August 15, 2000 1:45 PM PDT

Dell looks to keep Sun at bay with Linux

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Linux conference shows advances amid investor ennui

August 14, 2000
SAN JOSE, Calif.--Linux will help Dell Computer dislodge Sun Microsystems, chief executive Michael Dell predicted today during a speech in which he also knocked the business plan of one of his company's major partners: Microsoft.

"The open-source collaborative development model is built to succeed in the Internet age," Dell said in his keynote address at the LinuxWorld Conference and Expo in San Jose, Calif. "It makes much more sense than the proprietary model."

Dell was referring to Sun Microsystems, a company whose revenue--$5 billion last quarter--is growing uncomfortably close to Dell's $7.7 billion. Sun sells servers, more complex and profitable but more difficult to sell in large quantities and a type of computer Dell is working hard to sell.

Microsoft is another company that sells proprietary software--products that, unlike Linux, may not be shared freely and modified by anyone who wishes. Dell, which sells more desktop computers than any competitor, has for years been one of Microsoft's biggest customers, paying for copies of Windows and Office.

In an interview after his keynote, Dell qualified his position on the viability of proprietary software. "Clearly, Microsoft has a pretty profitable customer model and customer franchise," he said, and Dell isn't going to stop supporting Microsoft customers.

Dell sells most Linux systems on its server line, the environment where Linux and its progenitor, Unix, grew up. But Dell said in a news conference that his company also is examining the viability of Linux on the desktop, a move that would provide a more direct threat to Microsoft's stronghold.

Dell is in talks with Eazel, a company populated by former Macintosh programmers working to make Linux easier to use and keep up-to-date, Dell said today. Eazel is one of several members of the Gnome Foundation working to improve Linux for use on the desktop.

"We're quite interested in how (Eazel's software) or the desktop opportunity might emerge," Dell said. At this point it's a matter of when the technology will be ready to deliver to customers, he added. The company is displaying desktop computers running Eazel's software at the show.

According to a February report by International Data Corp., Linux has 4 percent of the desktop operating system market, a hair behind Mac OS' 5 percent and way behind Microsoft's 87 percent.

Dell's presence is among the strongest indicators of the widespread adoption of Linux. At the same time, though, Dell hasn't tried to buddy up with open-source programmers the way IBM, SGI, Compaq Computer, Hewlett-Packard and other competitors have.

Instead, Dell chooses traditional business partnerships. It has invested in Red Hat, Linuxcare, VMWare and CollabNet, Dell pointed out.

"Our commitment in ways that Dell is able to make a serious contribution is quite significant," Dell said. "Not all these investments are going to yield a return for us; they are going to yield progress in the Linux community."

Nevertheless, Dell ran into some skepticism during a question-and-answer period with the keynote audience. Some asked what contributions Dell was making to the Linux programming community, and several questioned whether Dell charges more for Linux computers than for the same systems with Windows.

Dell flatly denied that his company charges an extra fee for Linux. In a news conference, he said Linux servers cost less than Windows machines with the same hardware.

Dell said his company sells 10 percent of its servers with Linux installed--a larger fraction of Linux servers than any of his large competitors. He said he hopes that percentage will increase.

Though Linux doesn't work on servers as powerful as high-end Unix models from Sun, IBM, HP, Compaq and SGI, Dell is interested in markets where more units are sold. With Linux as one of its three "strategic" operating systems, Dell can sell to about 80 percent of the server market, Dell said.

The company offers Linux on four-processor servers. The company is evaluating it on eight-processor systems, Dell said.

 

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