Customers to Dell: Give Us Linux!

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23 posting on IdeaStorm, the company said it's working with Novell to certify its business desktops, notebooks, and workstations for compatibility with Linux, and is working with other Linux distributors about additional certifications. A company spokesman says Red Hat is among those distributors. Dell also said it will make it easier for PC buyers to forgo preloaded programs, and uninstall them once they get the machine.

Open-Source a Risky Innovation

Dell, once the top supplier of PCs, has seen its market share slip, profits fall, and reputation slide amid rising costs, quality mishaps, and missed market trends. Hewlett-Packard (HPQ) has become the top supplier of retail PCs, and Dell's lackluster products seem out of step in a market where Apple (APPL) has compelled vendors to pay attention to design. Customers have also complained about poor support and technical problems. That helped prompt Michael Dell to retake the chief executive reins, and he's hired new deputies to help turn out compelling products and clamp down on costs (see BusinessWeek.com, 2/16/07, "Dell's New Blood: Cannon, Now Garriques"). Dell reports quarterly earnings Mar. 1.

Bear Stearns (BSC) analyst Andrew Neff wrote in a Feb. 19 research report that a key to increased margins at Dell will be "focusing on innovative products that customers want." But putting customers' Linux ideas into action could also prove expensive. "PC makers tend to be very conservative about what they put on these machines," says Paul DeGroot, an analyst at consulting company Directions on Microsoft. Take tech support. If Dell offers Linux as a standard choice on consumer PCs, the number of calls to its support centers could rise. "After the second or third call, they've lost money on the machine," he says.

Then there's the effect such a move would have on Dell's relationship with Microsoft. IdeaStorm bloggers called for Dell to ship copies of OpenOffice, free software that includes word processing, spreadsheet, and other applications. "It can save you a pile of money" compared with Microsoft Office, which can cost $400 or $500 depending on the edition, DeGroot says. But Microsoft has been Dell's dominant operating system and applications provider since the company got its start in the 1980s. Microsoft has also taken steps to blunt the appeal of OpenOffice and other open-source suites. In January, Microsoft made the $150 Home and Student edition of its new Office 2007 suite available to all customers—not just education buyers.

Dell Needs More than Marketing

The groundswell on IdeaStorm isn't Dell's first brush with Linux. The company ships the system on its business servers and engineering workstations, and lets corporate IT departments install it on some PCs. But Dell stopped installing Linux on consumer PCs and notebooks five years ago, and it may not be in a rush to do so again. "It's something that you wouldn't tread lightly into," says its spokesman.

Yet it's also clear Dell needs to do something to repair frayed relationships with customers. The company on Feb. 16 launched a feature on its Web site where users can upload videos—YouTube style—of what they did on their Dell PCs. Last year, the company launched a site that includes videos of its chief executive at industry functions. On IdeaStorm, there's even been a suggestion for Michael Dell to start a blog, a la Sun Microsystems (SUNW) CEO Jonathan Schwartz. Better marketing is a start. But as Dell's response to the Linux clamor shows, it may need to adjust its products, too, to give the people what they want.

Ricadela is a writer for BusinessWeek.com in Silicon Valley.