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Re: [News] OEMs Need GNU/Linux for Independence from a Convicted Monopoly Abuser

In comp.os.linux.advocacy, Roy Schestowitz
<newsgroups@xxxxxxxxxxxxxxx>
 wrote
on Sat, 23 Aug 2008 00:20:24 +0000
<1663259.RSa4F027K4@xxxxxxxxxxxxxxx>:
>
> Can the dog start wagging the tail?
>
> ,----[ Quote ]
> | What do you think would happen if any of these headlines showed up today?
> | 
> | "Dell to pre-install Open Office across product line"
> | "Lenovo to offer Suse Linux Enterprise across product line"
> | "Acer in talks with IBM for pre-installed Symphony"
> | 
> | Well, here's the likely scenarios.
> | 
> | Dell would be offered $30 Office if pre-installed over Open Office
> | Lenovo would see it's effective price of Vista dropped to make SLED more 
> | expensive 
> | Acer would be offered $30 Office if pre-installed over Symphony
> | 
> | 
> | [...]
> | 
> | With these kinds of developments in the computing world, it is very very hard 
> | to command the kinds of margins you used to. 
> | 
> | So the simple question is, for how much longer can the tail wag the dog? It 
> | won't be all that long until the dog realizes that hey "I can wag it myself". 
> `----
>
> http://mostly-linux.blogspot.com/2008/08/can-dog-start-wagging-tail.html

The dog (metaphorically speaking) is not the issue here,
but the fattening of profit margins, which are currently
razor thin and probably about to get thinner, as the
economy continues to sour.

This is why a Microsoft "per-CPU" discount works so well,
after all, and why such tactics as lowering prices for
Vista to be below a FOSS solution + support might work,
too.

Are these illegal under, say, the Sherman Antitrust Act?
Good question.

>
>
> Recent:
>
> Is Linux currently at a fundamental disadvantage owing to
> how computers are set up?

How can it not be?

[1] It's not pushed by a major corporation.
[2] It lacks name recognition (that's being slowly rectified, of
    course).
[3] It's not Windows, which has both [1] and [2] as advantages.
[4] Intel has finally seen the light (or more likely simply gotten
    fed up with Windows) and is starting to incorporate open
    source into its internals, apparently.  It is far from clear
    whether that will change its chip designs (not clear it really
    needs to anyway), but we'll see.

>
> ,----[ Quote ]
> | Dell offers full blown computers with Linux installed, presumably,
> | with the engineering I'm talking about done.

Not 100% sure about that.  True,
http://www.dell.com/content/topics/segtopic.aspx/linux_3x?c=us&cs=19&l=en&s=dhs
exists, but it's far from clear whether Dell:

[1] slaps on an image and burns-in the unit, [*]
    then tests and ships it, along with an install kit.

[2] slaps on an image and burns-in the unit,
    then tests and ships it, along with a minimal reinstall kit.

[3] burns-in the unit using something else, then zeroes it,
    shipping the user a computer and an install kit
    with a single sheet of instructions.

[4] burns-in/tests the unit with something relatively useless,
    and ships it as is, along with aforementioned
    installation kit.

[5] burns-in the unit and ships it with a page of
    instructions on how to download and create a CD using
    Windows thirdparty software.

I would hope for [1] and at least [4].  The Ubuntu pages
are less than clear on the matter.  As usual, the config
pages recommend Windows Vista.

> | And over time we can expect to see a full
> | range of different levels of offerings in between. I think when out of the
> | box Linux computers start to become the default Linux for the average end
> | user, and the engineering issues become backgrounded for Linux like they are
> | now for Windows, that we may start to see more momentum in the direction of
> | Linux to the exclusion of Windows. And, for a special breed of user, we'll
> | see Linux being chosen over Mac.

I'm not quite so optimistic, but I'll admit it's a nice possibility.
The main problem is that Microsoft doesn't quite play fair, from
all accounts.

> `----
>
> http://scienceblogs.com/gregladen/2008/07/is_linux_currently_at_a_fundam.php?utm_source=sbhomepage&utm_medium=link&utm_content=channellink
>
>
> More evidence of Microsoft "tying up" the Asus EeePC
>
> ,----[ Quote ]
> | Then, one of the makers of Netbooks will release a fantastic product using
> | the paid Ubuntu/Netbook Remix, which will make us all forget about the EeePC
> | ? or, maybe we?ll remember it as one of the makers which used GNU/Linux in
> | order to launch a product, and then gave in to Microsoft?s pressure.
> |
> | The real question is: will the next maker manage to resist Microsoft?s
> | pressure? Or will everybody end up closely tied up with Microsoft?
> `----
>
> http://www.freesoftwaremagazine.com/columns/more_evidence_microsoft_tying_up_the_asus_eeepc
>

Like we're not already?

