Becoming a Linux OEM: A Roadmap

Monday Aug 27th 2007 by Matt Hartley
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There's a tidy profit to be made as a Linux OEM, but there are some treacherous challenges as well.

For years, Microsoft has reigned supreme as the 'only' choice for OEM partners on the x86 architecture. Later on, Apple switched from PPC (Power PC) to x86, but really did not make a dent in the OEM market, as Apple produces its own hardware, with OS X being a means to that end.

Then it happened: Dell dropped their hat into the ring, perhaps prompting what could become a rush of other PC manufacturers and distributors wishing to enter into OEM deals with various Linux distributions. Keep in mind that Dell is hardly doing anything new here. There have been a number of smaller companies that have worked within the Linux space for some time now. Generally referred to as distributors, their goal remains the same – selling pre-installed Linux-based computers to their customers.

Entering a world where Microsoft rules the marketplace.

Is Dell, among others, dead serious about providing Linux computers to their customers over proprietary OS option? I have seen evidence that many multi-OS OEMs remain fearful of Microsoft's control in this area. Hence, the reluctance to dump the Windows OS entirely as a sales platform.

The reasoning behind this likely stems from the belief that Linux distributions such as Ubuntu are simply not 'user friendly' enough. Apparently those who claim that Linux is just not ready have forgotten that when selling PCs pre-installed, most of the perceived hassle has since been removed.

Between common misconceptions from users trying to run distributions on PCs built for Windows, and Microsoft throwing around non-publicly proven patent threats, it's understandable how many U.S.-based OEMs feel a bit uneasy. Some to the point of needing to keep their fingers 'in' the Windows OEM market, just to be safe.

Linux OEM companies can survive, even flourish.

As far as I’m concerned, System76.com remains king here in the States. They've proven that a 'Linux only' approach is strong enough to stand on its own without needing to rely on Windows as a backup OS option to be pre-installed.

System76 has been able to establish itself as a real Linux distributor early on, as it sells both notebooks and desktop machines. Other great examples include Emperor Linux and Linux Certified, both of which have been doing this a lot longer than System76, though only with notebook-based Linux systems.

Besides specializing in Linux-only systems, the best Linux OEMs go that extra mile in customer service, in addition to providing extra needed functionality. Especially when the distribution itself falls short in an area of hardware compatibility.

Custom kernels and driver installers.

System76 and Emperor Linux understand that their customers want a working PC, not a weekend project. This mindset of understanding is critical within the Linux OEM business.

Emperor Linux for example, uses its own custom Linux kernel on each of its offerings. Doing this allows less common hardware such as Evdo-based devices to work out of the box. No other Linux OEM that I am aware of provides this. And trust me when I say that no one other than a system admin or a Linux hobbyist is interested in getting devices like that to work on their own.

Another level of advanced functionality that Emperor Linux enables their users to enjoy is Tablet PC functionality, complete with handwriting recognition and a biometric fingerprint scanner. Again, I know of no other OEM that offers this on their notebook machines from within the Linux world. Emperor Linux provides enterprise level computing for the professional Linux user.

By contrast, System76 is more consumer-oriented with its notebooks and desktop computers. Like Emperor Linux, System76 provides functionality for hardware devices that are not natively supported by the distribution pre-installed on OEM machines. This provides a value-added perspective for the end user. It’s also a fantastic selling point when trying to woo new customers into your marketing web. Remember, it's the job of the Linux OEM to simply make everything work – out of the box, no excuses.

Building the business, understanding the challenges that lay ahead.

There is much more to building a successful OEM business with Linux than there is with Windows. Xandros or Linspire for example, are Linux distribution companies that have had OEM deals in the past. And both have had their share of challenges keeping companies on board with their vision of their OS on the OEM machines.

The Linspire CEO, prior to his departure, told me that their core business is OEM in nature. This means that Linspire needed to be developing an ecosystem where the PC seller and their company must be able to maintain a healthy relationship. Unfortunately, unlike Windows OEMs, the vendors that choose to work with Linspire and Xandros have to deal with what I call “Linux challenges” regarding select hardware compatibility.

Both of the above mentioned Linux companies have really poor hardware compatibility lists (HCLs). And each of their distributions, while user friendly, are simply not as 'cutting edge' as the latest Ubuntu or OpenSuSE. On the flip side, however, you do have means of legally using restricted codecs in both distributions without concerns over usage violations here in the U.S. So it's fair to say that there is a balance of usability here.

Despite whatever we may think, it is 'legal' inclusion of these codecs among other 'intellectual rights payments' made to Microsoft that both Linux companies believe will give them an edge in the OEM market with the casual user. OEMs such as System76, Emperor Linux and Linux Certified are not interested in going this route, as they left the choice of using restricted codecs up to the end user. Some call this the purist approach; I call it a balancing act between the two conflicting positions on the use of restricted codecs in Linux.

Choosing your marketplace.

Linux OEMs will, as a rule, gain most of their new customers from online sales, whereas Windows OEMs depend on 'big box stores' and enterprise hardware distributors to get their latest products out to the public. Obviously, the most effective option for you as a potential Linux OEM is to market your pitch and make your sales online.

Before starting there, you'll need to decide on your customer profile. You will be presented with two very different opportunities: Marketing your OEM PCs to those who know what Linux is, and already have an interest in purchasing such a machine for their themselves or for their business; or, simply reproducing what Linspire and Xandros have been doing for the past few years. They've both made a business out of targeting users looking to cut upgrade costs. These users have shown little interest in the politics behind Linux as a whole. And up until recently, this has been a fairly good business for these Linux OEMs.

It should be obvious by now that the two 'player' distributions in the limelight today are Ubuntu and SuSe. With SuSE, there is the debate between SUSE Linux Enterprise Desktop (SLED) and OpenSuSE. With SLED, you have the Novell support team working with you. With OpenSuSE, you are either paying for support on the side or using the community for help.

Ubuntu offers much the same, but without the split of names. Support provided by Canonical is just as valuable to the end user as is support provided by Novell. Just remember, though, Novell has been doing this a bit longer, which might enable clients to feel better.

Linux OEM – a growth industry?

There is a growing frustration over Windows Vista in the enterprise and at home. Combine this with the immense frustration of trying to get various Linux distributions working on machines built for Windows and you have yourself an entrance into a growth market.

The key to success with this market, however, will be the ability to provide more than just typical support to your customer. You must be able to work around existing shortcomings of the OS/distribution itself, and in some cases, create rather elaborate solutions to yet-to-be discovered problems.

Why would anyone go to all of this trouble? Because with the right team in place and a complete understanding of their target market, a potential Linux OEM could do quite well. Remember, define why your idea of customer fulfillment is different and you could find yourself in a fantastic position. And finally, learn from the mistakes of other companies who have delved in these waters before you.

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