This is the second in a series of two articles on Tux's move into retail. Last weeks article described some of the mechanics of how free open source software is getting into retail. Today, Mad Penguin™ interviews Linspire CEO Kevin Carmony; Xandros CEO Andreas Typaldos; Mepis Linux founder Warren Woodford; and Kevin Jones, Micro Center Vice President of Merchandising, to get their take Tux's jump into big box retail.
Some common themes emerge from these interviews. First, relationships with companies and people working in the distribution chain don't emerge over night. Just as in contributing code, you have to build trust first before you get to dance. Second, you have to convince the distribution chain that there is a financial incentive to selling your distro. Third, you need a chain rep to package the code and get it to the stores in the right volume at the right time. These interviews also make clear that these business leaders do not always agree on what it will take to make open source a success in retail. Some will emphasize using the retail machine, others will emphasize starting with grassroots marketing.
Business leaders, of course, get paid to present their products or services in the best possible light. Call it commercial puffery if you will. But sometimes you can learn stuff from GOOD commercial puffery. These interviews are the good stuff. If you look past these interviewees' predictable enthusiasm for their distros, you will see that each of these guys was successful before they came to Linux. They could be selling any kind of widget, and making money doing so. They have each chosen to make substantial career bets on free open source software. This 2005/11/11 press release by Micro Center Kevin Jones explains a bit more concretely why they have taken the risk of backing a new technology like free open source software on the desktop:
“Enter desktop Linux. It's a fairly new choice, as far as retail computer operating systems go, but it's gaining quite a bit of attention in the marketplace. It had been on our minds, but it really caught our eye after a recent customer survey shows 75 percent of our customers would be receptive to purchasing a computer running desktop Linux. And with Micro Center's past history in debuting nascent consumer operating systems, it seemed like our stores were the perfect candidate to incubate desktop Linux computers and software...Yes, it's a risk to be on the forefront of new technologies, but that's what our customers have come to expect from Micro Center.”
Here's what Linspire CEO Kevin Carmony had to say about the Micro Center deal when it was announced on May 11, 2005:
"With Linux PC shipments forecast to reach 17 million units by 2008 and large retailers like Micro Center making this kind of commitment to desktop Linux, it's clear that Linux is no longer just for the technically sophisticated computer user, but that desktop Linux is now gaining mainstream acceptance."
That statement is more than commercial puffery. Notice that Kevin Carmony is not just talking about his company (Linspire). He's talking about Linux PCs in general. Aren't you tired of hearing that “Linux is not ready for prime time?” I know I am. Read on to find out what these business leaders think is on the horizon for mainstream desktop Linux.
Mad Penguin's recent email interview with Linspire CEO Kevin Carmony
This interview was conducted by email, as were all of the interviews in today's article on free open source software in retail.
Mad Penguin: Please introduce yourself to the nice folks in Mad Penguin™ land.
Kevin Carmony: Hi, I'm Kevin Carmony, President & CEO for Linspire. I was the first person to come to work for Michael Robertson, Linspire's Chairman, when he started the company about four years ago.
MP: Please tell us a little bit about your background, and how that steered you into Linspire.
KC: I have a Bachelors degree in Business and have been CEO for a few different software companies over the past twenty plus years, as well as other entrepreneurial ventures in other industries. After Michael Robertson sold MP3.com to Vivendi Universal, he asked me to become President of a new venture he had planned, a company to bring Linux to the desktop, which ultimately become Linspire. I knew very little about Linux at that time, but have obviously since learned a great deal and love it. You couldn't drag me back to Microsoft Windows, even if I didn't work here.
MP: Linspire has just closed a deal with Ingram Micro for retail distribution, but it wasn't always possible possible for consumers or end users to go to a store to buy desktop Linux. Is this a manifestation of a basic chicken-and-egg problem?
