Just how many Linux machines will Dell really sell?

I've been reading lately about how Dell is slated to sell just 20,000 PCs with Linux loaded on them. I've seen that number thrown repeatedly into the faces of an uncaring blogosphere by folks who obviously have no love for either Linux or Ubuntu. The source of the number seems to originate from this posting, which was itself quoting in part from an email the poster had received:
We will be launching a Linux based OS (Ubuntu) on the E520, 1505 and XPS 410 starting next Thursday, 5/24. We expect these systems to be less than 1% of our OS mix for the entire year which is ~20,000 systems annually. Please cover the huddle deck below with your team by EOB Sunday. If any questions come up, please let me know so I can address them before launch.

The goal of launching Linux is to continue to give our customers more choices to customize their new Dell. Providing more options to our Linux Enthusiast customer group will hopefully create even more Raving Fans!!
Now there are a lot of questions raised by these two paragraphs. For example, the "OS mix for the entire year" includes what operating systems? Just Windows? Windows and other versions of Linux? And is it across all machines (in other words does number of machines shipped equal number of operating systems shipped)? And how much less than 1% are we talking? Is is 0.9%, or 0.8%, or 0.5%? Or something even far less? And the length of time, is it a calendar year or a fiscal year?

In an effort to determine just how many systems Dell might ship this year, I have attempted to bracket the initial conditions and to find some statistics with regards to Dell's past performance. I want to see where that 20,000 might have came from.

First, let's consider the length of time. Dell's official announcement about selling Ubuntu on their machines was made within the last week of May. My own posting on the subject was May 26, which I tend to believe was the day it came out. So, rather than say that Dell will only sell 20,000 Linux machines for the whole year, it's better to say they expect to sell 20,000 machines for the last half of 2007. If we stick with the 20,000 number then we could say that Dell could sell 40,000 of their machines loaded with Linux within a full calendar year.

Second, let's consider the reach of Dell's efforts. Dell deliberately restricted the number of machines they would ship Ubuntu on, first to three, then several months later to just four. And it was also limited to just the US market. That market was later expanded to Europe. Now compare this to the total number of models that Dell sells across the world. I have some statistics in that area from 2006. In a lone ZDNet article from April 2006, I read that 57 million PCs had been shipped world wide from 1Q05 to 1Q06. According to the article Dell shipped 16.5% of those PCs, or 9,405,000 machines. Assuming that Dell will sell the exact number of machines for the next several years, through 2007 on into Q108, and assuming they were to ship exactly 1% of those machines with Ubuntu installed on them, then Dell would ship 94,050 machines during a full year, or 47,025 from June to December 2007.

So, while my numbers are higher, the 20,000 is certainly within the ballpark. The questions all this raises of course centers around what Dell's starting assumptions where that they came up with the 20,000 number in the first place, and I don't think we'll ever really know.

Regardless of what numbers you use, all the numbers are embarrassing, starting with Dell's basic assumption of 1% or less. I have never really believed that Dell would be successful. I always believed, and continue to maintain that belief, that the effort is a bone being thrown out to the community. I don't fully understand Dell's motivations, but it sure isn't to promote Linux. Otherwise Linux would have been offered as a selectable option on every machine they sell, in every market they sell in. And to rub salt into the wound, consider Apple's performance during the same time period from which I quoted Dell's numbers. Apple, in the same period (1Q05 to 1Q06) had a world-wide market share of 2.3%. That means they shipped 1.3 million of those 57 million machines. I know it's unfair to compare world-wide numbers to a percentage of a single vendor's number, but really. No matter how you slice it, 20K in the first year is pathetic.

If Dell meets that miserable target of 20,000, and there is no guarantee they'll even meet that, then Dell will be completely within its rights to conclude that the effort was a failure and turn it off. For Dell's Linux efforts to truly succeed then Dell would literally have to show a 10-times greater number of computers shipped with Ubuntu. Not double, or quadruple, but ten times (an order of magnitude). Otherwise it really is a waste of Dell's time and money.

