Starting a new Ubuntu-based PC company. Need advice please :)

[diablo75]

We know that Dell sells Ubuntu PC's online, but there are other competitors online. A friend and I hope to be added to the list soon, but right now we're trying to do some research. And we could use your help.

We are wanting to start up by selling a basic, affordable system with Ubuntu preinstalled and preconfigured by us at the request of each customer (this means software/driver install/configuration is done for them before we'll ship it).

This is a very short description of what we would like to do, and we're looking for 5 different base systems from 5 different online Ubuntu PC shops, such as System76, to compare hardware and prices.

Outside of competing with other online retailers, we'd like to also take advantage of the scarcity of Linux in our local area and offer Ubuntu based packages with customer service included in the deal, as well as hopefully spread word about Linux in general in the community.

Anybody have some suggestions for starting a business such as this? Thanks in advanced for the feedback!

[blithen]

Not to be a dream crusher or anything here, but unless you're rich I don't really see how this company can get off the ground. A good PC that someone is going to want to actually buy will probably run about 300-500$. That alone causes many problems.

[SuperSon!c]

i applaude your effort, but you're shooting for an already saturated pc market besides the "underdog" OS. you certainly won't make any money and will probably take a loss perhaps with PC sales, but you could potentially make money with your post-sales services provided you and your team provide over the top service.

either way, i wish you luck.

[kamaboko]

We know that Dell sells Ubuntu PC's online, but there are other competitors online. A friend and I hope to be added to the list soon, but right now we're trying to do some research. And we could use your help.

We are wanting to start up by selling a basic, affordable system with Ubuntu preinstalled and preconfigured by us at the request of each customer (this means software/driver install/configuration is done for them before we'll ship it).

This is a very short description of what we would like to do, and we're looking for 5 different base systems from 5 different online Ubuntu PC shops, such as System76, to compare hardware and prices.

Outside of competing with other online retailers, we'd like to also take advantage of the scarcity of Linux in our local area and offer Ubuntu based packages with customer service included in the deal, as well as hopefully spread word about Linux in general in the community.

Anybody have some suggestions for starting a business such as this? Thanks in advanced for the feedback!


Find a local Small Business Association in your area and make an appointment with a business volunteer. They will open your eyes to the reality of what you're stepping into.

[Changturkey]

That or 200$ desktops.

[madjr]

You can really sell locally, auctions, etc.

sell cheap or services people need like reselling eeePCs with eeexubuntu preinstalled or stuff like that. Be creative.

local costumers are your best bet: public institutions, schools, etc.

local support is a good business.

selling servers is good also.

online the competition is fierce and the big guys dominate, so be prepared.

At first is harder to make money, so don't over spend.

Remember that people are looking for the best at the best price.

[Patsoe]

You could ask these guys for some start-up advice: http://efficientpc.co.uk/

I'm sure there is a possibility of getting a company like that working - there is a market for secure/robust desktop pcs, I mean. But you'll need to have some extremely satisfied early customers that do word-of-mouth marketing for you.

Very few people know about Ubuntu or any GNU/Linux stuff yet... so don't expect people to come asking for it...

[diablo75]

Not to be a dream crusher or anything here, but unless you're rich I don't really see how this company can get off the ground. A good PC that someone is going to want to actually buy will probably run about 300-500$. That alone causes many problems.

Wow. "Dream crusher" he says. I'm sorry, but that just isn't the case. We are pretty well equiped to start something off that people will appreciate for being a formidable one-size fits most PC. We're not going to try to appeal to the gamers so much, but office users and hardcore Internet surfers. That's quite enough to get started with.

Thanks for your suggestion![/sarcasm]

[bribri124]

I started my business over a year ago with the primary goal of distributing knowledge on open source. Hell, I even got to show off Ubuntu to some clients. The most difficult thing, as with any business, is networking. If you and your partner have established a sound marketing plan, that will help you out.