KC: Yes, that's right. The retail and OEM channels don't want to create demand, they want to fulfill it. If they put a product on their shelves that no one is familiar with, and they don't know what it does or why they need it, it will just sit there. Just having a box on a retail store shelf doesn't do much to create demand. Fortunately, over the last several years, Linux has been getting more and more attention. Because of its strong success on servers, more people are learning of the benefits with Linux over legacy Windows technology. Linspire has worked hard over the last four years to help 1) to create great desktop Linux products and services; 2) to get these products into the channel; and 3) to educate end users of the value of considering Linux as an option for their laptop or desktop. This third one is the most difficult, and fortunately, Linux is getting more and more attention these days to help there.
MP: What steps does a manufacturer like Linspire have to go through to get its products carried in the manufacture-to-wholesale-to-retail chain?
KC: Lots of things. It starts with having great products - products that are super easy to use - so that anyone, even average computer users, can use them. You then need a top-quality support strategy. You can't have your customers calling Wal-Mart, Comp USA, Fry's or Best Buy when they have a question. You also need a highly skilled sales force that can fly all over the world demonstrating your products, services and support strategy. Linux and open source software help tremendously with the lines of code and technology, but for the retail channel to embrace it, it needs to have polish, manuals, ease of use, support, salespeople, and margin. Yes, margin. The retailers aren't in the business of putting "free" products on their shelves. They need to make money in the distribution process.
MP: Who are some of the other retailers that carry Linspire?
KC: We have dozens of retailers all over the world selling both our boxed product as well as computers which are pre-installed with Linspire, such as Best Buy, CompUSA, Fry's, Micro Center, Wal-Mart, and online at NewEgg, Tiger Direct and Amazon.
MP: It seems as if the Linspire deal with Ingram was an historical watershed in some ways. Please tell us where we were historically before the Linspire-Ingram deal, in terms of the retail desktop Linux presence before the Linspire-Ingram deal.
KC: Linspire has always known that you swim upstream - meaning you start with the smaller players, which then puts pressure on the larger players to participate if they see the little guys having success. Linspire has been selling to retail for a few years now, and every year our distribution deals have gotten bigger and bigger, as have our distribution partners. Ingram is a good indication that we're becoming successful at having distributors at all levels participating, but we still have to continue working hard on the pull-through demand so that the products sell well.
MP: What about other desktop Linux distros? Where were they before the Linspire-Ingram deal? Will this Linspire-Ingram deal establish a kind of presence that will help other distros get some respect from distribution chains?
KC: Only if they have a strong enough brand and marketing funds to pull it through the channel. Ingram will only take on products where there is strong demand and will sell well. Linspire has focused on the consumer market, so we have a strong brand in that space which makes us ideal for retail.
MP: It seems as if we are approaching a kind of digital tipping point, because the quality of a number of big name open source projects are reaching and exceeding consumer expectations offered by non-opens source software. Do you think that we will see an "iPod moment" for open source coming soon? What will it look like, and what role will Linspire play in that "iPod moment"?
KC: For Linspire, I think the technology is there, and the channel is now getting there, now it's just a matter of the masses learning about Linux as a viable option for their desktop and laptop computer. Just give things a little bit more time, and yes, we'll hit that tipping point. Not only will Linspire find broader adoption, but the entire ecosystem of Linux on the desktop will tip out, with more software, books, distribution, magazines, training programs, and so on. The advantages of Linux are just too compelling to not gain market share on the desktop just like it has on servers.
Mad Penguin's recent email interview with Xandros CEO Andreas Typaldos
Remember, this interview, as well as the interview of Linspire CEO Kevin Carmony, and Mepis founder Warren Woodford, was conducted by email.
MP: Please tell us a little bit about your background, and how that steered you into Xandros.
Andreas Typaldos: I am a computer science educated entrepreneur, with a BS in Mathematical Methods for Engineering and Operations Research from Columbia University, and a Masters in Computer Science from Pratt Institute.
