Microsoft Thanks Ubuntu For Increasing XP and Vista Sales

Posted: 2007-07-09 08:13:41

It’s great that Linux is finally getting the exposure it deserves, thanks to Dell, but the question still remains: how is Dell profiting from its Ubuntu offering?

We know that the net margin for Dell, as a whole, is around 5% [the true profit made on revenue]. While we can compare this number to the industry standard, it does not tell us anything about the margins Dell pockets on its commodity PC and Notebook lines.

Per system, it is rumored to be around 2% or less and to be razor-thin and ever decreasing.

Considering that Dell pays $25-$45 per OEM volume XP/Vista license and profits $45+ from the “Desktop Real Estate” provided by Windows, where is the profit made when a Ubuntu system is priced less than it’s Windows counterpart?

Surely not with the upgrades that are either lacking or similarly priced [that sometimes cost more].

Publicity.

The profits made on selling Ubuntu systems at cost, or even at a loss, is with the free publicity Dell is generating for itself via major news and social network sites around the net regurgitating on this deal literally every few days. This in turn generates traffic and sales on profitable items, such as the Windows systems, for Dell.