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Excellent observations. I personally think Asus was able to get a successful Linux-based laptop under Microsoft's radar simply because they were a relatively minor player in the portable market. Unlike Dell, who is constantly under pressure by Microsoft to under-advertise and devalue their own Ubuntu laptops and desktops, Asus was free to partner with Xandros quietly and successfully. Now that their EeePC has caused an explosion of interest in alternative OSes, Microsoft is having to play catch-up and attacking first in Australia where they have even more market penetration than here in the States. Once they really start turning the screws on Asus we'll see less and less of the Linux-based models available.

I think it's a desperate move by a giant whose head was in the clouds for such a long time he didn't notice the townspeople chopping away his feet until it was almost too late. Even Apple is seeing record-setting OS penetration while sales of Vista -- both on new PCs and boxed/OEM -- are stagnant compared to XP's first two years. I don't see Microsoft dying off any time soon, but there's a permanent shift brewing and I'm looking forward to it.

I think that Xandros is a small company which must make profit from this. Microsoft is rich, they can accept temporary loss in order to gain in the future. They could afford themselves to give away XP for free, they are going to discontinue it anyway.

I don't think there was a conspiracy behind it.

DG

Regardless of any thought of "a conspiracy behind it" ... it still remains illegal in Australia to engage in what amounts to "predatory pricing" ... which the giving away of Windows XP in order to forestall people from using the Xandros alternative ... would certainly amount to.

http://www.accc.gov.au/content/index.phtml/itemId/816375

http://en.wikipedia.org/wiki/Predatory_pricing

http://en.wikipedia.org/wiki/Trade_Practices_Act_1974

People seem to forget the ACCC is utterly useless. You hear about them once in a blue moon, and they rarely ever win. If they couldn't beat Telstra, they aren't likely to beat Microsoft. They're not even likely to challenge Microsoft, even if they have a mile of paperwork thrown at them TELLING them to do it.

I guess that it is illegal elsewhere, but Microsoft was able to do it anyway. Maybe is hard to prove. Besides, XP is an "old" operating system, it should become cheap.

But, as someone mentioned here, Microsoft is willing to sell their product at discount price, or give it away, more often than in the past. I think that Microsoft has reached its upper limits.

Without doubt this is the case.

The problem will be demonstrating that this is the case to the ACCC.

http://en.wikipedia.org/wiki/Australian_Competition_and_Consumer_Co...



It is clearly "illegal anti-competitive behaviour" and also against "consumer rights & business rights" for Microsoft to be able to force Asus to not offer to Asus customers the option to get the best deal.

http://en.wikipedia.org/wiki/Trade_Practices_Act_1974

The things that could potentially apply here I have shown in bold from the Wikipedia extract:

http://en.wikipedia.org/wiki/Trade_Practices_Act_1974#Part_IV:_Rest...

===================
These provisions prohibit:

* Most Price Agreements (see Cartel and Price-Fixing)

* Primary boycotts (an agreement between parties to exclude another)

* Secondary boycotts whose purpose is to cause substantial lessen competition (Actions between two persons engaging in conduct hindering 3rd person from supplying or acquiring goods or services from 4th)

* Misuse of market power - taking advantage of substantial market power in a particular market, for one or more proscribed purposes; namely, to eliminate or damage an actual or potential competitor, to prevent a person from entering a market, or to deter or prevent a person from engaging in competitive conduct.

* Exclusive dealing - an attempt to interfere with freedom of buyers to buy from other suppliers, such as agreeing to supply a product only if a retailer does not stock a competitor's product. Most forms of exclusive dealing are only prohibited if they have the purpose or likely effect of substantially lessening competition in a market.

* Third-line forcing: A type of exclusive dealing, third-line forcing involves the supply of goods or services on the condition that the acquirer also acquires goods or services from a third party. Third-line forcing is prohibited per se.

* Resale price maintenance - fixing a price below which resellers cannot sell or advertise

* Mergers and acquisitions that would result in a substantial lessening of competition

=====

... There is also a prohibition on "predatory pricing" of product on a market in order to remove a competitor.

http://en.wikipedia.org/wiki/Predatory_pricing
http://www.accc.gov.au/content/index.phtml/itemId/816375

Finally, in Australia, AFAIK product "tying" is also illegal

http://en.wikipedia.org/wiki/Tying_(commerce)
"Some kinds of tying, especially by contract, have historically been regarded as anti-competitive practices. The basic idea is that consumers are harmed by being forced to buy an undesired good (the tied good) in order to purchase a good they actually want (the tying good), and so would prefer that the goods be sold separately. The company doing this bundling may have a significantly large market share so that it may impose the tie on consumers, despite the forces of market competition. The tie may also harm other companies in the market for the tied good, or who sell only single components."

Edited 2008-05-08 12:49 UTC

Then where is the 12 GB Linux version?

