[Leaplist] Home Consumer Distribution "Costs" -- WAS: Laptop without Windows in Orlando

[Bryan J Smith]

[ I wanted to fork this into a separate discussion ... ]

On Tue, 2009-07-28 at 17:30 +0000, Teemu Laine wrote: 
> Hi!
> Thank you Steve and Stephen. I read somewhere that the Microsoft tax
> is only about $50-100 but it would indeed be a matter of principle.

It's actually $25 per unit per model, fixed, for the "Home" version.
Microsoft has had to open up its pricing as the result of numerous
lawsuits.  It's even far less for the "netbook" pricing ($5/unit?),
although the vendors are limited to only 1GiB of RAM and 160GiB of
storage for such pricing.  It is one place that is hurting Microsoft.
E.g., Microsoft's desktop OS revenue dropped $1B the past quarter, over
a 30% drop (and a major share of their total revenue drop altogether).
Some are attributing that to people waiting on Windows 7, but it had
already been dropping before that (largely due to "netbook" sales and
its ultra-cheap pricing).

But beyond all this, people also forget that Microsoft also "subsidizes"
many of the Tier-1 PC OEMs.  They fund and front all sorts of money, pay
for various individuals on-site for various tasks, and there are many
levels and approaches in "subsidy" that cost money.  And it's not just
Microsoft.

Which brings me to my point and the "on-topic" nature of this post.

E.g., an unnamed Tier-1 PC OEM will charge $3-5/unit from a Linux vendor
just to ship on their "home consumer" desktops and notebooks -- charge
the Linux vendor (not the other way around ;)!  And I said ship, not
support.  So beyond that cost, the Linux vendor must take on some
additional agreements on the support end, often to be included.  Again,
"subsidy" of Tier-1 PC OEMs costs real money in the "home consumer"
world.  Even when the software is free, it's not.

Some Linux vendors choose to help fund that subsidy.  Most others do
not.  In fact, others feel they'd rather spend their money on non-profit
and community developments instead of subsidizing for-profit vendors.
So one must ask themselves where that money is going.  Because in the
case of Linux as a standard option for "home consumers" at the Tier-1 PC
OEMs, it's not going to the Linux vendor.

I guess some Linux vendors feel this is important, a door into a future
marketshare -- loss now, leader later.  We'll see.  It will be
interesting.  Although even the leaders of some of these same Linux
vendors that are being quite charitable to for-profit Tier-1 PC OEMs are
even now admitting that they don't know when there will ever be a profit
point.  And they also wonder if the "home consumer" angle will help them
in the "business desktop" angle.

All in all I don't know if Tier-1 PC OEMs will ever offer a profit model
for "home consumer" sales of Linux systems ... ever.  So these Tier-2 PC
OEMs and other "Whitebox" solutions are more likely to be "less of a
burden" on the Linux vendor than the Tier-1 PC OEMs, as they operate
independently and aren't subsidized.  It may always be that way for
getting Linux as a "home consumer."

There will be exceptions, of course, but even those have caveats.

E.g., HP has a healthy Debian team in their organization.  They use
Debian as the OS in a variety of products, from embedded to x86-based
thin client solutions.  It's like a high-end Tier-2 PC OEM offering with
real support.  In all honesty, it's because it's a costs-saver for HP,
because they have an OS they control for their non-PC type needs.  But
these are more "black box" and "here's a firmware update" type support
details.  You won't see HP offering Debian in a general capacity --
i.e., desktops and servers outside of a few niche products, because of
the support costs when the customer is exposed to a full Linux system.

This is the reality of the industry we live in, for Home Consumer
products.  They will always cost Tier-1 PC OEM vendors money, and the
only way to compete with Microsoft at the Tier-1 PC OEM is to subsidize
them as well, like Microsoft.

-- Bryan

P.S.  I'm biased (hence why I saved this for the "P.S.") but I'd rather
see that money go to non-profit projects, community software
developments, etc... instead of subsidizing for-profit Tier-1 PC OEMs.
The former always serves the community (even if indirectly, we get code
and sharing).  The latter serves marketing (let alone the for-profit
vendor) far more than the community (which is far more debatable).


-- 
Bryan J  Smith     Professional, Technical Annoyance 
Linked Profile:   http://www.linkedin.com/in/bjsmith 
---------------------------------------------------- 
      Fission Power:  An Inconvenient Solution       



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