Dell: Linux netbook returns a "non-issue"

Dell: Linux netbook returns a "non-issue"

Summary: According to uber-OEM Dell, the whole debate about Linux netbook returns is a "non-issue".

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According to uber-OEM Dell, the whole debate about Linux netbook returns is a "non-issue".

Speaking at OpenSource World, a Dell executive deflated Microsoft's enthusiasm for making a case out of the number of Linux netbooks returned by unhappy customers.

Todd Finch, Dell senior product marketing manager, said the number of Linux returns are approximately the same as those for Windows netbooks. He categorized the matter of returns as a "non-issue".

Finch went on to say that Microsoft "are making something of nothing".

Ouch.

Interestingly enough, this is exactly what I've been hearing unofficially from several OEMs. This whole "Linux returns" issue stems from comments made by MSI a while ago, and after hearing from several customers, I think the returns were more down to MSI than Linux.

Microsoft are vulnerable when it comes to netbooks. This sounding off by Dell is a clear indication that OEMs are looking at Linux as a way to keep prices down. That said, netbooks aren't a slam-dunk for Linux either. Linux needs work, especially on the power-saving front. It also needs to leap Moore's Chasm and go from being an enthusiast thing and break into mainstream usage.

Still, if anything can drive Linux sales, it's price pressure, especially at the lower end of the spectrum. $50 on a system costing $1,000 is nothing, but on a system selling for $300, it's a big deal. And surprise, surprise, given how most people seem to use their netbooks, Linux is all the OS they need.

Topics: Dell, Hardware, Linux, Mobility, Open Source, Operating Systems, Software

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  • Marketing?

    A Dell exec goes to a Linux convention and says what the community wants to hear. He says, Linux netbook returns are not an issue.

    What's he gonna say to a linux crowd, "We put your OS on our hardware and people hated it."

    He's going to throw them red meat. "Linux isn't having any real issues and Microsoft is wrong." Cue applause and possible future sales.
    Fark
    • If that market segment were that unprofitable

      why would he care if he got future sales out of it?
      Michael Kelly
      • never alienate a potential client.

        It can't hurt to be nice to a client. It costs you nothing. Also - he may be hoping Linux has a greater adoption rate. If people will pay the same for a netbook with Windows as with Linux - then the Linux box is more profitable. The big question is "IF."
        Fark
        • What I find hard to believe is how the OEMs can afford Linux...

          Microsoft subsidizes advertising for the OEMs.
          They are not in the habit of doing that when it's for machines that don't sell with windows.
          <br>
          With the OEMs getting a steeply discounted price for Windows, and post sale making a profit on the OS and the Hardware AND the advertising that Dell doesn't have to pay for....I can't see how Linux could be a win.
          <br>
          If they can't sell service on a Linux box, then they are looking at really super thin margins.
          Somebody had to Install Linux and configure these machines. That is a cost that is not offset by the OS since it's free.
          <br>
          I simply don't see how OEMs selling hardware with Linux would be profitable. Selling "naked" PCs would be as profitable, theoretically, since there is no cost of installing the OS.

          I think, as you have said and others, this is just throwing Linux a bone in case there comes a time it can be monetized and DELL could actually make money from selling Linux machines.
          xuniL_z
          • xuinL_z, they use imaging systems.

            You can install a whole system from a PXE boot, use a Kickstart (for RedHat based systems) or Yast (for SuSE based systems). Even Windows can be imaged onto a system, though there is more work to do for it. It is just less expensive to use a network based installer for Linux based systems, so less cost (and even less human intervention needed) to do an install.
            B.O.F.H.
          • Even eaiser ...

            Use a PXE boot then:

            dd bs=4096 if=ubuntu.img of=/dev/sda

            Drop that one liner in a little script and you're done.
            MisterMiester
          • BOFH. Yes, I do understand that, but it's still a cost. There is more to..

            it. Version changes and application updates and so on. The process needs managed and there is still human intervention.
            The cost per machine may be low, but there is no revenue to offset it.
            I hear you but do you think it's enough to offset the higher margins and the subsidies from Microsoft?
            I just don't see how a gratis product mixes well in a very much for profit environment where commercial partners can sweeten the pot, and you may feel that is unfair, maybe not, but it's business under capitalism.
            <br>
            As I've asked many times, if Linux has a possibility of making a hardware vendor a good profit, why have we not seen any entrants into the market? It's been a good many years now that Linux has been said to be competitive in ease of use and application availability. Why haven't we seen VCs or a group of open source backers with the capital to do a startup, build the "DELL" of Linux OEMs? (maybe not as big as DELL to start of course).
            I have trouble seeing it as sustainable at this point.
            xuniL_z
          • I question your "good many years"

            I bought my wife a computer about a year ago and still had to load a couple of programs on it. This past month, my machine gave up the ghost (apparently motherboard failed) and I had to load up a new one. No client software, other than Open Office - just the browse and a few utilities. It seems the threshold has only recently been passed.

