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Is the Dell/Microsoft Alliance Fracturing? 390

Posted by Cliff
from the holiday-speculation dept.
An anonymous reader asks: "Dell has historically been the most loyal of all Microsoft's partners. Even today, it is very difficult to avoid paying the Microsoft tax on most of Dell's desktops and notebooks. Recently, two things have made the news where Dell is not toeing the Microsoft line. First, was the announcement that Dell is trialling shipping desktop and notebook PCs in the UK with Firefox as the default browser, instead of IE (announcement confirmed here). Today we have news that Dell is not going to support HD-DVD, despite reported incentives that recently induced HP to do so. So, what are some theories as to why Dell has lately been less of a friend to Microsoft, and what does this mean for the future? Does it mean that it might soon become possible to order Dell's full line of personal systems with Linux installed, or no OS/FreeDOS to save the Microsoft tax?"
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Is the Dell/Microsoft Alliance Fracturing?

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  • Microsoft Tax (Score:3, Insightful)

    by Andrew Tanenbaum (896883) on Thursday December 29, 2005 @12:37AM (#14356186)
    With the deals that Dell gets, the "Microsoft tax" is about $6. Hardly worth it for them to break up a uniform production process for that kind of money.
    • Re:Microsoft Tax (Score:5, Interesting)

      by ottothecow (600101) <ottothecow@gma[ ]com ['il.' in gap]> on Thursday December 29, 2005 @12:39AM (#14356199) Homepage
      Especially when if you are crafty and willing to spend time/go to small claims court, you can get the entire retail price of XP refunded to you (just think of it like a mail in rebate on top of the price of the dell)
    • by Anonymous Coward on Thursday December 29, 2005 @05:21AM (#14357107)
      I worked for a software company that had a pretty big business in paying OEMs to pre-install crippleware and share back the revenue made off of upgrades.


      This amounted to a pretty big subsidy for the Windows versions of computers; and if you add up all the software companies doing this game, I bet it vastly exceeds the cost of windows.


      Until the crippleware subsidy industry gets as big for Linux, I expect you'll always see the OEMs prefer Windows.

      • by klubar (591384) on Thursday December 29, 2005 @07:26AM (#14357356) Homepage
        You can get an approximate value of the shovelware by comparing the business machines to the consumer versions at Dell. The business machines (optiplex, latitude, workstations, servers) do not include any of the trials or demos. They typically cost about $50 - $100 more (before corporate discounts) than consumer.

        However, as your purchase volume goes up the cost of the business machines becomes less than that of consumer because high volume purchasers use less support (per machine) than low volume. In a corporate environment there is likely to be a help desk that fixes most of the problems that would otherwise hit support.
    • the "Microsoft tax" is about $6

      Would that still be true if Dell started edging away from Microsoft?? Dell could lose (or have to "renegotiate") their volume discount. Which would be stupid if Microsoft did it, because they'd drive Dell further away, but they might just do it to slow down any other manufacturers that looked antsy.

  • by hlygrail (700685) on Thursday December 29, 2005 @12:37AM (#14356188)
    ...than any other manufacturer. They'll follow the money trail. If they can sell more PCs by no allying tightly with Microsoft, so be it. If they can sell more PCs to the home market by appearing to be best buds with Microsoft, well, they'll do that, too.

    Nothing to see here.
    • by Anonymous Coward on Thursday December 29, 2005 @12:43AM (#14356225)
      Don't be fooled for one second into thinking that Dell is interested in anything else but their own bottom line. And the bottom line here is that Dell is spending a small fortune in tech support trying to help their customers remove spyware and malware problems that are largely the fault of Internet Explorer. So if they can sell computers with Firefox that don't result in their call center being flooded with calls from angry users (thus saving a bundle of cash), that is all the motivation they need to switch. This has nothing to do with Microsoft, and certainly nothing to do with open source.
      • This has nothing to do with Microsoft

        I thought IE was a Microsoft product.
  • Sure (Score:3, Insightful)

    by Segway Ninja (777415) on Thursday December 29, 2005 @12:37AM (#14356189)
    "Does it mean that it might soon become possible to order Dell's full line of personal systems with Linux installed, or no OS/FreeDOS to save the Microsoft tax?"

