Wal-Mart's Linux Gambit - InformationWeek
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12/30/2004
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Wal-Mart's Linux Gambit

I'm no friend of Wal-Mart. During my college years back in North Carolina and Georgia, I watched as Sam Walton's "big box" retail outlets spread across the countryside like a bad rash, leaving one bombed-out small-town business district after another in their wake.

I'm no friend of Wal-Mart. During my college years back in North Carolina and Georgia, I watched as Sam Walton's "big box" retail outlets spread across the countryside like a bad rash, leaving one bombed-out small-town business district after another in their wake. It didn't make for a pleasant shopping experience at the time, and I'm not much more enthusiastic about the company today.

Having said that, I'm not disappointed to see Wal-Mart using its immense marketing muscle against Microsoft. The retailer's partnership with Linspire to produce a sub-$500 laptop using only Linux, OpenOffice, and other open-source software has paid off: At $498, the Balance laptop looks like a reasonably nice system, and it's the cheapest laptop on the market to include both an operating system and an office productivity suite.

The most interesting part of this deal, however, isn't the price of this laptop; it's the nature of the company selling it. Wal-Mart is notorious for dictating everything from wholesale pricing to supply-chain technology to its suppliers, although in this case there's no cost at all associated with the software on this laptop system. That's a big difference compared to any computer using a Microsoft operating system, office suite, and other software, all of which would increase the cost of the Balance laptop by 50 percent or more.

Does Wal-Mart intend to put some serious marketing muscle behind its Linux laptop? Or is the Balance intended more as a message to Microsoft, whose products are still far more familiar to most consumers and thus much easier to sell in large quantities? Redmond might not be happy giving Wal-Mart the kind of preferential pricing the retailer would like to see, but it could be preferable to seeing the Balance sitting front-and-center in hundreds of stores, tempting even the most dubious consumers with its unheard-of price.

I suspect we won't have to wait long to see how this story ends. In the meantime, if any of you decide to shell out $498, drop me a line, and let me know what you think of the Balance.

Have a good week and a happy holiday.

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