(Although I agree the title is a tad sensationalistic)

While I'm usually not into conspiracy theories... this does seem a bit odd. Why would Asus decide not to offer the Linux unit with 12GB of flash? Unless someone did not want the non-MS unit to be beat out on price for PR reasons. It seems to me that in this low end market, having a unit offered at the lowest would be desirable. I can't help but wonder if Asus didn't have a little help from someone in deciding on the relative hardware and price points. I have no insider information, of course. It's just one of those things that make me go hmmmm....

I've been thinking about buying the cheaper 12GB XP variant, refusing the Windows EULA on first power-up (possibly I would wipe the disk of XP with witnesses, possibly right there in the store), and then demand a refund (as the Windows EULA apparently says I am entitled to) from the retailer.

Then I would put, say, Mandriva 2008.1 on it.

http://www.mandriva.com/enterprise/en/company/press/mandriva-presen...
http://eeepc.net/mandriva-20081-works-with-eee-pcs/

That could possibly put a spanner in the works.

Edited 2008-05-08 00:00 UTC

Actually, the current wording in Windows licenses seems to be (at least in Vista):

"By using the software, you accept these terms. If you do not accept them, do not use the software. Instead, contact the manufacturer or installer to determine their return policy for a refund or credit."

I have seen manufacturers that simply state that their return policy is that you can get a refund for the whole machine, but not for the Windows license. The argumentation is that the Windows license is tied to the hardware (whatever that means).

Hopefully, your national laws give consumers more protection, because the EULA is probably not going to do it for you.

I recall reading somewhere that the reason they went with the 4 GB ROM + 8 GB SSD for Windows and the 4 GB ROM + 16 GB SSD was to make the costs the same for each version, and to make the Linux one that much more attractive.

Granted, all that means is we're liable to see lots of people buy the Linux version to stick Windows XP on it... I've found reviews that bragged how they never once used the Linux system.

Correct me if I'm wrong but can't you get 8 GB SD card for like $30-40, so XP version is still cheaper, is it not?

whatever, I don't think internal memory used in the eeePC is the same as an SD card, but personnaly I would prefer to buy the 20GB version

I think it is better to buy the Windows version and install Mandriva 2008.1 (it is supposed to work out of the box, wifi and all the good stuff) or another Linux tailored for eeePC. Microsoft is loosing money with every computer sold with Windows because of the subventions. So the more computers are sold the worse for Microsoft. In addition, by buying the Windows eeePC you don't support Xandros (which has a patent deal with Microsoft).
But better than all this is to boycott eeePCs altogether.
Someone already mentioned that there are better choices on the market.

How is Microsoft losing money on this - I mean, how much does it cost MS to make copy of XP?? Like.. $1 or even less? Even then.. How exactly ARE they losing money if they are selling it for like $0?

It's not like with XBox 360 or PS3, you know, where they have hardware and manufacturing expenses.

Anyway, if you're buying XP model just because of that, you should see psychiatrist.

Edited 2008-05-07 21:32 UTC

I am probably going to cool down a bit after venting at Asus, and wait to see what Acer have to offer later this year (9-inch screen with an Intel Atom processor, I believe).

Having said that, even though this sham has probably caused me to drop the idea of getting an EEEPC entirely in favour of something from another manufacturer that better deomnstrates support for Linux, nevertheless I will still make a complaint to the ACCC over this.

Do they? I guess that depends on the development effort put in making an EEE PC-specific version. If it's mostly plain XP, they profit from it, given that duplication cost is near zero. Given that they probably have earned the development effort for XP back a few years ago, each copy sold at a higher price than material/distribution costs will give them profit.

Except if they provide full-blown support for these Windows copies, of course.

What they're really doing is charging $50 more for the Linux version, with some percentage of that pure profit being used as a kickback to Microsoft.
I don't think it makes any sense from a business point of view. I'd rather agree with the others that Microsoft is losing money on this one. Microsoft is losing lots of money nowadays. They give away XP for as low as $5 in Russia and other developing countries. How these revenues cover their expenses? I don't know but I hope Microsoft goes down. It's about time.

That $5 price in developing countries is what really is killing Microsoft. Think about it, every third world little twit can learn on Windows on the cheap while Americans have to pay heavily for the privilege to be hacked by said twits. It just made no business sense whatsoever to even market Windows abroad if they had to cut the price.

How is it "killing" them? It's not as if they're losing money with every copy sold. It's found money.

Well I live in a developing countries, and almost every desktop user wanting Windows XP/Vista can have it for about $5 (pirated version) and everyone does so. Which is why bringing a $5 legit version is a pretty wise decision from Microsoft coz this is a market they would normally never had - people will simply not buy a 'normal' priced Windows coz it's too expensive for em - so it's better for Microsoft to pocket the $5 rather than a pirated-copy seller. Microsoft also gains by getting people hooked on their software so that they get Microsoft-trained and be ready for enterprise where Microsoft can easily sell 'normal' priced software. (since people already have the skills to use these software)

It's easy to make profit selling software for $5, the one-off costs to develop XP have long since been recovered many times over, so now producing additional copies of it costs a few cents at most for the physical media, even less for a paper or electronic "license code".

