manner.


End User Support
Let's face it, support is a cost-center: the more you have to spend to support your product, the less your profit. Whether support is just an ancillary feature of your product, or the product itself, as with so many commercial open source ventures, the more you spend on support, the less you have to spend on all the other aspects of your business.


Would supporting Linux, even many different Linux distributions, be so difficult for hardware vendors? Again, it all depends on definitions: what does it mean for a PC vendor to “support” an OS? If that means the vendor has to be able to take calls from users who are having trouble getting an application to run, then supporting Linux could be a problem: most of the popular distributions include hundreds or thousands of different applications.


No one is doing that, not for any OS. A hardware vendor may stand behind their computers' ability to run Vista and the latest version of Office, but I doubt they'll solve your trouble with a virus-checker program interfering with an enterprise Java applet. Nor will most hardware vendors spend much time certifying their hardware to work with older versions of Windows.


What's the Difference?
Despite the high price on shrink-wrapped copies of Microsoft Vista, the cost of a bundled license when you buy PCs from vendors like Dell or HP is so low as to make it apparently free. The effective marginal cost of a Vista license in those cases is zero (or less): not only does Microsoft have an incentive to keep the price of the original hardware license low, but other software vendors who want to get their software on your desktop are willing to pay hardware manufacturers for the privilege of being bundled in.


The result is that not only are you unlikely to save money on the initial purchase price of PCs with Linux (or even PCs with no OS) over PCs with Vista, but you may pay even more for a Linux or naked system than for a Windows PC. In other words, your initial cost for that PC will be higher if you opt away from Windows.


However, that equation changes the instant you look at the total cost of ownership by including application software, OS upgrades, and ongoing system administration. Microsoft's OS division generates an important revenue stream, but more than that, the OS is the foundation on which application software sales are built, as well as OS upgrade sales.


That means you may pay $50 more per PC for Linux than for Vista, but over the lifetime of the PC, you will likely avoid at least one major upgrade release, either of the OS or the productivity software suite, a likely saving of anywhere from $100 to $500 or more. PCs with Linux installed don't need to be upgraded as often because older versions of Linux distributions typically are maintained longer and newer versions are not treated as mandatory updates.


Letting the Market Decide
The whole point behind free markets is that you let “the market” make decisions about what is sold and at what price. So far, so good: the participants in the computer hardware market, proprietary software vendors, hardware manufacturers and hardware purchasers all have a say.

The proprietary software vendors, led by Microsoft, make it worthwhile for hardware manufacturers to bundle their software with the hardware. This is good for the software vendors, because it gets their software out to lots of users/customers. This is good for the hardware vendors, because it reduces their costs (directly, in the form of payments from software vendors, and indirectly, in the form of support from the software vendors to help deliver usable computers). This is also good for consumers, because it keeps the cost of the hardware lower (through software vendor subsidies).

The hardware manufacturers are happy to accept subsidies and payments from software vendors, as long as it allows them to deliver products that their customers are ready to buy. However, the hardware vendors have to balance their contractual commitments to software vendors against what their hardware-buying customers actually want to buy. This is where Microsoft's arm-twisting can get nasty: can a hardware vendor ship significant volumes of PCs without Microsoft software and retain favorable discounts from Microsoft? Apparently, the answer is probably “no.”

PC purchasers may have some leverage with the PC vendors. Individuals really don't have much pull: Dell really doesn't worry too much about one-off buyers who would like to buy a Linux box. The Windows-equipped PC will be priced lower and more readily available, and doing a clean Linux install over Windows is easy enough to keep the status quo for most individual PC sales. Big companies buying lots of PCs have more influence: after all, it's much easier to buy a few thousand PCs with Linux pre-installed than to buy all those PCs and have to install Linux on each one.

Right now, the software vendors seem to be maintaining control over the equation: hardware manufacturers are constrained, for now, by the costs they'd incur by offering a real OS choice as well as by their view of the benefits (profits) they'd realize by selling more hardware.

Jack Schofield's whole point is that if you really think there's a market for Linux-based PCs, you should “beat Dell to it.” Given how fast hardware vendors are scrambling to put an OS-neutral or pro-Linux spin on their activities – while still maintaining good relations with Microsoft – we may not have to wait too long for an upstart hardware vendor to start offering attractive deals on hardware that doesn't have Microsoft inside.

  • Pete LoshinPete Loshin

    Pete is Founder of Internet-Standard.com, an open source and open standard computing consultancy providing technology assessment, needs analysis and transition planning services for organizations seeking alternatives to commercial software. Pete has written 20 books, including “TCP/IP Clearly Explained” 4th Edition, Morgan Kaufmann, 2003) and “IPv6 : Theory, Protocol, and Practice,” 2nd Edition (Morgan Kaufmann, 2004).

    Pete can be reached at pete@loshin.com or at 781. 859.9175.

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