Quantifying the "Microsoft Tax"

Quantifying the "Microsoft Tax"

Summary: Eighty dollars. That's the number (at least for Vista Home Premium) according to this comparison from Coding Horror of the price delta between identical Dell systems configured with Vista and Ubuntu Linux.

TOPICS: Windows, Dell, Microsoft

Eighty dollars. That's the number (at least for Vista Home Premium) according to this comparison from Coding Horror of the price delta between identical Dell systems configured with Vista and Ubuntu Linux.

The hardware is essentially identical. We can infer that Dell's price for a Windows Vista Home Premium license is $80. An OEM copy of Home Premium runs about $129, so it's cheaper to buy the license from Dell than it is to buy one yourself. But if you have no intention of running Windows, you just saved eighty bucks.

Kudos to Dell for doing the right thing and ending the Microsoft Tax. It's also quite possible today will be looked back on as an important turning point in the history of desktop computing.

Do you think so? Between unbundling their PCs from Windows and announcing they'll be selling PCs retail through Wal-Mart, it's definitely a turning point in the history of Dell. The whole "history of desktop computing" thing remains to be seen. Ask me again when a second major OEM announces they're following Dell's lead.

Oh yeah... almost forgot. So does a Dell box running Ubuntu avoid the latest Dell-Google "evil" plan to make money off our inability to spell?

Update: Ars Technica says the tax is $50.00 (at least on the high-end XPS system).

Topics: Windows, Dell, Microsoft

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  • So where...

    ...are all the talkbackers who predicted that Dell would charge MORE (or at least the same) for the Linux-equipped PC? :)

    Carl Rapson
    • Right here

      [i]So where are all the talkbackers who predicted that Dell would charge MORE (or at least the same) for the Linux-equipped PC?[/i]

      Can't speak for the rest, but most of the predictions were mine -- and I was wrong.
      Yagotta B. Kidding
      • It happens

        Just a little sarcasm at your expense. Having been wrong a time or two myself (*ahem*), it's certainly not my place to hold it over anyone. And to be honest, I wouldn't have been surprised if Dell had indeed done that. Let's just be glad together that Dell surprised everyone, and see what happens next.

        Carl Rapson
  • I thought...

    I had read that Dell was going to charge the same price for a Ubuntu loaded system and a Windows loaded system. The difference was going to be the hardware. The Ubuntu one would have better hardware since they would not have to pay the Microsoft Tax. I wonder if Dell is going to be greedy and try to recoup that $80 for themselves.
    • Greedy? Have you seen their numbers?

      If they do keep the margin, it's not greed... it's survival. If business in the direct order-and-build-to-suit market Dell pioneered still had profit left in it, they'd never have doe either of these things (Linux or Wal-Mart). Their numbers are way down and they're being forced to adapt by trying new tactics.
  • It's not a tax

    A tax is something you are coerced into paying by government.

    Who is forcing anyone to buy a PC from Dell?

    If Microsoft's terms are too onerous, then dont do business with them. Dell can then sell blank machines or ones with just Linux on them. If all the zealots here are correct, Dell should have no shortage of customers.
    • MS would like it to be

      In fact, years ago, they charged OEMs for each CPU sold, regardless of whether DOS/Windows was preloaded or not. They only changed the practice because a US District Court ordered them to. MS has also actively lobbied against allowing computers to be sold without an OS preloaded (apparently, they succeeded in China) and has in the past used price discrimination to discourage OEMs from preloading anything else.

      No, Bill Gates can't throw you in jail or garnish your wages for declining to pay for software you're not going to use, but it has been MS' policy for a long time to make it as difficult as possible to buy an x86 PC that's not preloaded with an MS operating system.

      On the whole, "tax" is an apt term and this columnist isn't the only one who uses it.
      John L. Ries
      • It is common terminology

        I and many others have used it for years, especially since the mid-90's when OSS really started coming into its own. Hence the quotations. It has been tremendously difficult to buy a system, except from local white box shops (or build your own) without a Microsoft OS on it.
        • What is so difficult?

