Dell and Google have struck a deal, Google’s CEO confirmed on May 25. Speaking at an investor conference in Las Vegas, Google CEO Eric Schmidt acknowledged that Dell and Google have reached an agreement. Schmidt provided few details of the agreement that earlier speculation had placed in the $1 billion range. So far a co-branded Web site is the most visible aspect of the collaboration, but the cracks that occurred in the Microsoft/Dell/Intel troika when Dell allowed AMD to come to its party, have now reached the earthquake stage.
…what would happen to that deal if Microsoft decided to substantially increase OEM licensing fee’s to Dell?
What would Dell do if a ‘HP + Windows’ was cheaper than a ‘Dell + Windows’?
What if Dell was forced to sell Windows prepackaged, no OEM install what so ever?
I just can see MS really messing with Dell on this one.
Dell would probably file an antitrust complaint as Microsoft would be engaged in an illegal practice known as “tying”: a monopolist using its monopoly to try to force a customer to buy another product where there is competition. Since Microsoft is already a convicted monopolist, Dell would have a strong case. Both the US and the EU could inflict damages on Microsoft.
For that reason, Microsoft’s power to twist Dell’s arm is limited.
Dell would never file an anti-trust suit against Microsoft no matter what MS did to them. MS would cut off their Windows license the minute they filed and fight everything out in court. That is effectively suicide for Dell.
Maybe over time Dell can lessen their dependence on MS, only then could they consider filing a suit.
JoeBuck is right in that Dell could have what it needs for an antitrust case of Microsoft decides suddently to increase the costs Dell pays for OEM copies of Windows. But I suspect Microsoft is already cutting deals for OEM companies and could decrease Dell’s discount off the price of Windows OEM rather than actually increase the price itself.
Frankly thought I think it’s time companies like Dell and HP started throwing some money into a mutually developed BSD derivative under a reasonable OSS yet proprietary friendly license. Apple won’t license OS X, so they could put together their own BSD based OS. I know some people think Linux would be a better choice, but many of the heads of Linux want to keep everything OSS, and that scares big business.
Seriously, building a BSD derivative that’s a viable alternative to Windows shouldn’t cost that much. The base OS and good desktop environments are already there, the only things that are missing are drivers which the companies could write as proprietary without fear (thus fixing that problem over a year or so), polish of the type which attracts and impresses average Joes (which could be done given some R&D cash and an organized leadership), and the lack of a lot of commercially developed software (although frankly there’s a good collection of OSS software they could use without cost, and within a year or two there could be a substantial collection of commercial software). Maybe I’m being unrealistically optimistic, but I see this as a very attainable goal. The only thing I see holding this back is the irrational fear of Microsoft’s revenge, or maybe OEMs are already paying so little for their copies of Windows that this would cost them more even though it’s also better for them.
…what would happen to that deal if Microsoft decided to substantially increase OEM licensing fee’s to Dell?
Under the anti-trust settlement with the US government, I don’t think MS is allowed to manipulate OEM license discounts.
The leverage MS has over the OEM’s is via the generous marketing funds they provide, with the agreements stipulating things like the “Designed for Microsoft xxx” stickers on machines or “xx Recommends Windows XP Professional” tags on ads and websites in exchange for funds.
Whether the agreements also stipulate requirements on bundled software is anybody’s guess, the OEM contracts are all under deadly NDAs and nothing short of an enforceable court order would make that information public.
However, Microsoft’s primary spanking by the feds wasn’t so much about bundling software, but more about preventing OEM’s from bundling competitive software. It’s permissable for them to say they’ll provide extra marketing or similar incentives if you ship MS exclusive software, but more or less illegal to say they won’t allow OEM’s to license Windows anymore if they don’t ship MS exclusive software.
I don’t actually think MS will do anything about this, if it was worth it they could easily match Google’s offer, they don’t seem to mind throwing billions at unprofitable business operations for the sake of maintain competitiveness. But I don’t think the extra profit is the entire story for Dell (although in the ultra-competitive consumer market at least every dollar counts), since this is hardly new for them. They’ve starting dancing with desktop linux in overseas markets, they started bundling Wordperfect Suite as opposed to MS Works, they made the decision on Firefox etc. etc. It all amounts to the same thing, Dell is essentially flexing their muscle without actually alienating their partner. And if it’s costing them some marketing dollars in doing so, they probably made the business determination that it’s an acceptable cost, similar to the decision to adopt AMD as an alternative to Intel. They’ve most likely decided that the risk from remaining entirely dependent upon Microsoft and their whims outweighs any short-term pain from loosening the chains.
Could also be MS has modified existing contractual arrangements to their benefit with regards to Vista and OEM bundling, so maybe this is reactionary on Dell’s part. That’s pure speculation on my part, though.
No doubt Ballmer will throw a few more chairs around, but I suspect the MS legal team will pin him to the floor and sit on him if they have to, in order to prevent him from reaching his phone or desktop email, at least until he cools down a bit. I see this at noteworthy, but not necessarily newsworthy.
Just my 2c.
but the cracks that occurred in the Microsoft/Dell/Intel troika when Dell allowed AMD to come to its party, have now reached the earthquake stage.
This was inevitable. Dell simply had to accept AMD, and now that Sun has had a resurgence through cheaper and good quality AMD based servers that process is only going to accelerate.
