Wal-Mart Slams Lindow on Microsoft

On June 17, Walmart.com began selling eight different Microtel desktop computers with preinstalled LindowsOS, a Linux-based operating system that also can run some Microsoft Windows software applications.

At $299 for the basic model, the machines have set a new standard for affordable computers. That appears to be about half the cost of the cheapest computer sold by Gateway ($599) or Dell ($579 after a $100 rebate), which are preinstalled with Microsoft’s ubiquitous Windows XP Home Office operating system.

With the sales-volume muscle of Bentonville-based Wal-Mart Stores Inc., the world’s largest company with $218 billion in 2001 revenue, the Microtel/Lindows computers may give Bill Gates’ Microsoft monopoly some “everyday low-priced” competition.

Computer experts have been buzzing on Internet Web sites about the challenge to Microsoft’s empire.

“You can buy a PC without paying the Microsoft tax!” wrote one techie on slashdot.org, a popular Internet site for computer experts. “Rejoice, the revolution has begun! Down with the king!”

A Closer Look

A closer look at the specs on Walmart.com shows that the $299 Microtel SYSMAR701 comes without a monitor or floppy disk drive.

A 15-inch monitor is included with both the Gateway 300SE Special and Dell Dimension 4500S mentioned above, and Gateway throws in a 3.5-inch, 1.44 megabyte floppy drive for the total price of $599.

Most computer shoppers will need a monitor and floppy disk drive with an entry-level computer like the Microtel SYSMAR701. A Microtel MT07E7 17-inch monitor purchased at Walmart.com would add $128.42 to the cost of the basic Microtel with Lindows, and a Comstar USB external floppy drive would add another $47.64 for a total of $475.06.

That’s still 26 percent cheaper than the entry-level Gateway, but the Gateway 300SE has a few other advantages over the basic Microtel — such as a faster processor, larger hard drive and CD burner — which make the Microtel appear to be closer in price to the other two computers than the $299 price tag implies.

With the inexpensive Microtel, Wal-Mart appears to be surfing for its traditional customer — the one who wants the lowest price, period. Whether Wal-Mart will be able to carve out a significant piece of the computer-market pie is yet to be seen. Last year, Texas-based Dell had sales of $31 billion, and California-based Gateway had sales of $6 billion.

“You’re getting what you pay for,” said Scott Robinson, assistant manager of the Gateway Country store in Fayetteville’s Spring Creek Centre.

“I’m sure people are going to jump on that,” he said of Walmart.com’s advertised price of $299 on the Internet site, “but the real problem is you’re not going to be able to run a lot of software.”

The Gateway salesmen also said customer service could be a problem with the Lindows operating system because Microsoft is so entrenched that most computer experts are familiar with it.

“The issue is going to be how compatible is this computer ultimately with Microsoft’s software,” said Brendan Barnicle, an analyst with Pacific Crest Securities in Portland, Ore.

“Functionality is the key word. You’re still going to have to download browsers and possibly buy additional applications such as [Microsoft] Office if you want them.

“Linux has so far been more of an application for hobbyists. Right now it represents less than 5 percent of the market. But if they have the functionality, no doubt it’s something that Microsoft will see as serious.”

Computing for The Masses

When announcing the Microtel/Lindows computers in mid-June, Michael Robertson, CEO of Lindows.com Inc., made it sound like the three companies involved had struck a deal to make computers affordable for the common man.

“Microtel and LindowsOS are bridging the economical gap,” he said. “Every family can have a viable computing solution in their home for the cost of a video game console, and every business now has an affordable and easy-to-use option.”

Robertson compared the Microtel/Lindows marriage at the chapel of Walmart.com to the first time color television sets became affordable to the masses.

He said the LindowsOS runs Windows applications without the performance degradation experienced by users of other types of emulation software. Robertson is the former CEO of MP3.com.

The Microtel/Lindows computers use both Intel Corp. and Advanced Micro Devices Inc. processors.

The $299 Microtel SYSMAR701 PC has an 850 megahertz processor, a 128 megabyte memory and a 10 gigabyte hard drive — enough horsepower to put Joe Sixpack on the Internet.

But the computers aren’t for sale in Wal-Mart stores. They’re only available through the company’s Web site.

The most expensive Microtel that Walmart.com is selling is the $599 SYSMAR708 PC with a 1.8 gigahertz Pentium 4 processor, 256 megabyte DDR memory and 40 gigabyte hard drive.

The LindowsOS computers being sold through Walmart.com include an e-mail program, word processor, Web browser/file manager, address book, calculator, CD player, MP3 player, Microsoft PowerPoint Viewer, Microsoft Word Viewer, Microsoft Excel Viewer and an image viewer.

For about a year, Walmart.com offered Microtel computers with Windows software.

In February, Walmart.com began offering Microtel computers with no operating system at all.

“We kept getting calls from people asking if we would offer a Linux operating system,” said Cynthia Lin, a spokeswoman for Walmart.com.

This is the first time LindowsOS has been available to the public. Previously, the Lindows operating system was available only to insiders who purchased it through the Lindows.com Web site.

“It delivers the stability of Linux with the ease of Windows,” Walmart.com tells shoppers on the page featuring the computers.

“And it includes a trial membership to a library of more than 1,000 software programs to meet your business, home and entertainment needs.”

Walmart.com also offers 10 different Microtel computers loaded with a preinstalled Microsoft Windows XP Home Edition operating system, ranging in price from $599 to $799; 13 Microtel computers with no operating system, ranging from $399 to $699; seven Hewlett-Packard computers, ranging from $598 to $1,298; and three Compaq computers, ranging in price from $1,149 to $1,649.

Walmart.com, Lindows.com and Microtel are all based in California.

CHART

Computer comparison

FeaturetMicrotel SYSMAR701 tGateway 300SEtDell Dimension 4500S

ProcessortAMD Duron 850MHztIntel Celeron 1.3GHztIntel Celeron 1.7GHz

Memoryt128MB SDRAMt128MB SDRAMt128MB SDRAM

CD-ROMt52x CD-ROM drivet24x/10x/40x Recordable CDRWt48x Max CD-ROM drivet

Hard drivet10GB Ultra ATA100t20GB Ultra ATA100t20GB “Value” HD

Floppy drivetnonet3.5-inch 1.44MBtnone

MonitortnonetEV500 15-inch colortE551 15-inch color

Operating systemtLindowsOStMicrosoft Windows XP HometMicrosoft Windows XP Home

Modemt56Kbps V.90t56K PCI Voicet56K PCI Data Fax

Pricet$299t$599t$579 (after $100 rebate)

Source: The companies Web sites