            Likewise, in the enterprise, until the past year or so, a lot of the productivity software and general enterprise management (timesheets, what have you) relied on client software; some of it became exclusively web only recently.

            I contend that Linux has been poised only very recently. You would not have seen the Director of National Intelligence and New York Stock Exchange phasing in their thin clients a couple of years back. We still needed Windows.

            Not exactly a "good many years," is it?
            IT_User
          • Your making some serious assumptions ...

            [i]"The cost per machine may be low, but there is no revenue to offset it."[/i]

            What? Were talking about the cost per unit offset by any marketing funds that Microsoft may or may not give. That's still a fixed cost that Dell must bear.

            And what revenue are we talking about? Secondary sales of software and services? If Ubuntu was not offered those customers would have either made a purchase elsewhere or choose a Windows laptop then replace the OS with Ubuntu.

            With this situation Dell either loses a sale or replaces that sale with a Windows version, but any secondary sales are going to be non-existent since the bulk of these machines will ultimately have Ubuntu anyway.

            Dell ran the numbers and it appears that not losing sales and/or gaining sales from competitors offsets any sunk, fixed, or variable costs of having Ubuntu available as a purchasing option. In-fact Dell just made an announcement that they were expanding their Linux offerings:

            http://www.pcworld.com/businesscenter/article/170186/dell_looks_to_linux_to_expand_netbook_presence.html

            Dell is profiting from the sales of Linux netbooks otherwise they wouldn't be intensifying their efforts. Since you're not privy to Dell's internal accounting division your analysis is worth about as much as the electrons on this page.
            MisterMiester
          • Why CAN'T They Sell Linux Support?

            There are Linux distros that will do what most people want Netbooks to do perfectly - be relatively secure (well, compared to WinXP anyway), let them Web surf and pick up e-mail, do simple office tasks like word processing and spreadsheets, and if they're a bit savvy watch videos and play arcade-level games while they're traveling. The problem is, many Linux distros, including Ubuntu, are unfamiliar to a lot of people - which is where Windoze XP has the advantage, since it's been around so long just about everybody knows how it works (or not) by now.

            There is no reason a Linux distro couldn't, say, offer something akin to AppleCare - a limited time free service and support, and paid service and support to those who need it after the time period is up if they don't want to search the Web like the rest of us do. The same organization could also make a deal to sell content, like licensed games and movies, to play on Netbooks at a high enough resolution to look good there.
            drprodny
          • Funny That You Should Ask That Question.....

            [i][b]"Why CAN'T They Sell Linux Support?
            "There are Linux distros that will do what most people want Netbooks to do perfectly - be relatively secure (well, compared to WinXP anyway), let them Web surf and pick up e-mail, do simple office tasks like word processing and spreadsheets, and if they're a bit savvy watch videos and play arcade-level games while they're traveling. The problem is, many Linux distros, including Ubuntu, are unfamiliar to a lot of people - which is where Windoze XP has the advantage, since it's been around so long just about everybody knows how it works (or not) by now."[/b][/i]
            --drprod

            Since you mention Ubuntu by name, here's a link for [b][i]paid[/i][/b] -- as well as free -- support: http://www.ubuntu.com/support

            By the way, any flavor of Linux is inherently more secure than any Windows product (including -- I'm willing to wager -- Windows 7).
            nbahn
          • Funny Canonical Never Mentions That, nbahn

            Thank you for the link! :)

            I've got Ubuntu 9.04 running on my EEE PC 901 right now - generally I'm happy with it, except for a little issue with updates breaking my WPA-encryped wifi. I'd like to download a patch that fixes that, and I'm not sure what I'm doing wrong here....

