Sunday, May 03, 2009

Why Desktop Linux isn't profitable

One of the more popular videos making the tech news rounds is Bryan Lunduke's Linux Sucks! video from LinuxFest NW. He makes several valid points, and covers one of my biggest problems with Open-Source development, the sheer number of duplicated efforts. I agree, I like KDE, but the development of Phonon kinda threw me for a loop. Why was KDE reinvinting the wheel? Linux sound is complicated, with many distro's having stuff like JACK, ALSA, OSS, Xine, Pulse, and so on. While I can't say that I'm a fan of the Gstreamer mentioned in the , mostly because it's a media backend like Xine and as far as I know not like ALSA or OSS, Fluendo's pay-for-codecs are only available with a Gstreamer backend.

One of the other points raised during the video presentation is that Red Hat says Desktop Linux isn't profitable, so they won't be doing Desktop Linux anymore. It's easier to see where Red Hat is coming from. When Red Hat sold their Linux alongside Windows in the likes of Comp USA, they weren't actually making a lot of money off of retail box sales. Warren Woodford of Mepis had to go back into the private sector as Mepis CD sales just weren't paying his bills, and Mepis still is heads and tails above the best efforts of all other user-friendly distributions.

So why is Desktop Linux not profitable? Well, for starters, the business model that most pursue is broken. As much as I dislike Microsoft and it's business practices, I do have to give Bill Gates credit for being right when it counted. Bill Gates was right about the money being in the software sales and not hardware sales for initial computer buyers. The business model of Microsoft focused getting their operating system installed as the default option on cheap, commodity, hardware. Microsoft's entire business model, even today, largely depends on people buying computers with Microsoft Windows installed, with no other options.

That model is broken. More and more people are having computers custom built. More and more people are using mobile devices as computers. It seems that nobody in Microsoft tried to figure out how their business model should change, if the market model that made their original business model possible changed.

A better example comes from the auto industry. It seems that nobody in the US Auto Industry stopped to think about what would happen if 95% of all people with driver's licenses had a car. It seemed nobody thought about what would happen if everybody who could afford to buy a car, did.

Well, some auto manufacturers did. So they started created obvious defects in their cars, designing and manufacturing cars that were not as reliable, or would fail due to cheaply made parts in only a few years. That way consumers would have to keep buying new cars in order to replace cars that would have still be running if they had only been better manufactured. So, consumer advocacy groups got involved and started mandating various engineering standards car manufacturers had to meet in order to guarantee the safety of passengers inside the vehicle. So the auto-industry started making cars that satisfied these new crash and safety regulations, but did so by designing cars that would effectively be destroyed as cars in a single fender bender... thus forcing anybody who was in a wreck to... yes, go out and buy another car.

Now the auto-industry, at least in the US, is paying dearly for its actions.

Over in the computer spectrum, many of these same business practices are observed. Dell, for example, explicitly designed many of their consumer computers with poor cooling, the idea being that the computer would thermally kill itself in under 2 years, forcing people to... go out and buy another computer.

Other manufacturers have gotten into the act as well. When my family first started buying computers, the computer store had dedicated training sessions. You went in and were taught how to use defrag. You were taught how to use scandisk. You were taught basic system maintence before you actually took the computer home.

Now, anybody can go into WalMart, plunk down $500, and get a fairly decent computer system, with absolutely no idea how to take care of it. When the computer gets full of malicious software... junk... and buy a new computer.

That's been the business model that Microsoft and most major computer vendors have worked under, and it's falling apart. Computer parts are not limited to hokey catalogs and expensive pricing anymore. Consumers aren't limited to what Dell and HP sell. One of the fastest growing market segments today is the Netbook format, essentially an ultra-lite laptop. While Linux is taking up 1/3 (or more) of these sales, which is great, it's doing so on mostly junk desktop enviroments. Can you imagine how well Dell's Linux systems would sell if they had chosen a distribution like Mepis over Ubuntu? Or just any KDE desktop over Gnome?

I'm getting away from the point then.

As a Operating-System package, Linux has never been in the position to be effectively offered as an install option. Even when Mepis made Desktop Linux usable back in 2003, most corporations selling computers couldn't care. Microsoft largely had it's Microsoft Tax on each computer sold... and the big Linux backers wouldn't do a thing about it.

Apple, for example, loves mixing it up with Microsoft, and presses the attack often with it's I'm a Mac, I'm a PC ads. Novell, despite having produced excellent responses to the Apple Ads... never put them on an ad-rotation.

While IBM has smacked Microsoft in the head with it's Linux Is Learning advertisements, that's been mostly for server sales. No other corporate sponsor of Linux has really gone out on a limb and freaking advertised.

