Dell's questionable pricing policiy.

Story: The LXer Interview: John Hull of DellTotal Replies: 7
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Oct 12, 2007
10:44 AM EDT
I wouldn't consider a Dell until they change the way they show the prices for the Linux machines. Here in the UK it seems to cost more for the Linux version of a machine than the Windows version which is plain ridiculous.

Why can they not show a price with Windows and then how much it costs with Ubuntu? In exactly the same way you would with a choice of processors: the 2.2G Duo costs x and the 2.0G version costs y. The fact that there are completely different sections is very fishy to me and makes me think there's still something very underhand going on with our friends in Redmond.

Zepto offer a facility similar to the above (ie one price with Windows and with no OS) and got my trade.

Oct 12, 2007
11:19 AM EDT
Dell's in a position that's both good and bad. They're one of the biggest dogs in the yard in terms of dealing with Microsoft, but they're not the only dog, by far.

I really appreciate Sander's interview of John Hull because it shows that there are smart people behind Dell's foray into Linux, both in servers and on the desktop.

I understand why Dell went with Ubuntu: the popularity, the PR and the ability of the community to relieve Dell of much responsibility for support. Nothing wrong with that. And I'm glad to see that, as evidenced in this interview, anyway, Dell is mindful to give back to the community in terms of drivers and other improvements.

The more Dell does to make Linux work with its hardware, the better things will be for all of us.

What Dell really needs to do is some major marketing of its Ubuntu offering to educate non-geeks about what Linux and open source are and what benefits FOSS offers the home and office computer user. Somebody's got to break this thing (desktop use of Linux) out of the underground. Dell could do it.

But I'm sure Microsoft isn't happy and has probably let Dell know it. To whose advantage that antagonism works best is anybody's guess.

As far as prices go, Dell probably gets a killer deal on MS Windows, so they probably don't save much by slapping Ubuntu on the box instead of Vista. That's the reality.

I'm no industry insider, but I bet Dell gets dinged for no more than $20 a box for Windows. I could be wrong. Does anybody know any better?

Oct 12, 2007
11:25 AM EDT
It could be that Dell loses money by putting Linux on the machines. Think of all the crapware companies that are paying Dell to feature craplets on its desktop install for the consumer market.

Those crapware companies don't have Linux versions of their craplets so Dell does not get money from them when they sell a Linux box. That's lost revenue for Dell. It might amount to more than the cost of Windows per box for Dell.

Oct 12, 2007
1:32 PM EDT
I've heard the crapware theory before. It's incredible to think that companies might be paying Dell to put software trials on a machine.

On the price of Windows, I can quite believe Dell are getting a frighteningly good deal on Windows and that Microsoft would stipulate that Dell are not allowed to reveal it. Putting the price difference between Windows and non-Windows might seriously p**s off other vendors I guess.


Oct 12, 2007
1:50 PM EDT
My guess is that volume discount pricing would be available to any vendor.

Sell 1,000 copies get 25% off. Sell 1,000,000 copies get 50% off. Sell 1,000,000,000 copies get 75% off.

So the other vendors probably get the same deal as Dell. Dell just sells more copies and gets a bigger discount.

Craplets are real. Look at the desktops for consumers from any major brand in a big box computer store like Fry's. Companies pay the computer vendor to get the desktop placement.

Oct 12, 2007
2:09 PM EDT
Quoting:My guess is that volume discount pricing would be available to any vendor.

It's the same thing I have been wondering for a while. I guess it qualifies as 'classified' info inside these OEM companies, because of the competition with other OEM's?

Oct 12, 2007
2:47 PM EDT
>My guess is that volume discount pricing would be available to any vendor.

Not just a guess in the US. It's illegal to discriminate against vendors, so differentials have to be based on some business logic. Volume is most common.

Oct 12, 2007
10:37 PM EDT
Quoting: But I'm sure Microsoft isn't happy and has probably let Dell know it.

I actually asked John that very same question. But since he doesn't deal with Microsoft people at all he didn't know. I left the question out of the interview because it didn't really fit in with the rest and didn't have an answer. Perhaps someone like Mark Jarvis or Lionel Menchaca could answer it, though I doubt they will even if they can.

Re. volume licensing: My understanding is that, since the US anti-trust case MS has to offer the same thing to all vendors and their program is based on volume. Their OEM contract forbids them from revealing the price of WIndows. This has two effects:

1) Low Linux uptake. After all, every box sold with Windows means more discount. They need the discount to be as high as possible or they cannot survive with the razor-thin margins.

2) If you try to get a refund for Windows, you're likely to get the full retail price of Windows or at least the base OEM price before volume discount. Both are higher that what the EOM actually pays for Windows. After all, if some OEM just payed you the $40 they actually payed for Windows then they would have revealed the OEM price and broke the OEM agreement. So OEMs actually loose money on Windows refunds, which explains why they're so unwilling to do refunds in the first place.

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