Wonder if this will have anything to do with OpenOffice.org as Sun + Google did an agreement. Could be interesting.
It shows that Dell is wanting to keep up to date and on the forefront with Apple 🙂
This deal is highly interesting in one particular aspect – Microsoft has long been agressive to the point of being obnoxious and paranoid in keeping their OEMs, Dell included, over a barrel. It has long been the one thing in their history that they have been absolutely steadfast and adamant about. OEMs have secretly had a similar disgust with Microsoft and their OEM division, Dell included most probably, but because of Microsoft’s power they’ve never been able to voice it. If you want to read about the most obnoxious and powerful division (OEM) and person (Joachim Kempin) in Redmond, this is an interesting read:
http://practical-tech.com/who_is_microsofts_secret_power_broker
The bit about his Porsche and his disdain for OEMs is revealing. Sometimes they have to try and go straight to Steve Ballmer to get any sort of a deal. Yer – it’s that bad.
OEMs are Microsoft’s channel to end users, and they say how, and what those end users see. It was a pivotal weapon for Microsoft in making sure users saw IE first and that OEMs didn’t pre-install Netscape. A deal with Google to put Google branded products on a desktop, pre-installed for users, is something that will horrify Redmond and their OEM division. They’re not going to be happy campers.
What Microsoft will do about it, I really don’t know. The threat of cutting any discounts has historically been enough to scare an OEM out of its mind, because it’s the difference between a profit and a loss. However, Dell has huge sales and they obviously feel confident in striking a deal no OEM would have dared do at one time. In a now stagnant desktop market Microsoft does now have to keep the cash cow going, but any pressure and financial loss from Microsoft may well be covered by Google.
I really do find this most interesting, because this is the one thing that at one time was seen totally untouchable when it came to Microsoft.
Oh boy! More half baked software to come preloaded on that new computer! Just more stuff the uninstall as soon as you turn on that brand new computer…
Oh boy! More half baked software to come preloaded on that new computer! Just more stuff the uninstall as soon as you turn on that brand new computer…
Unless that half baked software is made by MS, in which case good luck untangling it from the OS.
On our new Mac’s we tend to keep everything that’s given to us on a drive of new machine because it’s so good.
Except ‘Microsoft OfficeMac Demo’, we love to trash that right away.
In fact we fight over the opportunity.
My one hope is because of Google’s interest in Firefox, that they get Dell to make it the default browser. It could be the greatest boost to Firefox’s market share yet and protection against the upcoming IE7.
Here’s hoping for the next browser war and the innovation that it would insight. Competition will only be a good thing.
I say include openoffice and firefox by default 🙂 that’ll give MS sleepless nights.
> Here’s hoping for the next browser war and the innovation that it would insight. Competition will only be a
> good thing.
I have to disagree with you in this one.
This browser competition ain’t exactly a war ’cause Firefox is open-sourced, free as in speech.
Which means that it doesn’t matter the result, Firefox will always be around, maybe weaker, but still around.
MS showed everyone that if you control the browser you get a lot of power on the web by setting de facto web standards, default home page/search page, promoting your own plugins (WMP (WMP-DRM)/Active-X), making it harder for people to use non IE OSs/etc.
It might be more of challenge than a war for Firefox but I can promise you MS have a lot of incentive to dominate the browser and control how people access the internet.
Firefox will always be around, maybe weaker, but still around.
Yeah, but if it’s more prevalent, it will put more pressure on webmasters to create more standards compliant sites, will would make life better for those who choose to use Firefox. It may be around regardless, but if more sites work with it, that has to be better
Google+Dell+AMD+Firefox+Sun vs Microsoft+Intel
They should add Linux to the bunch
If Dell would support Linux and so would Google, maybe it could finally get going.
How come Google ain’t paying pots of money to Redhat or Novell to bundle their closed source software?
You honestly think if they threw money into having their closed source applications bundled with popular commerical distro’s, they’d make that money back one way or another?
I know some people think Linux would be a better choice, but many of the heads of Linux want to keep everything OSS, and that scares big business.
Right…like it’s scaring IBM, Sun and HP for their servers, right?
OEMs are hardware manufacturers…what do they care if the kernel, the DE and bundled apps are open-source? What they want is to sell boxes. Lots of them.
And as for some Linux devs wanting “everything” to be open-source (by “everything” I assume you mean all the software on the machine?), well, what can I say…it’s not what they want that matters, but what they can enforce. And what they can enforce is pretty limited.
Linux already have 99% of required drivers, and wrapper modules that load proprietary drivers in real-time do not go against the GPL. (Even if they would be deemed as such, all you need is to keep them separated during distribution and include a little script that installs them when the computer is first booted.)
There’s no reasons why BSD should be considered a better choice here, except for personal preferences.
+++++
By Anonymo (1.11) on 2006-05-27 05:46:32 UTC
Google+Dell+AMD+Firefox+Sun vs Microsoft+Intel
They should add Linux to the bunch
If Dell would support Linux and so would Google, maybe it could finally get going.
—————
http://www.eweek.com/article2/0,1759,1897398,00.asp?kc=EWRSS03129TX…
I got a lot of letters about that one, so rather than write everyone back individually, I’ll say here why I still think the Linux desktop, more than anything else, needs big-time—Gateway, Dell, HP—support before it can be a big-time success.