CyberTech Rambler

May 9, 2007

BIG QUSTION to Novell and Microsoft is a Linux reseller

Filed under: Uncategorized — ctrambler @ 5:20 pm

Any announcement remotely related to the infamous Novell-Microsoft deal is going to be nitpicked. We know that. But this announcement about Dell selling SuSE is different, no nitpicking is needed to discover a big hole in Novell’s announcement.

Strip away the market talk and you will notice that Dell is actually buying SuSE coupons from Microsoft and is not buying SuSE directly from Novell. Strange indeed. May be Novell is trying to establish a market for SuSE reseller. If so, this will be a first for Linux Operating System.

The biggest question to Novell is why isn’t Dell buying directly from them? Surely the reseller need to take a cut of the sales price. If so, wouldn’t this drive up the final price for the purchaser? If the involvement of middleman means lower prices for the purchaser this will definitely be the world’s first for software. In this case, we do not have one middleman, but two. While we can understand why Microsoft is willing to subsidize its cusotmers’ SuSE purchase, surely Dell will be taking its cut of the sales? Or was Dell pressured by somebody to distribute the coupons at their own expense, the plot thickens indeed.

If it is indeed cheaper to get coupons from Microsoft. Novell has a big problem. If Microsoft can buy from Novell and sell at price A, surely Novell can sell at the same price and make more profit than Microsoft would. Novell needs to ask itself is it heading down where Larry Ellison try to put RedHat into with Unbreakable Linux? If so, it will be embarassing for Novell because unlike RedHat, it is involved in the deal that seems to put Novell down.

From Microsoft viewpoint it is not surprising. Microsoft is normally not in the business of selling software direct to customers. If you don’t believe me, when is the last time you deal directly with Microsoft for a purchase. It is therefore not surprising that Microsoft needs a distributor for the coupons. Dell, being the second biggest PC seller, is by default one of Microsoft’s biggest distributor. Unlike the world’s biggest PC seller, HP, Dell is very dependent on Microsoft. As I argued in the previous post, this means it has to keep up with its relationship with Microsoft. Selling those coupons will help grease this relationship.

And the much trumpetted Dell’s contribution to the deal is …… Dell is going to flock the coupons.

Gosh… yet another announcement involving the Novell/Microsoft deal that yield more questions for Novell. Someone somewhere in Novell must had started to have second thoughts about the deal. With respect to whether is it still worth it for Novell? Frankly, looking at the actual events to date, I still think it is. But I maintain that the long term perspect is not good.

And, … in case you miss it (PJ of Groklaw and FSF didn’t), Microsoft is behaving like a Linux reseller. It does it in a roundabout way. FSF believes this makes Microsoft a purveyor of Free Software. My believe it is trying to distribute Linux in a way that allows it to keeping a straight face when bash Linux. There may be some legal maneuvering to avoid the responsibility as a distributor of Free Software in play as well.  And another thing, it is not behaving  like the average software reselling companies who do have to take care of post-purchase support, but rather like a  pencil seller in your local market who need not bother with post-purchase support.

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