At the same time, one of the biggest mis-conceptions about Linux is that everything has to have it's source-code opened up and nobody wants to buy anything. I left a rather nasty note on Champions-Online preview board that they didn't get it. Until Champions-Online offered Linux support in line with City of Hereos, I was going to keep paying for City of Heroes.

Most Linux users are willing to purchase software of a reasonable quality, and to purchase software at a reasonable price. However, a vast quantity of the software that has been sold for Linux hasn't been either. A good, or in this case bad, example is the Nero burning package. While Nero got around to releasing a version of their CD/DVD burning software for Linux, it barely had a quarter of K3B's feature list, and offered none of the audio / video editing software that made Nero on Windows a killer suite. Even the most recent version of Nero Burning Software for Linux still is exceedingly light on the software loadout. Okay, so the burner for Nero is only $13 in the US, and 20 Euro's elsewhere. K3B offers a better interface, with generally more options. Well, whether or not Nero likes it, offering even the same exact software package that one gets for free out of the box on a KDE distribution for any cost... simply isn't going to work. Now, include everything else that's in the Nero Windows? The audio editing and video editing software? Then it might be a package worth looking at.

Desktop Linux is in a position that it won't be profitable, because most corporations and business's don't know how to deal with Linux. Many try to deal with Linux using the Microsoft Business model. That hasn't worked, and won't work as the Microsoft model depends on marketing models never changing.

Okay, so how can Desktop Linux be profitable? Well, I'm not sure how to answer that, but I think Valve does have the answer. Valve runs a successful publishing operation with Steam, and if the latest numbers are any indication, competes against traditional brick-and-mortar stores like Gamestop on an uncomfortable for Gamestop level. Valve gets money not only from enabling independent developers like 2D boy to sell their wares alongside major publishers like Capcom. Valve provides the storefront, the cash-register, and the advertising options, and gets a bit of money from each sale. Apple, Nintendo, and Sony have all taken the Steam concepts, implemented them, and achieved some sucess. Microsoft has tried that as well, but anybody who has used Microsoft's Xbox 360 store probably agrees with me that it's typical of Microsoft software... shoddy, and not that good.

In the same way, I think Desktop Linux can be profitable by vendors moving to offer a similar unified storefront. The Desktop Linux vendor hosts the servers, manages the storefront, and packages the software, and gets a cut off of the sale price. Such a marketing model has been tried before under Linux, with the Lindows / Linspire Click'n'Run repositories. While Michael Robertson possibly had the right idea, his love of direct conflict with Microsoft was more like sabatoge than anything else.

I think though, such market options may be available...

However, much like the Linux Sucks! video, whether or not anything is actually done to address these problems... is a question that still needs to be answered.


jvin248 said...

You need some work on the auto example.. the reason auto quality tanked in the 1970's - where most of the comparisons start.. was not any tactical plans.. just bloated corporate structures without any real competition... similar to an operating system we all tend to get frustrated with until Linux came along to light a new path.

Desktop linux is expanding, and will continue to expand. I've started seeing high school kids of friends of mine using it.

JohnMc said...

Having watched the Linux Sucks vid I have only one point I agree with -- packaging. Till the Linux crowd comes up with a common packaging format the commercial vendors see nothing but headache in trying to sell to the platform.

To your other points. First off RH does sell a desktop linux. But it is only available to commercial accounts that buy support from RH. So lets kill the myth.

Desktop Linux will be adopted not through retail sales but through the business channel. But one has to crack that nut not by features but first by TCO. A Red Hat could be successful in the desktop space if they wanted. What holds them back like anyone else is TCO. The initial buy is not the end of the story but merely the beginning. When the number setlle, Linux only ends up 10-15% cheaper than Windows. Not sufficient enough to warrant the conversion and staff retraining.

So what to do?

1) Develop and foundation on par with Mozilla to upgrade the following apps --

a) GIMP to Photoshop level status.
b) Bring Open Office into the umbrella and continue support. Improve the Base app to exceed Access.
c) Kdenlive or another video editor to match anything on the commercial side.
d) Fund to complete Ardour.
e) Tweaks to Thunderbird to be the Exchange client killer.

2) Further development of the Splashtop instant on feature. Specifically so that software can be added to the stack by the end user for instant on availability.

3) While (2) is endgame also develop a VM appliance application stack of (1) that can be run in the top VM managers.

The point of all this? It's a Toyota strategy. Attack Windows from the edges. When over time it becomes readily apparent to many even in management that a selection of OS is not the critical issue Linux can win on merit.