Customers to Dell: Give Us Linux!

The troubled computer maker sought input from users, but complying
with the most popular online suggestions could worsen its woes

by
Aaron=
Ricadela

When computer maker Dell asked customers how to spice up its products
and improve service, the flood of responses may have provided more
feedback than the company bargained for.

Thousands of computer buyers have weighed in on a site Dell set up
Feb. 16 to solicit opinions on everything from product design to
marketing to technical support. The resounding response: Give us more
software and other features based on open-source code, including the
Linux operating system.

Heeding the requests won't be easy for the PC maker, which ousted
Chief Executive Kevin Rollins on Jan. 31 and again named founder
Michael Dell CEO in an attempt to regain market share, improve product
quality, resolve customer support problems, and recover some of the
financial mojo Dell exuded until recent years (see BusinessWeek.com,
2/1/07, 007/db20070131_503358.htm">"Is Dell Too Big for Michael Dell?">).

"We certainly expected to see some interesting stuff, and it hasn'=
t
failed to deliver," a Dell spokesman says of the online forum, which
harnesses tools common to the emerging user-generated Web, asking
customers to blog about potential solutions to Dell's problems or vote
for their favorite posts. So far, more than 120,000 people have visited
the site, Dell says (see BusinessWeek.com, 2/23/07, usinessweek.com/innovate/content/feb2007/id20070223_399988.htm">"Hack =
This Product, Please!").

The most popular ideas? Nos. 1 and 2 on the list: Factory-install Linux
on consumer desktops and notebooks, and preload OpenOffice and other
open-source productivity programs. The fifth most popular is a
recommendation that Dell replace Microsoft's Internet Explorer with the
open-source Firefox Web browser. "They're very high-end users and =
very
knowledgeable," says Dell's spokesman.

Making Linux Consumer-Friendly

What's less clear is whether the outcry for Linux reflects demand in
the market that goes broader than a vocal group of open-source
advocates. Even high-profile Linux proponents admit the operating
system isn't ready for mass-market use. The system is gaining traction
in corporate data centers where low costs and the ability to play
suppliers against each another are paramount. But Linux has been too
arcane to control, incompatible with popular hardware, and bereft of
popular programs for most home PC users.

"Linux has a long way to go before it has the same market demand as
Windows," says Jim Zemlin, executive director of the Linux Foundation,
which promotes the software as an alternative to Microsoft's (=3D"http://stockmarket.businessweek.com/www/search.html?q=3DMSFT" rel=3D"ti=
cker">MSFT)
Windows, pays the salary of Linux creator Linus Torvalds, and counts
Dell among its members. "Dell's a pretty smart company and they ar=
e
responsive to their customers," Zemlin says. But to make Linux for
consumers fly, the vendor would need to invest in engineering to ensure
the software works with popular graphics chips and wireless modems,
sign expanded support contracts with Linux suppliers like Red Hat (=3D"http://stockmarket.businessweek.com/www/search.html?q=3DRHAT" rel=3D"ti=
cker">RHAT) and Novell (www/search.html?q=3DNOVL" rel=3D"ticker">
NOVL), or train its own customer service reps on open-source technologi=
es. "That would help them build a better box," he says.

Dell says it's already listening. In a Feb. 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 (sinessweek.com/www/search.html?q=3DHPQ" rel=3D"ticker">HPQ) has become =
the top supplier of retail PCs, and Dell's lackluster products seem out=
of step in a market where Apple (
l=3D"ticker">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, m/technology/content/feb2007/tc20070216_070194.htm">"Dell's New Bl=
ood: Cannon, Now Garriques"). Dell reports quarterly earnings Mar.=
1.

Bear Stearns (l?q=3DBSC" rel=3D"ticker">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 tha=
t
customers want." But putting customers' Linux ideas into action co=
uld
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&=
quot;
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=97not 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 somet=
hing
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=97YouTube style=97of 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 (/www/search.html?q=3DSUNW" rel=3D"ticker">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.