    Sure, it might soon be possible.
    • Re:Sure (Score:3, Informative)

      by morcego (260031) *
      You actually can already do it, at least here in Brazil.
      Dell offers the n-Series of Desktop computers, without any MS software. It comes with FreeDOS.

      Free translation from Dell homepage (originaly in Portuguese):

      "The n-Series systems are some of the desktop and workstations selected from the Dell Dimention(TM), Dell OptiPlex(TM) and Dell Precision(TM) series sold without an operation system.

      Avaliable for IT professionals wishing to have control over instalation and development of their systems. A copy of th
    • Microsoft tax becomes Dell profit!

      1. build a huge base of loyal customers using MS Windows
      2. Drop MS Windows
      3. Profit?
  • It's all about... (Score:4, Insightful)

    by Bin_jammin (684517) <Binjammin@gmail.com> on Thursday December 29, 2005 @12:40AM (#14356203)
    the money. I'm sure more people than you (collective) or I at Dell are in the know about something. Perhaps they see the opportunity to ship BluRay drives earlier than if they ship HDDVD drives. If they wait for HDDVD, other OEMs will eat their lunch sitting around waiting for an os that makes an appearance in a year or so. And Firefox shipping is likely due to customer complaints about spyware and malware, enough people complain about something, you save money on tech support by moving to something secure.
  • Theories? (Score:5, Insightful)

    by Anonymous Brave Guy (457657) on Thursday December 29, 2005 @12:41AM (#14356211)
    So, what are some theories as to why Dell has lately been less of a friend to Microsoft, and what does this mean for the future?

    I think Dell has a smart management team. They realise that they are a market leader in hardware, and the balance of power is shifting.

    Microsoft can't afford to upset Dell. It would be unfortunate for MS if the income stream from Dell dried up, and disastrous if Dell boxes started going out with non-MS software routinely given priority.

    Dell, on the other hand, increasingly has viable alternatives to offer and probably an increasing number of customers asking about them, particularly on the Windows vs. $OTHER_OS front. And of course, they can more effectively compete against other workstation and particularly server vendors if they aren't paying the Microsoft tax, and they have more legal shielding than ever against reprisals by MS.

    Today, Microsoft is getting a very bad name in some areas, particularly among the techies who probably buy 99% of the Dell servers and a heavy majority of the workstations and support contracts. At a time like that, if you'll forgive the horrible cliches, it pays to know which side your bread's buttered, and not to have all your eggs in one basket.

    • mod parent "inciteful". just made me get out of bed to make some buttered toast and fried eggs.
    • Re:Theories? (Score:5, Interesting)

      by aralin (107264) on Thursday December 29, 2005 @03:34AM (#14356887)
      I think Dell has a smart management team. They realise that they are a market leader in hardware, and the balance of power is shifting.

      I think this is exactly the reason. What you need to realise is that half of M$ income is comming from the M$ Office package. What would happen to this if Dell would, for example, decide to preinstall OpenOffice.org 2.0 on all the new customer machines as a value add? Why wouldn't they? I think the next five years will see a dramatic changes in the power distribution thanks to this one bargaining chip.

    • Dell's major revenue stream is still from its low-end boxes - i.e. your average home PC. Average users are not looking for alternative OSes or alternative office suites, they just want to keep using what they've always used, what works with everybody else, and leave it at that. If it works better than before, all the better, but they want the comfort of knowing that nothing's changed ("It's still Windows, right?") For example: if you were to give them something like OpenOffice.org instead of MS Works or
      • Re:Theories? (Score:4, Insightful)

        by beejhuff (186291) on Thursday December 29, 2005 @10:26AM (#14357875) Homepage
        Well, that's not entirely true. As another poster suggested, Dell's primary source of PROFIT is from enterprise purchases (higher margins on better products and all) though selling on the low end allows for the volume Dell needs to keep its supplier prices in check.

