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The week in review: Rebel Dell

The computer maker has some new ideas about how to do business that seem to go against standard models--selling customers only what they want.

PC maker Dell Computer has some new ideas about how to do business that seem to go against standard models--selling customers only what they want.

In what appears to be a slick interpretation of Microsoft's new licensing terms, Dell Computer is making Windows optional for some of its business desktops. The PC maker next month will introduce n-Series corporate desktop and workstations that ship without Microsoft's Windows, or any other operating system, preinstalled.

The Microsoft licensing terms, which were put in place on Aug. 1, specify that PC makers must ship PCs with an operating system. The new policy exists to prevent piracy and to better track operating system shipments. With the n-Series, Dell will include a copy of a free operating system--FreeDOS--inside the cardboard box. However, the operating system will not be preinstalled, so customers will not have to worry about reconfiguring their machines should they want to use a different product.

The demand for PCs without operating systems, while limited, is often fueled by their convenience, especially for companies that want to experiment with Linux. Many large companies buy Windows through licensing programs and thus have to erase all the software that comes on factory-shipped PCs and reinstall their own.

Dell is also turning heads with its new Professional Services group, which is promoting a new menu of IT services--such as moving data to new storage equipment or installing new servers--for fixed prices that it claims are lower than its competitors'. Dell is hoping that companies will be more willing to buy specific, fixed-price services than to wade through proposals for custom services from its competitors.

As a desktop PC maker, Dell didn't have to worry as much about consulting. But now that it has become a major player in servers and other backroom hardware, it needs to provide customers with greater contact. In addition, Dell executives have publicly stated their goal of doubling the company's revenue over the next few years.

Fixed-price offerings have been tried before. But unlike pure consultants, Dell will be able to piggyback on its hardware business, one of the few segments in the technology industry that is experiencing growth.

It's a LinuxWorld after all
Linux flexed its growing muscles this week at the LinuxWorld Conference and Expo, attracting heavyweights such as IBM, Sun, Oracle and even sworn enemy Microsoft.

Linux is going to use some of that backing to muscle onto corporate desktop computers. Red Hat, the top seller of Linux software and services, will release in coming months a new version of its software for corporate desktop computers that follows in the mold of its high-end server version. And Sun Microsystems will use Linux inside its own company on desktop computers as a part of a plan to cut real estate costs, and plans eventually to offer a Linux desktop product.

Sun will use Linux desktops in its "iWork" program, under which employees don't get an office of their own but instead sit down in the first available empty cubicle they encounter. Sun executives declined to say whether the company planned to sell Linux PCs using Intel or Advanced Micro Devices processors, but said the company would announce more details of its desktop Linux strategy at the SunNetwork conference, taking place Sept. 18-20.

Some companies are looking to save more than just space. Telecommunications company Verizon Communications saved $6 million in equipment costs by moving its programmers to Linux computers. The company cut costs by replacing programmers' Unix and Windows workstations with Linux systems that run OpenOffice instead of Microsoft Office.

Cost-cutting is one of the key arguments behind adoption of Linux, a clone of the Unix operating system. Linux is available for free or at low cost. But one Verizon employee familiar with the conversion said the equipment cost savings were outweighed by problems getting code written on one system to run on another.

"We've saved money on the front end but burned money on the conversion process, so we're still behind," the employee said.

There was also dissension from an unlikely source. Bill Joy, Sun's chief scientist and a pioneer in designing Unix, voiced doubts about Linux's open-source underpinnings as the company began selling its first general-purpose Linux servers.

"The open-source business model hasn't worked very well," Joy said. A business link, he said, is important for ensuring customer support that doesn't rely on volunteer help and for letting market forces select between competing packages such as the KDE and Gnome software that give Linux a graphical user interface.

Joy, a Sun co-founder and the principal designer of the Berkeley version of Unix, called BSD, said he preferred BSD's license or, better, the Sun Community Source License (SCSL) to Linux's. Those licenses are more amenable to companies wanting to build businesses on the software, he said.

There was also an optimistic--if not conspiratorial--message from Oracle's chief executive. Linux is making inroads against Microsoft, but to become a real threat there must be a concerted effort to build an open-source offering that's competitive with Microsoft Office, Larry Ellison said.

Ellison told a crowd of Linux loyalists that Oracle was committed to the open-source operating system, but rained on dreams of Linux on every desktop unless there was a strong or popular open-source alternative to Office. Sun has open-sourced its StarOffice product--but when Ellison asked for a show of StarOffice users and whether they were happy, he received a tepid response, even from the partisan crowd.

"That's the challenge?the real barrier to providing competition. I hope there is an open-source response to Office--a concerted, better-coordinated plan in addressing the 'Microsoft Office gap,'" Ellison said.

Naughty on the Net
RealNetworks is considering adding adult programming to its multimedia subscription service. The company is in discussions with several audio and video producers to expand the lineup on RealOne SuperPass, the company's fast-growing content subscription service.

Although an executive said there are no immediate plans to launch an adult channel on SuperPass, he added that the possibility would not be ruled out. "We expect we will have different tiers" of service, he said. "Maybe even an adult tier."

Although many porn sites pay RealNetworks to use its technology for serving up online video clips, the company has thus far steered away from offering adult material through its own content channel. The decision reflects the main problem facing the online porn business: While adult content is a big moneymaker, few mainstream publishers want anything to do with it, forcing most porn distributors into a niche.

Speaking of sex, the long-running property rights case surrounding is heating up again. Now the 9th Circuit Court of Appeals is hoping to sort out at least one of the issues: whether domain name registrar VeriSign can be held responsible for turning the name over to someone who sent the company a forged letter requesting the transfer.

The case could have important legal implications for companies that administer domain names, including determining the duties and liabilities for domain name registrars that handle Web addresses. In addition, the case could help settle how domain names are treated under property law.

A three-judge panel heard arguments from lawyers representing Gary Kremen, the businessman who lost and then won back the rights to the domain name; VeriSign, which turned over the domain name; and Stephen Cohen, the man who tricked VeriSign into giving him the name for five years and now apparently is hiding out in Mexico.

Also of note
Mozilla 1.0, the open-source technology behind the latest Netscape browser, is garnering favor for helping to block irksome pop-up advertisements, but don't expect to see that feature in the coming full release of Netscape 7.0...Unconventional business arrangements are coming home to roost for erstwhile Internet stars such as AOL Time Warner, which this month joined the lengthening list of companies under investigation for alleged accounting fraud...Apple unveiled souped-up Power Macs, in the first major upgrade to the professional system in about a year and half...Apple Computer is also rewarding households with more than one Mac by allowing consumers to buy a $199 a copy of the OS X operating system and install it on up to five Macs...Microsoft will launch its Xbox Live online game-playing service on Nov. 15, a year after the video game console entered the market.

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