            Well - and the little issue that the &$#@*&@ keyboard on my 901 isn't QUITE big enough for my middle-aged fingers, but that just means I need a new Netbook w/a bit larger keyboard. ;)
            drprodny
          • Re: Funny Canonical Never Mentions That, nbahn

            drprod--

            Hopefully, the below will prove helpful to you.

            http://ubuntuforums.org/showthread.php?t=1147020

            HERE (http://forums13.itrc.hp.com/service/forums/bizsupport/questionanswer.do?admit=109447627+1250483036436+28353475&threadId=1342315) it is suggested that a similar problem's solution lies in the router itself.

            HERE (http://www.jpierre.com/2009/04/installing-ubuntu-netbook-remix-904-jaunty-jackelope-on-eee-pc-the-howto-guide/) there is a brief mention of a WPA2 issue and its resolution. (EDIT: The example provided is an Eee PC.)
            nbahn
          • nbahn, can't respond below any more - so Thank You

            The links will help me troubleshoot the WPA issue in a better way than stepping back every time I reboot, which is annoying and quite possibly insecure.

            As for Win 7 vs. Linux? Heaven knows I'm sick of Micro$haft's dominance of the desktop market, and Steve Ballmer's bullying way of trying to hang onto market share Windows no longer deserves. But Windows 7 is a step in the right direction, which is why I'm sure Ballmer has zip to actually do with it - he'd rather sue some open-source developer into oblivion using the DMCA has an excuse.
            drprodny
    • Exactly...

      Plus, a lot of people figure out they don't like Linux after all and just install Windows over it rather than pay to ship a $300 computer back to Dell.
      BillDem
    • Really?

      [i]"They start playing around with Linux and start realizing that it's not what they are used to. They don't want to spend time to learn it so they bring it back to the store. The return rate is at least four times higher for Linux netbooks than Windows XP netbooks."[/i]

      http://blog.laptopmag.com/msi-wind-coming-to-major-retailer-new-models-coming-soon

      If it's all about marketing then why did the MSI representative say their netbooks have a 4 times higher return rate? Would he not want to sell more product as not to alienate future potential customers?

      [i]"A third of our Mini 9 mix is Linux, which is well above the standard attach rate for other systems that offer Linux. We have done a very good job explaining to folks what Linux is" says Dell's Jay Pinkert.[/i]

      http://blog.laptopmag.com/one-third-of-dell-inspiron-mini-9s-sold-run-linux

      So when a different Dell representative says the exact same thing almost 8 months ago is it still marketing? Is Dell misrepresenting there sales numbers for Ubuntu machines? Do Dell stock holders know about this false representation by upper management?

      Better call the SEC because if Dell is knowingly making false statements that will effect stock holder equity then this is a violation of commission rules and regulations. Do you think Dell would do this just for marketing purposes?

      No I don't believe for one moment that Dell would risk an SEC inquiry over sales numbers. So to make a long story short I believe that you're talking out of a different orifice then everyone else.
      MisterMiester
      • MSI had real problems

        The MSI Wind had a high return rate because
        1) Salespeople and marketing material didn't make the situation clear
        2) More importantly, the hardware didn't work -- no wifi drivers and other problems an OEM should have solved before shipping.

        Everyone who read the reports about MSI knew the reasons, and all of us said that they weren't _necessarily_ indicative of something industry wide (though FUDders didn't listen). Both ASUS and Dell have come out and stated that return rates for both systems are essentially equal. I think that should settle the matter.
        daengbo
      • Well, He IS Clearly a M$FT Bigot, MM - They're USED to Talking Out of There

        N/M
        drprodny
      • Well, He IS Clearly a M$FT Bigot, MM - They're USED to Talking Out of There

        And you see a LOT of them on ZD/Net, don't you...?
        drprodny
  • RE: Dell: Linux netbook returns a

    Don't believe everything you hear, especially from an OEM at a linux conference. They will say what the audience wants to hear, even if its not true as in this case. The statement from MSI has to have some truth in it otherwise they would never have made such a claim. I find that a 4x return rate for linux netboots to be quite believable. In fact I haven't seen anyone carrying around a linux netbook.

    But the linux community only has itself to blame for this, if they didn't make such an inferior product which requires constant maintenance and patching then maybe it would have a bigger marketshare and more people would take interest. As of now most people say "No thank you!" to linux and for good reason. It doesn't do what they need it to do. No multimedia, no security, no applications.

    So yes, the linux netbook returns is a huge issue. OEMs are losing money on hardware because the OS they loaded just doesn't cut it and its not what people want.
    Loverock Davidson