        In addition, as the SEC filings [nasdaq.com] suggest, the rate of GROWTH for consumer PC's hasn't exactly excited anyone, inside or outside the company. This is reflected in the product shift to Consumer Electronics and Printers sales.

        One thing to keep in mind is that Dell is probably MOST reponsive to the demands / needs of its enterprise customer base, at lease in the short to medium term. Especially since they drive a large share of profit growth, and these customers are probably the ones MOST sensitive to avoiding the MS tax. A few dollars per unit add up when you purchase THOUSANDS at a time, right?

        *** DISCLAIMER ***

        I'm an employee of Dell, though these opinions are my own, and this does not necessarily reflect the thoughts or opionions of my employer, blah, blah, blah

        *** DISCLAIMER ***
  • by User 956 (568564) on Thursday December 29, 2005 @12:42AM (#14356217) Homepage
    Today we have news that Dell is not going to support HD-DVD, despite reported incentives that recently induced HP to do so. So, what are some theories as to why Dell has lately been less of a friend to Microsoft,

    I don't know about a cohesive theory to tie all of it together, but for the HD-DVD thing, I would suspect Dell's not supporting it because it keeps getting delayed [reuters.com], because they can't seem to get their shit together finalizing the AACS "content protection".
    • HD-DVD vs. Blu-Ray (Score:3, Interesting)

      by phriedom (561200)
      I don't think the AACS delay favors either format because it is delaying them both equally.
      • Then it could be that Dell feels the Blu-Ray format is more commercially viable, as it's more likely to be accepted by content producers as 'secure':

        "The only difference being that Blu Ray is adding another two supplementary security elements: ROM Mark and BD+. ROM Mark is a sort of stamp, invisible to the consumer, which can be embedded using special equipment available only to licensed Blu-Ray disc producers. Obviously, these discs will only be compatible with Blu-Ray equipments." (link [softpedia.com])

        With regards
  • by Sebilrazen (870600) <blahsebilrazen@blah.com> on Thursday December 29, 2005 @12:43AM (#14356221)
    Apple-Intel-Dells (I know the OS is Mac, but I couldn't resist) Apple is on the blu-ray foundation and is switching to Intel chipsets, Dell is the largest consumer of Intel chips, Dell has an established 'PC' friendly name that is basically a 'go to' for the direct purchase pc order industry. This has the makings of a win-win-win situation, provided that Apple gets the final veto on all computer/peripheral designs.

    What are the odds?


    • This is an interesting theory.

      Possible, but certainly not probable. With Dell's design language, I just can't see them getting a license from Apple.

      I think these moves are just Dell doing their level best to eke more money out of each machine sold in a market where the margins are thin and getting thinner.
    • What are the odds?

      85 to 1.

      Now's not yet the time. Apple needs to get their own machines on the market, and get comfortable buildign and selling them before they can repeat the clone situation. They didn't handle direct competition very well last time, so they need to be able to get everything running like a well-oiled machine before they license the OS. I do think it will eventually happen...just not yet.

      Dell is, if anything, just going with the market and seeing what happens. As someone el

    • Extremely unlikely (Score:4, Insightful)

      by phriedom (561200) on Thursday December 29, 2005 @01:10AM (#14356347)
      Apple uses software to sell hardware. If Apple licenses it, they give away their reason to exist. I don't think you'll ever see that.
    • Apple-Intel-Dells (I know the OS is Mac, but I couldn't resist) Apple is on the blu-ray foundation and is switching to Intel chipsets,

      Or, as I like to call 'em, "Apple-Intel-Desktop-Systems". A.I.D.S.
    • Yep, it's true. Apple's entry into Intelland means more marketshare for Apple, less for Dell. It also means that Intel won't be held as hostage to Dell's threats of switching to AMD - those marketing dollars could just as happily go to Apple you know:

      Ding! Da da da daa! "Think different.." and all that.

      And Apple isn't merely content with selling computers, they seem to want to be the next Sony - another space Dell has tried to enter (unsuccessfully).