This could even work out good for Linux... Linux is perceived by many as being inferior and worthless simply because it's free... But in this case, the Linux model is clearly superior to the Windows one, and therefore people will expect it to cost more. If it costed less, or even the same, people would (wrongly) assume there was some hidden drawback to it.
Now the more expensive linux version is clearly a better model, it comes with a much better selection of software, it boots faster, it has considerably more storage space, and for many this is likely to justify the extra cost.

However there is clearly something nefarious going on being orchestrated by microsoft... Otherwise, Asus would be offering the 12GB version with Linux at the lowest price point of all the models, and possibly a 20gb windows version as the most expensive.

What needs to be done, is side by side comparisons of the two models that present the superiority of the Linux version to the public.

Huh? How is it anti-competitive? Asus is no different than any other OEM.

My suspicion is that the XP version comes with demo versions of about 10 different pieces of crapware like desktop machines do. The vendors pay per unit to have their demos included, thus offsetting the cost of the OS license. If this is the case, it is problematic. Do we demand that Asus release the Linux version with crapplets?

The main question in my mind is why is there no 12GB Linux version?

My suspicion is that the XP version comes with demo versions of about 10 different pieces of crapware like desktop machines do. The vendors pay per unit to have their demos included, thus offsetting the cost of the OS license. If this is the case, it is problematic. Do we demand that Asus release the Linux version with crapplets? "

This "explanation" still does not answer why the Linux version is more expensive than Windows version in Australia, but the two versions are the same price in other countries.



This is another valid question, but it will be harder to put a case to the ACC on this question as there is no requirement AFAIK that sellers HAVE TO offer particular combinations of features in a product.

Has this been established with certainty?

Has this been established with certainty? "

Not at all ... there is only apparently one magazine article (in APC), which could very well have the pricing wrong.

Any complaint to the ACCC would of course have to wait for an official announcement from Asus Australia.

However, AFAIK, it IS established that the 20GB Linux variant and the 12GB Windows XP variant are being offered for the same price in other countries.

Edited 2008-05-08 00:45 UTC

They'll be more but you get a bigger screen and Flash Drive.

i bought the 701 (4GB) here in Australia for $483 in feb this year, which is currently ~450USD.

The price for everything is too high here. games cost almost double what you can buy them for in the US now.
50USD does not equal 100AUD!

i won't be upgrading my eeepc because it already does what i need and after i installed ubuntu from a usb stick it has it all i want.

paying that much more for a larger screen isn't worth it as far as i can see. the drive space is also irrelevant as i keep work on usb sticks and have a SDHC storage card for extra data.

you should be able to pick up a good 701 for cheap very soon.

What do you mean? The web cam works fine with the Linux version out of the box, and comes with skype and google talk.

If you want to use the web-cam with MSN, you can install aMSN that can handle web-cams just fine.

I do not have an eee (waiting for the one with Norwegian keyboard that comes in June) but I'm still pretty sure that you can install aMSN. At least you can with eeeBuntu.

Nalle Berg
./nalle.

there's a lot of free software for windows. There's open source ports like openoffice and gimp for windows but Microsoft Office Accounting express is also free. I wonder if there is anything that compares to that accounting package on linux.

This monopolistic dumping is clearly illegal in Austalia.

I've initiated a complaint about ASUS's behaviour with the ACCC, and would encourage any other Australians who are pissed off about this to do the same. Just go to http://www.accc.gov.au/.

Nothing like a consumer howl to make government depts listen.

That is a very good idea.

I will do just that ... and show how there is no offer of the Linux version on the cheaper hardware, and that the Linux version on more expensive hardware is the same price as the Windows version in other countries, but more expensive in Australia.

There can be absolutely no justification for this ... it is clearly price fixing and anti-competitive.

The ACC should have them for it.

You don't know what you're talking about. Price-fixing is when two or more market players collude with one another to set an artificial price that distorts the marketplace; in most cases, price-fixing is done by cartels in order to keep prices artificially high. Clearly, Microsoft isn't colluding with Xandros. So, in fact, what you're seeing is .... gasp ... competition. Which is precisely what I like to see.

You don't know what you're talking about. Price-fixing is when two or more market players collude with one another to set an artificial price that distorts the marketplace; in most cases, price-fixing is done by cartels in order to keep prices artificially high. Clearly, Microsoft isn't colluding with Xandros. So, in fact, what you're seeing is .... gasp ... competition. Which is precisely what I like to see. "

Price fixing was not the term I was after, sorry about that.

"Predatory pricing" is what I was after.

http://en.wikipedia.org/wiki/Predatory_pricing

In the context of Microsoft, Xandros, Asus and the EEEPC, predatory pricing would have occured if Microsoft offered Asus a lower price or other special terms for XP on the EEEPC compared to other deals for laptops with other OEMs, simply because Asus were offering a Linux option on the same laptop that would have exposed a side-by-side true cost comparison visible to consumers.