          [i]It has been tremendously difficult to buy a system, except from local white box shops (or build your own) without a Microsoft OS on it.[/i]

          Can none of you type in:
          Seriously, what is so hard? Apple has even had extremely famous ad campaigns so you can't even say that people don't realize Apple doesn't sell computers. Face it, the opportunity to avoid the MS "tax" has [b]always[/b] been there. It just so happens that 90%+ choose not to avoid it. I really don't see how yet another computer company offering yet another computer with yet another OS on it is news and it certainly isn't "revolutionary".

          Again, anyone complaining about how difficult it is to buy a non Windows computer is being incredibly dishonest.
          • Oh come on

            You're taking a crazy position saying that. Up until recently, you could not easily buy an x86 machine without Windows installed is the statement that was made. We're talking about non-proprietary, commodity-component-based systems, not Macs.

            Trust me ? everyone in this conversation knows that you buy computers from Apple so there's certainly no "dishonesty" here. Apples and oranges is more like it.

            As you might know, I have both a MacBook and an iMac in service right now (along with a rarely used old Power PC G3 Power Mac). So there's no Apple-bashing implied in this conversation. Macs are just not relevant to the discussion at hand. They are proprietary systems from a closed ecosystem manufacturer with a unique model of controlling both the hardware and operating system.

            If you don't think that one of the largest resellers of Windows-based systems branching out, however tenuously, into selling Intel-based systems with an open source operating system installed is news, you're going to have a hard time selling that soap. This is a significant break from how the market has been operating and is certainly noteworthy.
          • Party Line

            MS and its boosters for years have implied that the only legitimate alternative to an MS-Windows preloaded PC is an Apple Macintosh, which is usually much more expensive, the assumption being that anyone who buys an x86-based PC should be paying MS for the privilege (at least indirectly). Your comments follow that line perfectly.

            Marc is correct that until recently, it was very difficult to get an x86 PC that didn't have an MS operating system preloaded (custom-built was pretty much the only option). Couldn't even get IBM to sell a PC preloaded with their own OS/2 back when they were strongly promoting OS/2 (mid 1990's). Turned out that there were reasons, but those didn't surface until the DOJ took MS to court.

            Sure you're not a zealot?
            John L. Ries
          • To both respondents

            You both have artificially limited the market to x86 computers. Why? Instead of saying:
            [i]you could not easily buy an x86 machine without Windows installed[/i]

            I could easily say

            [i]you cannot easily buy a PPC home computer without OSX installed[/i]

            but who cares? If you are looking for a computer that can surf the web, handle email, do word processing, accounting, play a couple games, etc, what has ever been wrong with buying from Apple? What end user requirement could possibly exist that could justify the artificial limiting of the market to include only x86 computers? What, exactly, could x86 computers do for the average home consumer that PPC computers couldn't?

            Your position is even shakier when you consider that for about a year now, Macs have also been on the x86 platform. For about a year now, if you wanted an x86 without paying the Microsoft tax, you could [b]very easily[/b] buy a Mac. That fact makes this Dell announcement even more of a yawner in the context of "finally being able to buy a computer without paying the Microsoft tax". Don't get me wrong, I'm glad that Dell is offering Ubuntu preloaded but let's not lie and say that people [b]couldn't[/b] avoid the Microsoft tax. They've [b]always[/b] been able to buy a Mac (x86 or PPC doesn't matter as long as the product can satisfy the end user requirements) and for about a year now, they've been able to [b]easily[/b] avoid the MS tax on x86 computers by buying Mac. We'll also completely ignore stores like TigerDirect who have been selling naked PCs at a discount for years because that just makes your thesis even more untenable.
          • So what legitimate claim...

            ... does MS have on the PC market that they try so hard to make sure that all x86 PC users pay MS for the privilege? Why is it so important to make sure that all PC users buy an MS operating system, whether they want it or not?

            Naked PCs, are, of course, a recent (and welcome) phonomenon. I may never buy a preloaded computer (except for maybe a Mac) again because I'd much rather set up the OS the way I want, instead of how the manufacturer dictates.
            John L. Ries
          • Never let the facts get in the way of a good story

            Macs are not relevant to this discussion so please stop with the completely rhetorical comments. I get your point ? so does everyone else here. You're an Apple zealot, your handle notwithstanding.

