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WalMart.com Does Lindows - 2002-07-24


Call it shrewd marketing, risky business, or a bargain, call it whatever you choose, it may come as a surprise that the American retailing giant, Walmart, is known in the computer industry for something other than low prices on household goods.

Walmart is the first major retailer to sell personal computers loaded with a new operating system called Lindows, as opposed to the Microsoft Corporation's Windows system installed on 95 percent of the world's PCs. Lindows is a simplified version of Linux, a powerful but relatively complex operating system favored by many computer programmers.

The new Lindows computers mark the first time that the mainstream retail community has embraced Linux.

Most computer dealers have avoided Linux, mainly because only a small fraction of computer shoppers have expressed interest in this alternative operating system. And catering to this tech-savvy minority is risky. If a computer comes bundled with Linux, computer dealers generally have the responsibility to provide technical support for it. Supporting Linux can be more difficult and expensive than supporting standard Microsoft software.

Even Dell Computers, well known for tailoring computers directly to their customer's needs, was unable to sell them or support them, cheaply enough. If Dell couldn't effectively cater to this small market, why would any major retailer spend the time or money to do it? For Walmart, the answer is price. They recently began offering Microtel brand PCs for under $300, with a new, more user-friendly version of Linux, named "Lindows."

Walmart currently makes these bargain computers available only to online shoppers at Walmart.com. Cythia Lin, a spokeswoman for the company, says the decision to market to Linux fans occurred earlier this year.

Wittingly or unwittingly, Walmart had already been marketing to them when they offered computers with no operating system at all. Without the cost of Windows' licensing fees, these computers were very inexpensive. Many computer users chose to install Linux on them instead of Windows. Ms. Lin says the low cost and absence of Windows on the PCs made them an ideal choice for the Linux community.

"In February we began testing this on our site and the response was really tremendous," she said. "Some people found it on our site, they started telling their friends, who told their friends, and word got out very quickly. Sales of the PCs without the operating system were, and continue to be, quite strong. We realized that we found an opportunity and it was one that wanted to continue to explore."

Their exploration led them to an upstart operating system called Lindows. Lindows is a new version of Linux that has the ability to run some programs designed for the Windows operating system, without Windows installed.

The low cost and more user-friendly operating system are also attracting some long-time Windows users who would not have considered buying a Linux-based PC. "The sales of the Microtel PCs with Lindows, which just started, have really surpassed our expectations," she said.

Whether the Lindows PC will meet consumer expectations remains to be seen. The company that developed the Lindows software has made some big claims about their product's ability to run software written for the Windows operating system. But because Lindows is only emulating Windows, its compatibility with Windows-based software products will be limited, at best.

Rich Heinmann, the top sales executive at Microtel Computers, says that so far, customers have expressed satisfaction with Lindows. The most important thing Mr. Heinmann notes, is that Lindows can run most of the computer applications that people need.

"I wanted to make sure that the product was going to have compatibility. If I was going to be sending e-mail, an Excel file, a Word file, or a Powerpoint file, those are items that I use everyday and I'm sending those back and forth in business. I wanted to make sure that the person on the other end is going to be able to read those. And they're able to do that."

The marriage of the new Lindows operating system and Walmart.com seems to be an ideal one. Since online computer buyers are generally more technically literate, Mr. Heinmann claims that there have been few customer complaints with his Lindows-based PCs. He says Microtel is now considering whether to sell the Lindows PCs in actual Walmart stores.

"We're already talking with them to see if it makes sense," he said. "If it does go into the stores by the way, it'll be in those that sell computers, printers and hardware products in those particular stores or we might go test it in a few. If it went very well, then we'd roll it out. We are getting a lot of interest from the store and we're also getting a lot interest from international too."

While Lindows is relatively simple to use, Mr. Heinmann concedes that the average Walmart customer might not have the computer proficiency of the retailer's on-line shoppers. That could mean heavier demands on Walmart and Microtel, to provide costly technical support services. Still, the Microtel executive believes the sale of its Lindows PCs through Walmart's online retailing outlet has whet the public's appetite for alternatives to the dominant Windows operating system. Microtel has also finalized a deal with the makers of another flavor of Linux software called Mandrake. Mr. Heinmann predicts the Mandrake operating system will bring in a different segment of the Linux community.

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