- Samba
- various fonts
- various codecs

>
> Related:
>
> Feeling the heat at Microsoft
>
> ,----[ Quote ]
> | If I ask you who is Microsoft's biggest competitor now, who would it be?
> |
> | Ballmer: Open...Linux. I don't want to say open source. Linux, certainly have
> | to go with that.
> `----
>
> http://www.news.com/Feeling-the-heat-at-Microsoft/2008-1012_3-6232458.html?tag=ne.fd.mnbc
>
>
> Did Microsoft want to 'whack' Dell over its Linux dealings?
>
> http://news.com.com/Did+Microsoft+want+to+whack+Dell+over+its+Linux+dealings/2100-1014_3-6153904.html
>
>
> Dell's secret Linux fling
>
> http://www.theregister.co.uk/2007/01/09/dell_linux_china/
>
>
> Microsoft 'killed Dell Linux' - States
>
> http://www.theregister.co.uk/2002/03/19/microsoft_killed_dell_linux_states/
>

The OEMs are not exactly in the strongest of positions to
resist Microsoft, after all.  Dell in particular has
a profit margin of only 4.76%, and a slightly fatter
but still very lean operating margin of 5.82%.  Contrast
these with Microsoft's far more robust 29.26% and 39.64%.
Hewlett-Packard isn't a lot better off: 7.37% and 9.02%,
respectively.

http://finance.yahoo.com/q/ks?s=MSFT
http://finance.yahoo.com/q/ks?s=DELL
http://finance.yahoo.com/q/ks?s=HPQ

While all three are doing well, Microsoft has more
flexibility and a little more oomph, even though Dell's
raw revenues are slightly bigger ($62.49B versus $60.42B)
and HP is almost twice as big ($110B).  These are also
reflected in market cap valuation:

MSFT = $254B, HPQ = $116B, DELL = $51B

The market loves Microsoft and doesn't care for Dell or HP
(I wonder how many companies have a valuation lower than
their yearly raw revenue?).

Microsoft can afford to discount Vista 10% to capture and
lock in additional market share, should it need to (and
it's not deemed illegal); that would dip its profit margin
from 29.26% to about 21.4%, assuming all of its $60.42B
of revenues is coming from Vista, which is unlikely.
Neither Dell nor HP can afford to give up that discount,
unless their product mixes includes at least 50% Linux
machines, and I highly doubt that.  (In HP's case, though,
I'd have to look; they're rather diversified.)

>
> ,----[ Quote ]
> | From: Joachim Kempin
> | Sent: Tuesday, January 16, 1996 9:43 AM
> | To: Bill Gates; Pete Higgings (Xenix); Nathan Myhrvold; Brad Silberberg
> | (Xenix); John Ludwig; Russel Siegeirman (Xenix); Steve Ballmer;
> | paulma@xxxxxxxxxxxxxxxxxxxxxx
> | Subject: RE: AOL
> |
> | are you suggesting we should put them in our box? May be all of them?
> | Not a bad idea - but the OEMs might not be too hapy about it. They are
> | loosing their $$?
> | P they are not in compliance. Compaq
> | truely pisses me off.
> `----
>
> http://edge-op.org/iowa/www.iowaconsumercase.org/122106/PLEX0_2455.pdf
>
>
> Microsoft Shuts Down Linux 10 Years Ago Says Iowa Attorne
>
> ,----[ Quote ]
> | Going back now to as early as 1998, Microsoft starts to realize that
> | Linux might pose a possible threat, and Vinod Valloppillil, who is
> | a program manager at Microsoft, is asked by Mr. Allchin, Jim Allchin,
> | to analyze potential strategies for combatting open-source software,
> | and specifically Linux.
> | His memos are leaked to the press in April -- I beg your pardon --
> | in October of 1998 and become known as the Halloween documents.
> | And the evidence will be that Microsoft uses its influence in the
> | OEM channel, the computer manufacture channel, to make sure that
> | end users have a difficult time buying PCs with Linux preinstalled.

Or "naked PCs".  Not sure whatever happened to the proposal of
preinstalling Windows on disk units -- though I did buy my 1 TB
storage unit with some preloaded backup software, which for me
is generally useless (I'll admit to some curiosity as to how
well it will function under WinE, though).

> `----
>
> http://www.linuxelectrons.com/News/RoundUp/Microsoft_Shuts_Down_Linux_10_Years_Ago_Says_Iowa_Attorney
>
>
> Microsoft's Dirty OEM-Secret
>
> ,----[ Quote ]
> | They are, in short the secret to Microsoft's success. And the word
> | secret is to be taken quite literally: No OEM may talk about the
> | contents of his contract, or he will lose his license, and (assumption)
> | likely be sued for breach of contract as well.

Can't be too careful with competitors and the DoJ nosing about...

> `----
>
> http://www.kuro5hin.org/story/2001/10/23/13219/110

[*] a requirement to catch infant mortality, as I understand it.
    The unit basically sits in an area, consuming power, maybe
    with a light exercising program.  I'd frankly have to look.

-- 
#191, ewill3@xxxxxxxxxxxxx
/dev/brain: Permission denied
** Posted from http://www.teranews.com **

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