            Macs have been, until recently, a premium choice for a certain kind of PC buyer. The premium price was actually called the "Cupertino tax" for a while. It's a closed ecosystem that has traditionally been harder to accessorize or customize. The price delta has nicely slimmed down and there's a real renaissance in software development going on that makes most of my Windows-only buddies insanely jealous. The standardization on USB (rather the proprietary ADB) and iPod peripheral goldmine has made accessories affordable and choice plentiful. That's all good news for everyone who wants a Mac.

            But not everyone does.

            And now you're throwing out Tiger Direct as an "easy" purchasing option suitable for mainstream consumers? Please. Do a search on Tiger Direct and you'll find a level of the hot place similar to the now-famous Dell Hell. "Regular people" do not shop with Tiger Direct - most don't even know they exist. Dell, OTOH is a household name and a brand that enjoys positive associations in a large segment of the consumer (as opposed to geek) market.

            Stop with the attack language please. Because someone sees things differently than you does not make them dishonest or a liar.
          • If you say so

            [i]Macs are not relevant to this discussion so please stop with the completely rhetorical comments.[/i]

            Okay, if you say so. I know state, as fact, that it is impossible to buy a car without paying the "Ford" tax. IMPOSSIBLE!!! And if anyone brings up Chevy I'll simply say that Chevy isn't relevant to this discussion and ask them to stop with the completely rhetorical comments. You are right, if we completely ignore all the home computers out there that can be bought without paying MS tax, it is impossible to buy a home computer without paying MS tax. Wow, I feel so much better informed now!

            [i]But not everyone does.[/i]

            (in reference to not everyone wanting to buy a Mac)
            Can't I turn this around and say that not everyone wants to pay the MS tax and those that don't, can buy a Mac? Or does it only work one way?

            [i]Because someone sees things differently than you does not make them dishonest or a liar.[/i]

            You can't call anyone dishonest for stating an opinion. What I call dishonest is the artificial limiting of the home computer market to include only x86 computers sold by large companies. That isn't "seeing something different", that is having a conclusion in mind (avoiding the MS tax on all computers has been difficult) and then actively ignoring (and telling others to ignore) all pieces of evidence that run contrary to your conclusion. There is a lot of evidence that you've always been able to buy a home computer without paying the MS tax if you want to: [i]but not everyone does[/i] (if I may quote you). Those that don't want to avoid the tax, don't. Those that do, buy a Mac, buy from their local computer store, buy from TigerDirect, build their own, etc, etc, etc.
  • Makes no sense

    Even if you are going to run Ubuntu, why wouldn't you buy the Windows machine to get a cheap copy of Windows? You could run Ubuntu as a host and Windows as a guest or vice versa. Although there may be an odd technicality in the Windows license that would prohibit running as a guest.

    Still, I hope it works for Dell and Linux gets better driver support.
    • Makes sense to me.

      My home PCs have been Linux-only since 1998, and I'd much rather spend the money that Microsoft makes it difficult for me [i]not[/i] to spend on a Windows licence on hardware upgrades instead.
  • You're both right

    Preface: 1. This post is late and won't be accepted, so oh well. I read my RSS in batches. 2. I apologize for the eye-rolling diplomacy coming up.

    You're both right.

    Now down to business. Zealot, yes we all have choices, and we all know that. The point is that 90%+ of the public are sheep and don't buy or build "white box" PC. They buy Dell or another name brand, and Dell's a biggie. Dell therefore has huge market sway. Microsoft actually cares what Dell does. Dell's that big. So yes it's major for Dell to offer a non-Microsoft box. There was a very unhappy senior Microsoft VP in a Dell conference room pounding his fist at this "Ubuntu" news. Bill G himself was probably called and asked if they could go down to $0 as an offer of Vista OEM to Dell.

    Zealot, regarding Apple, all you're saying is that we should choose to pay an OSX Tax instead of a Windows Tax. That BTW is a valid comparison. The "tax" between M$ and Apple is probably very similar. But we don't know, because (guess what) Apple doesn't sell a Mac without OSX. See above: Dell truly is branching out. That's the point.