      So, yeah, I think they have reason to fear Apple - and who
  • According to the article, Dell chose Blu-Ray because of its greater capacity and long list of industry backers. Dell now realizes that it is not necessarily as advantageous as it once was to partner with MS on everything. With the rise of online companies such as Google, the MS stranglehold is loosening. Dell probably sees that and now wants to break out of its old marketing habits.

    I still think that Dell will do whatever it can to sell the most PCs in volume, so if that means further customization w
  • by black hole sun (850775) on Thursday December 29, 2005 @12:50AM (#14356250)
    I'm reminded of Carl Sagan's famous quote from Cosmos: "Observation: You couldn't see a thing. Conclusion: Dinosaurs."

    Call me a cynic, but only on /. do we see "Dell not supporting HD-DVD" --> "DELL MIGHT SPORT LINUX!!!" The economic realities of this situation just won't allow Dell to NOT use Windows. Nobody's going to know what this linux thing is (or, as my sister calls it, "that weird thing"), nor how to use it, and they'll be quite upset when they discover they can't play their games and applications on it.

    It's a nice thought, but this is little more than daydreaming.
  • by Awptimus Prime (695459) on Thursday December 29, 2005 @12:52AM (#14356260)
    Today we have news that Dell is not going to support HD-DVD, despite reported incentives that recently induced HP to do so.

    First off, this is because Dell is in on the advisory staff that came up with the Blu-ray spec. They have never said "No we are going to sell it", they have only taken the safe road in saying they will stick with their design until the market says otherwise. This probably won't take long since you won't be paying for the patent license at $30 a unit like you will with the Blu-ray product. Not to mention, media will end up costing less for the Microsoft product based upon the same premise.

    Yes, Microsoft is trying to get in quick with the incentives, but that is only because they don't have quite the advantage of having Sony on their side. Sony/Dell/and company are going to end up losing out in the long-run for the excessive patent fees. Pair that with Sony being the biggest single contributor to our RIAA pains, and you don't have a great deal of support for the company.

    I'm not saying Microsoft is great, just saying they'll be less likely to sue folks for utilizing methods to backup/copy their discs.
    • by SuperKendall (25149) * on Thursday December 29, 2005 @01:10AM (#14356348)
      First off, this is because Dell is in on the advisory staff that came up with the Blu-ray spec. They have never said "No we are going to sell it", they have only taken the safe road in saying they will stick with their design until the market says otherwise. This probably won't take long since you won't be paying for the patent license at $30 a unit like you will with the Blu-ray product. Not to mention, media will end up costing less for the Microsoft product based upon the same premise.

      So why do so many people have DVD burners now when CD burners are so cheap? The players cost more, so does the media.

      While not quite the same order of magnitude as the difference between DVD and CD storage, Blu-Ray simply offers more storage space than HD-DVD and that makes it much more practical to use as a third-tied backup for things like 400GB drives. That's why I plan to get a Blu-Ray burner soon after they come out. Even if the media and the drives are more expensive, being able to use half the number of discs and half the time (especialy half the time) to do the same backup is a huge draw for computer users.

      Now come at it from the media angle. Consumers are not going to buy movies because the PC supports playing that format. When they will do is buy movies when they have a dedicated device, like a DVD player, that will support them. Who is almost guaranteed to have millions on millions of said devices in homes that are not even all early adopters? Sony, with the PS3.

      On Microsoft could possibly have the hubris to think they could stop or even slow what is coming, which is a slam-dunk for Sony and Blu-Ray. And they could have done it to if they had delayed the 360 release to include HD-DVD drives in more expensive bundles.
  • by deaddrunk (443038) on Thursday December 29, 2005 @12:57AM (#14356285)
    Dell is under no obligation to ship IE with their machines

    Unless IE has been decoupled with Windows recently without anyone being told, Dell, like everyone else, has no choice in the matter.
    • Also, you still need IE for Windows Update, and probably always will. Only that Dell is installing Firefox and setting it as the Default browser, and probably removing the shortcuts to iexplore.exe
    • Even if it was IE would have to be installed. Many applications use IE as a backend for their apps, infact I think even explorer(the program to look through your files) is basicly explorer.
  • by jcr (53032) <jcr@@@mac...com> on Thursday December 29, 2005 @01:04AM (#14356321) Journal
    Of course they want to use firefox! It will save them a fortune in support calls.

