[TriLUG] [BusinessWeek] Apple pushes HP toward Linux?

[Tom Roche]

A variation on the old "they're gonna start selling linux boxes
Real Soon Now" ...

http://www.businessweek.com/technology/content/sep2008/tc2008095_077474.htm
> HP's 'End Run' Around Windows
> As Hewlett-Packard steps up efforts to make Microsoft's operating
> system easier to use, some want to devise a rival version with Linux

> by Aaron Ricadela

> The carefully crafted ecosystem of tech companies built around
> Microsoft's Windows operating system is showing signs of strain.
> Hewlett-Packard (HPQ), a longtime Microsoft ally, has quietly
> assembled a group of engineers to develop software that would make
> Windows Vista easier to use, or bypass some of its more onerous
> features. A Skunk Works of engineers at the company is even angling
> to replace Windows with an HP-assembled operating system, sources
> say.

> HP's "customer experience group"--formed nine months ago and headed
> by vice-president Susie Wee, a former director in the company's
> research labs--is developing software that can complement
> Microsoft's (MSFT) Windows operating system to make it accessible to
> more users. Wee's team is tackling touchscreen technology and
> software that lets users circumvent Vista to watch movies or view
> photos, as well as transferring ideas from HP's Halo
> videoconferencing system to mass-market products. "Our customers are
> looking for insanely simple technology where they don't have to
> fight with the technology to get the task done," says Phil McKinney,
> chief technology officer in HP's personal systems group. "For us,
> it's about innovating on top of Vista."

> Others in HP's PC division are exploring the possibility of building
> an HP operating system for mainstream desktop and notebook computers
> based on the open-source Linux system, which competes with Windows,
> say people familiar with the company's plans. The goals may be to
> make HP less dependent on new releases of Windows, and to strengthen
> HP's hand against Apple (AAPL), which has gained market share with
> computers that boast innovative features and inspire a loyal
> following of users. 

> Apple Is Seizing Share

> McKinney didn't deny that those conversations had occurred, but said
> any discussion happened below senior management levels. "Given how
> many engineers are in my R&D organization, I wouldn't be crazy
> enough to say, 'No, we haven't made those inquiries,'" he says. But
> he adds that HP isn't devoting large-scale resources. "Is HP funding
> a huge R&D team to go off and create an operating system?" That
> "makes no sense," he says, given the compatibility problems with
> users' software programs that such an effort could introduce.

> HP has long been an advocate of Windows, and there's no indication
> that the relationship will change any time soon. HP is the world's
> largest supplier of PCs, with about 19% market share, and analysts
> estimate overall sales will grow 10.3% this year, to $115 billion.
> Yet the tepid market reception of Windows Vista (BusinessWeek,
> 5/15/08), the latest version that made its debut in early
> 2007combined with a fear that Apple could cut further into Windows'
> shrinking U.S. sharehave led HP to inject proprietary innovations
> into its computers as a way to differentiate them, analysts say.

> Meanwhile, Apple has been gaining share in the U.S., where it
> accounted for 7.8% of PCs shipped in the second quarter, according
> to market researcher Interactive Data (IDC). Mac shipments grew
> nearly 32% from a year earlier. Apple also enjoys fatter profit
> margins and more loyal customers than makers of Windows PCs, thanks
> to its delivery of both hardware and the Macintosh operating system.

> Fear of Microsoft's Wrath

> A concern at HP is that Apple could develop a low-priced, sub-$1,000
> notebook that could cut into a core HP market, says one person who
> has advised HP executives about their PC strategy. The customer
> experience group would constitute a preemptive strike against such a
> development. "Apple is a huge motivating factor," this person says.
> "You don't build loyalty by making a box that's practically
> identical to your competitors'."

> But HP needs to walk a fine line in creating an identity for its
> products that doesn't directly involve Windowswhile trying not to
> alienate Microsoft, whose marketing muscle and access to technical
> details are critical. "Nobody's ever done anything like this
> before," says the advisor. "It's a big risk, and the return is so
> far not certain."

