Yesterday I wrote that Vista is expected to push Microsoft's stock price up next year, even though it's not exactly stirring up a frenzy of excitement in the marketplace. In "Does Vista Look Better As A Market Play Than As An OS?" I wondered aloud why Linux wasn't taking advantage of the opportunity. In response came a link to a piece from Business 2.0 by Owen Thomas that rehearses something I'd forgotten: Linux may be free, but it's too expensive for PC makers to install on their machines.

Thomas, in "To Love Or Hate Vista" points out why.

Once upon a time, Microsoft wrote contracts that charged PC makers for an operating system for every PC they built -- whether or not that machine went out the door with a Microsoft operating system installed on it. No other operating system maker could get a foot in the door, because no PC maker would pay twice for the operating system they installed.

That made sense before the U.S. government's antitrust case, and before open source operating systems. But how does it work now that Microsoft is bound not to discriminate on price and Linux is free?

Discounts, writes Thomas: "To settle the government's massive antitrust lawsuit, Microsoft agreed to charge all PC makers a uniform royalty, based on the number of Window licenses they buy. The more Windows licenses a PC maker buys, the cheaper the cost per unit. While Microsoft can't punish companies for selling rival operating systems, machines with anything but Windows installed don't help PC makers meet the quotas necessary to pay Microsoft lower rates." In effect, saving money on part of their production by installing Linux makes their Windows machines more expensive because the discount goes down. And in an industry that runs on hair-thin margins already, giving the competition any price advantage is bound to be a disaster.

Thomas still sees an opportunity for Linux: "Linux suppliers ... should forget touting Linux as a cheaper alternative to Windows. Instead, pitch Linux as a luxury product whose stability, versatility, and virus-resistant technology deserve a premium price." It worked for Apple, he points out, and if consumers prove willing to pay more for a Linux PC, then PC makers will be a lot more eager to pre-install the software.

"Luxe Linux," as he calls it, is a catchy notion, but I'm not sure I'm buying it. Sure, Macintoshes have sold at a premium over Windows machines forever (although the premium may be eroding). But why would I pay $70 more for a Dell or HP laptop running Linux than the same hardware running Windows? (According to Thomas, $70 is the average cost of Windows on a PC.)

This brings us back to my "killer app" argument of yesterday. I think I might pay a premium for a Linux PC -- not for snob appeal, which is what "Luxe Linux" sounds like to me, but for something that Linux does that Vista doesn't, for a "killer app." But absent a killer app or similar compelling reason ... well, I'd have to think about it.