Could this be the start of something really subversive, like listening to customers and giving them what they ask for?

Dell's decision to offer consumers low-price laptops and desktops pre-installed with the Linux operating system looks like a really good idea and not just because it offers more choice.

Almost every PC sold in the world today comes with a copy of Microsoft Windows. Customers generally have to buy the software whether they plan to use it or not. When hardware prices were relatively high, the additional cost was barely noticeable.

Today, Microsoft's operating system can account for 20 percent or more of the cost of a PC. That represents a significant barrier for those customers who don't intend to run Windows. What Microsoft's critics like to call the Microsoft Tax has been rising and this probably has an impact on the PC upgrade cycle, which appears to be lengthening.

There's no proof that offering cheaper, WIndowless PCs will stimulate demand, but Dell is in a good position to pioneer the concept.

Dell has been here before. It already sells Linux systems to business customers.

The company's earlier attempts to sell consumer Linux machines flopped. But today's Linux is not yesterday's Linux. It's much more complete and, when paired with good quality Open Source applications, is an attractive, viable alternative to anything Microsoft has to offer. Sure it's not for everyone, but neither is Windows Vista.

It'll be interesting to see if Microsoft responds the move with a carrot, with a stick or by pretending nothing has happened. And will Dell's rivals follow its lead?

Posted by Bill Bennett February 27, 2007 1:15 PM | Comments (0)

Public relations companies are working on their trigger fingers in preparation for what might be the games console war of the century.

Sony’s Playstation3 is due to launch in roughly one month, but the PR companies representing both Sony and Microsoft are already putting their dukes up. This morning we received a short, wooden stick with an attached note on it. It reads: A handy yardstick for measuring the height of your PS3 games library.

As it turns out, this doesn’t come from Sony. We suspect it is their opposition who is gearing up for the release. Sony’s PR representative knew nothing of the stunt and was rather baffled, mumbling something about ”sticks and stones…„ Xbox’s PR arm would neither confirm nor deny that they were the source, but said that we might just receive a longer stick in the near future.

The PS3 will be released exactly one year after the Xbox360, both Sony and Microsoft has plans for the night. Microsoft’s console will be celebrating its one year birthday in New Zealand and Sony will, of course, celebrate its launch of the PS3. A week after the new console is launched; Microsoft will be release its HD-DVD addition to the Xbox360.

It might not be the fight to the death that many were predicting, but as a friend in PR once told me. It is never just lunch, it is always an event.

Posted by February 26, 2007 6:11 PM | Comments (1)

Are New Zealand’s computer buyers dim-witted enough to fall for Dell’s foray into the printer business?

It would be nice to think they are too smart. Nice but, sadly, unrealistic. After all, Dell’s offering is only a refinement of what has become the standard way of making money from printers.

All the major players at the consumer end of the printer market operate on what is usually described as the Gillette razor blade model. They suck customers in by the main units for next to nothing - although they argue otherwise retail prices for many models are almost certainly lower than the cost of manufacture.

Then, once they’ve got a customer locked in with some hardware, they sell authorised replacement ink cartridges at a huge mark-up. Gross margins for ink are as high as 60 percent. Ink is extremely lucrative - indeed one could argue the entire Hewlett-Packard empire was financed by replacement cartridges.

When I investigated Dell Australia’s printer offerings some time ago, I noticed the company’s hardware was significantly cheaper than equivalent hardware from rival printer makers, but the ink was more expensive.

What’s more, Australian customers had to buy Dell ink over the internet, cutting out distributors and resellers, then pay inflated courier fees for the privilege -- presumably Dell makes money on this as well. And I don’t recall anyone selling third-party replacement cartridges that ate into Dell’s business.

At an educated guess, the hardware was sold way below cost, but the company would be in profit from the very first cartridge. The other revelation was Dell’s printers went through cartridges slightly faster than those from rival printer makers.

It wasn’t possible to check New Zealand ink prices at the time of writing because Dell’s web site was down. However, it’s safe to assume Dell’s ink margins will be astronomical.

Ordering ink online and waiting for a courier is a lot more trouble than hopping in the car and driving to the local New World whenever the printer runs dry.

All-in-all Dell printers are bad news for resellers and bad news for consumers. Let's hope the punters can figure this out for themselves.