    -jcr
  • To OS or not to OS (Score:2, Interesting)

    by Kuxman (876286)
    I highly doubt Dell will sell their computers without an operating system preinstalled. That would completely alienate the whole, "plug it in and it works" idea of Dells. I would venture to guess that the majority of their sales come from home/small business field, and to not be able to plug it in and have it work would really hurt Dell's reputation as a people-friendly PC.

    So if Dell has to package an OS with their system, what will it be?

    1) Windows: The status quo. Plug it in and it works (albeit no

    • There would be a *nix tax as well


      How so? Would you purchase your machine with a Microsoft OS only to have some
      of the proceeds of the sale go to SUSE or Redhat, even though you
      had not purchased a product from them, due to the agreements the OEM had
      to sign in order to get the lowest pricing from SUSE or Redhat?
  • by Lisandro (799651) on Thursday December 29, 2005 @01:13AM (#14356360)
    Does it mean that it might soon become possible to order Dell's full line of personal systems with Linux installed, or no OS/FreeDOS to save the Microsoft tax?

        Yes. Soon. They will also come with a life supply of candy covered chocolate bunnies that will cure cancer and make you smile!

     
  • Hell, I think BillG and/or Microsoft themselves have advocated not using IE, and specifically recommended Firefox for more secure web browsing on a Windows PC. Wasn't there some big hoopla over this in the past year?
  • Once Dell makes it easy to buy a non-Microsoft os preloaded sans price of Windows (actually cheaper), I might believe it. Don't mislead yourselves into thinking Dell is going to shift away from the OS that has over 90% market share.
  • by poptones (653660) on Thursday December 29, 2005 @01:33AM (#14356437) Journal
    Dell has their own brand in the fire with Sony so it's not at all a surprise they may be bucking MS on this. Because Dell is already probably selling more systems than any other competitor and has more deals with third party makers they aren't going to miss that added "incentive" the IP royalties would mean more to them in the long term than the discount coupons from MS.

    But more than that I think it stupid to keep going on about this "Microsoft tax." You can buy a pretty ripping machine from Dell or Gateway or emachines (I mean Gateway) at a very, very good price. These prices are possible because of the huge volume these makers sell, and that volume is possible because everyone knows, no matter how much it may or may not suck, when they get the machine home it will be "familiar" to them and they can go to the gazillion warez and spyware repositories and install whatever crap floats their boat.

    Bot more improtantly it's that volume that beckons other OEMs. Third party makers like Adobe and Epson and Norton and others offer Dell and Gateway juicy licensing deals because they know the distribution of their "demos" and their cheapass printers with the ridiculously overpriced ink and paper supplies will benefit them in the long run. So while MS gets paid by Dell, Dell gets paid by Adobe and Epson and Norton. Whether it's money that directly offsets the cost of licensing windows or the cut rate hardware that allows them to make "special deals" that help them blow out thousands of machines at a whack, in the end it's Windows that is driving down the cost of the hardware.

    Until there are third party OEMs like Norton and Adobe offering well recognized linux tools that will help sell even more machines, Dell would make LESS on each system by NOT including windows. Twice the support costs (now they have to field both linux and windows calls) but LESS PROFIT. They would have to charge MORE FOR LESS, which is exactly what you see now.

    It makes zero sense for Dell to sell bundled linux systems and that isn't going to change until linux has evolved into a "killer brand" in its own right. And that's not going to happen because fo Dell, it's only going to happen because someone, somewhere, develops a desktop that offers something more than windows and does so in a way that is tangible to someone who doesn't spend their life working on this stuff.
    • All your arguments about discounts could apply equally to Linux, except more so.

      Sure, like any investment it's would be necessary to pay up-front. but a switch could pay for Dell in the long term. And the same applies to anybody in the computer industry besides M$.