And if it does fail, then it will leave a black eye on the movement that no amount of time will ever completely erase. And that, I think, is what this whole effort has been about. Set it up, hobble its scope, and then sit back and see what happens. It will fail, and by direct association so will Ubuntu and Linux. And Microsoft will wind up with a huge PR bonanza in its continuing fight against Linux. This carefully crafted trap isn't aimed at the geeks, it's aimed squarely at the business community and general buyers who are wavering in their commitment to Microsoft Windows. This has nothing to do with merit. It's all about marketing and maintaining market share, even for a convicted monopolist. The coming public failure of Dell's Linux marketing efforts will provide Microsoft with all the heavily documented ammunition it needs to support its position that Linux can't be sold, certainly not as a viable alternative to Windows.


  1. Let's assume you are right. Ubuntu will be a failure for Dell. But you don't fully assess the downside to this, which I am sure Dell has. Dell doesn't take a dump without working the angles. I've dealt with them enough to know better.

    If Ubuntu failed what is the downside to Dell? Like you say, it tightens M$ grip. More than before. So why would Dell attempt it if that was the downside? Simple answer -- They don't think it will. I would hazard that Dell has already ran across enough 'linux on the Dell' in their support calls that the cost of attempting to support 10 different Linux versions has been driving them nuts. Solution?

    Well of course, the first order of business to cost reduction is to minimize the variants you support. So to do that Dell had to provide an alternative Linux OS to drive their rogue Linux users to on the desktop. So they pick Ubuntu. So now when a dell owner calls they can say "Sorry we only support Ubuntu." Customer switches over to Ubuntu, Dell gets lower cost of support. Win-Win.

    Dell has all those support calls logged too by the way. They can see the trends in their own records. Also remember that Dell supports RH on the server side and has for years. I would hazard that Dell figures they can sell that many units by COY. I might even hazard that they may have a few corporate deals in the works like HP did to sell several thousand at once.

    Bottom line -- I think your assessment as to WHY is off. It is not for marketshare that Dell did this but for cost containment purposes. It will be interesting to see what the numbers are at the end of the year.

  2. Another way to look at the very modest sales prediction for Ubuntu on Dells is that it's easy to exceed.

    Then both Dell and the Linux community, as well business and regular users, can say "see, Linux is viable because it exceeded Dell's sales predictions".

    I think Dell, like all OEM's, is tired of being Microsoft's b!tch.

    It's very much in Dell's interests to make MS at least a little bit worried, and try to be more accomodating to their, and their customer's, needs.

    In short, Dell could also be using it's Ubuntu offerings as a bargaining chip with MS.

  3. Bill,

    The sales _by far_ exceeded their expectations. They have sold over 30,000 already.

    Nice blog, by the way. Keep it up. Please.

  4. Can you provide a link to that number? Thanks.

  5. Bill,

    I think your analysis of Dell's reasons are wrong. Let's remember something, Dell is a business, they are there to make money - so I find your statement that Dell is throwing a bone to the community weak.

    Dell has been in trouble, and HP has been eating their lunch. Why? Because Dell was too dependent on their direct sales model. Dell is now selling machines in Walmart - but not all models, but they are serious in expanding in retail. Think about that. Using your logic, if Dell is truly serious about entering the retail space, why wouldn't they have their own stores with all of their products? It's simple - it would be foolish to commit so many resources on an untested idea. The same applies to the launch of Linux on Dell systems. This is a pilot project for Dell. Dell, in it's search to differentiate itself from it's competitors asked it's customers via the Dell Ideas Storm site what their customers want. Offering Linux came in easily as the most popular idea. This is not Dell throwing a bone, this is Dell asking prospective customers, responding to prospective customers, and creating a pilot project that they can expand as demand increases. The pilot starts in the US and they pick three systems. Now they add more systems and expand the offering to Europe. You see this as throwing a bone? Come on! Dell is treading carefully, and they are trying stay within Microsoft's maxim of satisfy demand, don't generate it. This is why you do not see front page links on Dell's website for Linux systems - Dell wants to keep MS's ad dollars. Guestimating 20,000 systems, or 40,000 systems is a useless exercise. The real question is what is Dell's expectation of success, and more importantly, are the revenue dollars from sales of Linux systems greater than the costs incurred by the cost center that builds these systems? If the answer is yes, then Dell has a winner that they will expand, and they will do it through word of mouth, and passive means. Only Michael Dell knows what his tolerance is for taking risk and giving something a chance to work. Michael Dell is building a business with some tight constraints, and what Dell is doing is making perfect sense to me.

  6. http://www.accountingweb.co.uk/cgi-bin/item.cgi?id=171829&d=1032&h=1020&f=1026 (among others)


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