Custom System Panel Gets Hot About Microsoft Pricing

The system builders were part of a session that got heated when the pricing discrepancy between tier one vendors and the system builder channel was raised during a session hosted by CRN Editor In Chief Heather Clancy and Digital Connect Editor Jeff O'Heir. The event, CRN's Xchange Solution Provider Conference, is taking place in Las Vegas.

One of the panelists, Gary Clayton, vice president vice president of Entre Technology Group, a Fort Worth Texas system builder that provides highly specialized embedded systems for the medical market, urged system builders to consider a Linux alternative.

"On a $500 to $700 desktop PC, the Microsoft license is your single largest cost, so why not consider the Linux desktop if it is a lower cost," said Clayton. "Bring it out there, when they [Microsoft] sees their largest contingency is starting to adopt a platform from another manufacturer we just might get their attention."

Clayton noted that his company uses Linux for its stability in some embedded environments and also provides both Intel and AMD processors. "We try to bring a manufacturer independent perspective," he said.

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System builders have complained for many years about the preferential pricing given by Microsoft and Intel to tier-one giants such as Dell.

The complaints have intensified, though, with the incredible pressure on margins in the last several years. Some system builders have even expressed an interest in banding together and forming a group that could pressure Microsoft and Intel for better pricing.

The pricing issue came up only moments after Novell demonstrated a Linux desktop alternative, Suse Linux Enterprise 10, at a world premiere event.

Panelist Mark Rhoades, vice president of PC Direct Inc., a Indian Trail, North Carolina system builder, for his part, urged system builders to look to themselves to make their lot better rather than point fingers at vendors.

Noting that some system builders want to form a collective to pressure vendors for better pricing, Rhoades pointed out that no matter what vendors system builders deal with there will be issues. "Where we are going to come out ahead is figuring out how do we work unfortunately with the cards that we are dealt to come out ahead," he said. "If we all sit here and just keep on complaining we are not going to solve anything."

Panelist Joe Toste, vice president of marketing for Equus Computer Systems, the giant Minneapolis, Minn. System builder, said Dell's recent decision to use AMD's Opteron processor on four and eight way servers could pose problems for system builders. "For us the AMD product line has been an important differentiator," he said. "We have done very well with Opteron. Dell has had their clock cleaned in that segment. This is a concession."

Several system builders attending the session said they will look seriously at Novell's SUSE Linux Enterprise 10 because of their frustration with Microsoft.

David Lair, owner of Lair Services, a Brandon, Fla. Microsoft partner, said he is anxious to evaluate SUSE Linux Enterprise 10. He said a high priority for him is testing the new platform after he received a free evaluation copy. "I am going to put it on a couple of test boxes," he said. "The last time I looked at Novell was 1996. Now they are doing this. If they can get this out before Christmas Microsoft is going to lose a whole lot of their steam with Vista."

Don Allison, owner of Media2Play, a Tuscon, Arizona system builder, said the marketplace is more receptive to a Linux alternative now than years ago. "The whole market has changed radically in the last couple of years," he said. "The hardware margins have slimmed down. Open source is coming into its own. People are looking for altneratives compared to traditional solutions because they are spending a lot and having to update every few years."

Several system builders, however, said even though they are frustrated by Microsoft's near monopoly like position on the desktop they would be hard pressed to switch to Linux. "You are talking about the operating system," said Glen Coffield, president of Cheap Guys Computers, an Orlando, Fla. system builder. "It's not a different monitor. "

Robert Nitrio, president of RanVest Associates, an Orangeville, Calif. , said there is a big "inertia" factor with Linux. "That is the key element," he said. "I will definitely take a look at SUSE Linux, but as much as I might like it. I still have to go back to my clients and look at the total return on investment of the proposition. You have to make hardware changes, code changes and then bring in new software that runs on the Linux platform and do all the education and get them up and running there are costs there."