> According to McKinney, Wee's group has taken charge of HP's
> TouchSmart PCs, which overlay special software on top of Windows
> Vista (BusinessWeek, 6/25/08), letting users tap and drag on-screen
> icons to launch programs. 

> How Far to Take Linux?

> The division is also looking for ways to expand application of the
> company's QuickPlay technology, which lets users quickly boot up
> their machines with Linux, without waiting for Vista to start.
> There's also interest in providing methods to watch TV, movies, and
> other media beyond the Media Center versions of Vista that Microsoft
> sells. Wee was a designer of some of the software underlying HP's
> room-sized Halo videoconferencing system, and her team is exploring
> how concepts from that product could be applied in a broader manner.

> A decision by HP to create its own consumer-friendly version of
> Linux would be a break with current strategy. HP, Dell (DELL), and
> other PC makers already offer customers an option to buy desktops
> and notebooks with Linux preinstalled. But those machines account
> for a small percentage of sales, and PC makers don't heavily promote
> them.

> HP could package Linux with the tools needed to work with HP's
> printers, digital cameras, and other add-on hardware, backed by the
> company's marketing and technical support. Yet further embracing
> Linux could also leave the company's innovations open to copying,
> due to Linux's open-source licensing terms.

> HP's efforts to make Vista more user-friendly come as Microsoft
> launches a new ad campaign for Windows designed to shore up Vista's
> reputation, which has been bruised by early technical problems and a
> withering ad campaign by Apple. The ads, created by hip Miami ad
> shop Crispin Porter & Bogusky, will star Jerry Seinfeld and Bill
> Gates. A Microsoft spokesman declined to comment on HP's plans.

> Dell and Intel, Too

> Yet Microsoft's power to control how PC makers alter the experience
> customers have with Windows has been diminished. Its 2001 antitrust
> settlement with the federal government placed restrictions on its
> ability to prevent vendors from installing their own software on top
> of Windows, or changing the desktop. And the disappointing response
> to Vista has prompted Microsoft to grant partners more leeway to
> alter Windows' look and feel, analysts say. Dell's latest Studio
> notebooks, for example, feature an Apple-like piece of software
> called the Dell Dock that groups Vista shortcuts into icons for such
> common tasks as digital photography, e-mail, and Web browsing.

> Longtime Microsoft allies are making wider use of Linux in their
> products as well. Dell's new ultraportable Inspiron Mini 9 notebook,
> announced Sept. 4, gives customers the option of running Linux, and
> Dell may use the operating system in future digital music players,
> according to a person with knowledge of Dell's plans. Later this
> year, Dell plans to start selling business laptops equipped with a
> special low-power chip and an embedded version of Linux that let
> users bypass Vista to quickly read e-mail, view their calendars, and
> browse the Web when they flip open their screens. "This is what my
> customers want," says Dell senior vice-president Jeff Clarke.

> Even Intel (INTC), the world's largest chip vendor and a staunch
> Microsoft ally for decades, is promoting Linux for a new class of
> ultraportable machines such as the Dell Mini, which uses its Atom
> processor, just when Microsoft is trying to spread Windows'
> influence to more portable devices. In August, Intel acquired London
> Linux developer OpenedHand to work on software for Atom devices. Too
> many defections could hurt Microsoft economically, since the company
> collects about $70 for each copy of Windows that PC makers
> preinstall on their machines.

> "It's an end run around Windows," says Rob Enderle, president of
> consultancy Enderle Group, about the efforts. "For both Dell and HP,
> there was a realization that Windows became an impediment,
> especially compared to Apple," he says. "The vendors are taking back
> some of the user experience."

> Add that to the growing list of repairs on Microsoft's Windows
> checklist.

> Ricadela is a writer for BusinessWeek.com in Silicon Valley.