Posted by Bill Bennett February 22, 2007 2:28 PM | Comments (1)

In his February 7 blog, PC World editor Chris Keall reported the sudden appearance of Vista in his web site statistics. It's taken two weeks for reseller.co.nz readers to catch up. That's interesting.

It's not exactly surprising to learn that many of the geekier types who inhabit pcworldland have jumped into a new operating system straight away -- they appear to crave techno-novelty.

On the other hand, given the large numbers of official Microsoft business partners in New Zealand's reseller community, you might expect them to back the hand that feeds -- so to speak. Or perhaps those people working at the sharp end of the industry know something the enthusiastic hoards don't.

Other interesting facts from the Reseller web stats: the Vista numbers come entirely at the expense of XP and a significant minority of viewers appear to be happy with the eight-year-old Windows 2000 operating system.

Operating System % Uniques
1 Windows XP 78.07
2 Windows 2000 7.49
3 Mac OS X Intel 3.21
4 Windows Vista 3.21
5 Mac OS X PPC 2.67
6 Windows Server 2003 2.67

Posted by Bill Bennett February 20, 2007 1:57 PM | Comments (1)

According to sources within Telecom, the ISP arm of the telco giant might send out letters to selected broadband customers this month, notifying them to ease back on pirating and file sharing.

Since the launch of Xtra's go-large plan a few months back, some customers undoubtedly took the opportunity to increase downloading of pirated material through torrents and other P2P services. With the ability to monitor web control, users might now get the first taste of Telecom’s ‘fair use’ strategy, where the company reserves the right to throttle broadband speed as it sees fit.

New Zealand ISP WorldxChange has canceled and then reopened some customers accounts due to the detection of those users using P2P services to download movies etc. Reportedly, WorldxChange's Xnet service told a customer they had been contacted by Paramount pictures who had detected someone downloading their material from New Zealand.

Meanwhile, back at the farm, a leaked letter from the RIAA (Recording industry association of America) has been sent to US ISP's, asking them to cooperate with efforts to identify and sue those accused of sharing music over P2P networks. ISP's can be forced to turn over the name and address of account owners addresses by matching activity logs with IP addresses. The idea behind the letter seems to be that the RIAA will send the letter through cooperation with the ISP, looking for settlement without resorting to the legal system.

It is unknown whether the RIAA are able to influence Telecom/Xtra here in New Zealand, although the RIAA has previously put pressure on Russian MP3 sites through the US government, convincing Visa and MasterCard to decline payments to the site.

Go here for the full story and a sample of the US letter.
http://arstechnica.com/news.ars/post/20070213-8832.html

Surely, Telecom is looking to save face and reassure its position in case of an international law suit involving New Zealanders. So if you get an angry letter in the mail telling you to stop downloading those old Star Trek episodes, let us know.

Posted by February 14, 2007 12:12 PM | Comments (0)

Theresa Gattung's resignation as Telecom CEO isn't much of a surprise. And it probably isn't good news for New Zealand business either. Let's face it, the woman had to go, she was too honest. In today's business world, that simply won't do.

There's a lot wrong with Telecom New Zealand, but Theresa Gattung isn't on the list.

She's a personable, intelligent, engaging boss. She's popular with shareholders and has their respect. As far as we know, the same applies to Telecom employees. She's been in the role, make that survived in the role, for nearly eight years.

It's a horrible job. Where she needs to triangulate between shareholders, customers and government.

Telecom's shareholders, naturally enough, want to maximise the returns on their investment. Whatever Telecom says, this does not align with delivering the products and services New Zealand's businesses and consumers want and need. In fact it doesn't come close to aligning.

When Telecom was privatised, unlike elsewhere in the world our government failed to legislate for market competition. So we simply went from a government-owned abusive monopoly to a privately-owned abusive monopoly. Since privatisation, communications has moved right to the centre of economic life. Consequently, Telecom has become the anchor dragging on the entire New Zealand economy.

Under Gattung's reign New Zealand's government finally decided to correct those earlier mistakes. Her employers would have expected her to block these attempts. It was never going to happen.

It will be interesting to see if Gattung's replacement is hired to continue fighting against the inevitable government regulation or someone reconciled to the new reality.

Posted by Bill Bennett February 2, 2007 10:59 AM | Comments (0)