      Linux is already appearing in low end and specialty boxes. I expect it'll slowly move up the value chain. Particularly for large organisations, where per-seat licensing costs becomes increasingly economically stupid compared to the fixed price

      • Linux is already appearing in low end and specialty boxes.

        I just wanted to call bullshit, as people use Linux in extremely high end boxes, too, but I realized that you're right. One doesn't buy these, one builds them. And as such, they're not pre-packaged stuff, and thus not a sale for Dell or the likes.
      • Sure, like any investment it's would be necessary to pay up-front. but a switch could pay for Dell in the long term.

        Dell is successful because they focus on shipping PCs and not making speculative investments. Look at IBM where they were bragging about the billions invested in Linux, all while taking a huge loss on each PC sold due to overhead.

        M$ is currently taxing the world $40,000,000,000+ per year for a dozen programs mostly written more than a decade ago. I think most sensible software consumers would
  • by Gilatrout (694977) on Thursday December 29, 2005 @01:58AM (#14356561)
    Consider the fact that MS is in pretty warm water in the EU. It does not take a huge leap for MS to put a bug in Dell's ear to preinstall Firefox. It doesn't cost them anything. Windows is still installed, and paid for, and Firefox is no threat to Windows. Firefox drives 0 users away from Windows. So if it makes the EU happy, then it makes MS happy too.
  • by fowlerserpent (690409) on Thursday December 29, 2005 @02:08AM (#14356601)
    It's been known for a while that Dell is building its own operating system. It's a Dell version os Windows, sort of. It is called Delldows.
  • No OS installed (Score:5, Interesting)

    by jarek (2469) on Thursday December 29, 2005 @03:31AM (#14356875)
    Dell in Sweden allready ships laptops with no OS installed. We recently bought two. I only asked the sales rep which laptops works best with linux. They suggested a model (latitude D610) and shipped. I actually expected there would be some MS stuff installed but when I powered them up they turned out to be empty. Quite lovely. They both now run Ubuntu. I had to work a few minutes to get native screen resolution though. /jarek
  • by Anonymous Coward
    As the original poster said, they have absolutely been the least supportive of any major PC manufacturer of linux. Now they are trying to break into the 'server' market (which they are a jonny-come-lately to), which they try to define as ms windows, ms sql 2005, etc. the hell with em.
  • by samj (115984) * <samj@samj.net> on Thursday December 29, 2005 @05:05AM (#14357083) Homepage
    the thing with the M$ monopoly is that it has traditionally been that what's right for M$ is (quite deliberately) what's right for Dell, so that's what they've done. With that monopoly weakening every day we'll see more and more of this, particularly as the cost of the hardware continues to drop while the cost of the M$ tax is reasonably static (if not on the rise). Bear in mind also that given that Internet Explorer Sucks [schneier.com] (with only 7 days in 2004 without an unpatched, public security hole), this reflects badly on Dell and is likely to be one of their major support costs (imagine how many 'my machine runs 10 times slower now than it did when we got it and i'm constantly harassed by popups' calls they get!). In contrast, Firefox on Windows was 7% unsafe (still a ridiculously high number - this should be very close to zero) - it's a no brainer.
  • Courting Apple? (Score:5, Insightful)

    by daBass (56811) on Thursday December 29, 2005 @05:09AM (#14357091)
    Michael Dell has already publicly said [fortune.com] he'd love to license OS X.

    It could be that is the reason for the drift away from MS, either because he wants to make friends with Steve Jobs or a backroom deal has actually already been done.

    • Re:Courting Apple? (Score:3, Interesting)

      by plusser (685253)
      Maybe Dell are going to build the Intel-Macs for Apple, as they already have closer dealings with Intel and quite possbily could get bigger discounts for the chipsets? If this is so, then Apple in return could allow Dell to sell the Intel Macs via their website, maybe even using their own customer support network. Dell may even have helped Apple to accelerate the introduction of the new Macs as a result.

      The bottom line would be a partnership between Dell and Apple, which if successful may mean that Dell c

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