Over the past thirty years I have been involved in a number of major corporate transitions of computing environments: from mainframes to minicomputers, to client server, to the Internet, from flat to relational databases, and from proprietary to open systems. In the process I have built and run major consumer software and technology companies, including a Fortune 1000 international records management and mission critical applications company (AxsOne). I have now positioned Xandros for the largest transition ever, to Linux as a mainstream platform.
For the last ten years, I have principally been an angel investor in a broad spectrum of companies in the Internet infrastructure, broadband and multi-media distribution, SMS and mobile transaction, technology consulting and enabling, instant messaging, and Linux spaces. In the Linux space, I was a founding investor, through Linux Global Partners, in Xandros as well as in Ximian and CodeWeavers. I was asked to personally build and run Xandros, as CEO, in 2003. Over the last two and a half years we have been expanding our original award-winning Xandros platform into a full range of consumer and business products, including desktop and server distributions, mass deployment and management tools, as well as specialized Linux applications.
We have more than tripled our company size since I came here two years ago, including a doubling our development and support operations. On the strength of our technical accomplishments, including our recent German release, we are now deploying a significant sales and marketing organization both in North America and abroad.
IDC expects overall Linux revenues to reach $35.7 billion by 2008, so Xandros, as a pure play, is an attractive investment both for its engineering leadership and pioneering ease of use that will spearhead mass market Linux adoption.
MP: Xandros has just closed a deal with Channel Sources for retail distribution, but it wasn't always possible for consumers or end users to go to a store to buy desktop Linux. Is this a manifestation of a basic chicken-and-egg problem?
AT: Yes and no. Linux may have been over-hyped a few years ago, before it was truly ready for mass market use, and this may have soured some retailers on Linux. That's in the past. Channel Sources is now seeing a remarkable upsurge in interest in Windows alternatives, and Xandros in particular, after all the glowing reviews we have received.
MP: What steps does a manufacturer like Xandros have to go through to get its products carried in the manufacture-to-wholesale-to-retail chain?
AT: Once you've received widespread recognition as the secure, easy-to-use alternative to vulnerable Windows machines, the rest is relatively straightforward. First you set up a well-focused sales and marketing campaign, and then you go with a leader like Channel Sources who can set up distribution through Ingram Micro, Navarre and other national distributors.
After that, you pay a lot of attention to retailers.
MP: Who are some of the retailers that carry Xandros?
AT: Wal-Mart, Amazon, Buy.com, Newegg, Fry's, J&R, Micro Center, PC Mall ... the list keeps growing by the day. This is just North America – we are doing the same in other regions as our localized editions roll out, such as our new German release of the Xandros Desktop OS.
MP: It seems as if the Xandros deal with Channel Sources was an historical watershed in some ways. Please tell us where you were historically before the Xandros-Channel Source deal, in terms of the retail desktop Linux presence.
AT: We had always been doing deals with Wal-Mart, Amazon, Fry's and others, but once demand takes off you really need to have a support infrastructure in place. That's what Channel Sources provides.
MP: What about other desktop Linux distros? Where were they before the Xandros-Channel Sources deal? Will this Xandros-Channel Sources deal establish a kind of presence that will help other distros get some respect from distribution chains?
AT: Yes, I expect Xandros to pave the way, which is fine in terms of overall Linux recognition, but not so fine when it is not clear who the other distros are targeting. For example, a typical Windows user could purchase a “geek” distro sitting next to Xandros on the shelf and become disenchanted when it is not simple to install and use. Fortunately, Xandros is getting strong brand recognition as the easy-to-use Windows alternative, and we're training retailers to put our products in the right customers' hands.
MP: It seems as if we are approaching a kind of digital tipping point, because the quality of a number of big name open source projects are reaching and exceeding consumer expectations offered by non-open source software. Do you think that we will see an "iPod moment" for open source coming soon? What will it look like, and what role will Xandros play in that "iPod moment"?
AT: Yes, that “iPod moment” is fast approaching for both open source and open standards. Xandros will be in the thick of driving Linux standards and mass acceptance – we're in for an exciting ride.