Another thing I have to fight day-in and day-out is getting people to actually listen to what I have to say regarding Ubuntu and open source, whether it is one person or a group. Many people are set in their ways and still have FUD on moving away from Windows. If you can convince and show them the benefits of Ubuntu and open source, I am quite sure your business can start nicely.

My business details can be found at http://desertbytescomputers.com. If you have any additional questions, I will be more than happy to assist you.

[maniacmusician]

My advice would be to appeal to low-budget crowds, as a start-up company. Because of the huge costs of an undertaking like this, they're the most viable market. A lot of them also feel the pain of being in the low-budget category; they're not exactly happy with the fact that they have little money, and can't afford anything new or good looking. This plays into one of Linux's strengths; customizability and themability. If you have a good low-power computer with an affordable combination of HDD space, available RAM, and other resources, in addition to a configuration that doesn't consume a lot of those resources, and still looks good, well, that'll probably be your best bet. A decent case design wouldn't hurt either.

I can understand that you may already have a decent amount of start-up funding, and even plans in place for production of whatever computers you may want to sell, a company like this which is based on sale of product and services is almost a sinkhole for whatever you might have to work with. The following things have to be considered:

Marketing
Who's your target audience within the first 6 months? Within the first year? Within the first 5 years? How are you going to reach them? Networking is important, but can you consistently expand your audience demographic by geographic location to keep a constant influx of customers?

Online resource
A website with comprehensive information about your company, its background, the products that you offer, the support that you'll offer for them, etc. It's time consuming to keep a website like this up-to-date, so will you do it yourself or will you hire a web designer and maintainer? If you'll hire one, have you accounted for it in your budget?

Support
What kind of support will you offer? Online Chat, E-mail based, Call-in, and At-Home? Would you have full servicing under a hardware warrantee? Cover shipping on systems that have to be shipped in? Will you have a paid support staff, and have you budgeted money from your capital to compensate for it?

And then there's all the normal costs such as cost of hardware and if you're dealing with parts, assembly of the hardware. You're also going to want to do complete diagnostic testing on new systems before they ship out. The hardest thing to account for is the ability of your company to meet demand, which is often a problem without paid staff, and paid staff is often a problem due to budget constrictions.

Taking all that into consideration, as I mentioned before, my best advice would be to start out with one or two simple, low-power, low-budget systems (within the realm of $100 - $200. A system under $100 would probably be eye-catching, but hard to achieve).

Also, don't skimp on planning. I would recommend having at least an additional 2 - 3 month planning stage to make sure that all things are accounted for budget-wise, since that's often a hold-up with small companies. Also, you need to evaluate how quickly you can create demand, and how quickly you can create the supply to meet it.

One last note: don't act in such a derogative way to people who replied to your post. Someone took a few minutes out of their day to honestly think about your situation and give feedback on the information you gave them. You didn't say anything about your budget, or how far you were in preparations for the actual models you planned to sell. You didn't say whether you were reselling systems or assembling systems from parts, and you gave no information on the infrastructure of your company (employees, capital, etc).

With that in mind, I feel like all the responses here so far, including blithen's, were completely justifiable. We can only provide feedback on the information that you give us. And considering that most of us do lead lives outside of this forum, you should treat responses, especially those that you asked for, with a certain amount of respect, considering that people are taking time out of their day to give you feedback.

But I wish you the best of luck with your company, and I hope that you succeed in generating some revenue and introducing some people to Linux.

[Patsoe]

My advice would be to appeal to low-budget crowds, as a start-up company. Because of the huge costs of an undertaking like this, they're the most viable market.

In the low-budget segment, customers don't value service and support as much as they should. You'd be competing with crufty Wal-Mart/Tesco/Aldi products (depending on where in the world we are) and you'd probably lose that battle.

I'd rather target users who are willing to spend money on service and support but didn't know such a thing existed yet. They're not "power users", but they use their machines a lot and want them to Just Work.

Two stereotypes drawn from the people I know: a senior who wants to have a word processor, a digital photo album tool, and a web browser and email, or a social sciences student who is typing away hard at his thesis and needs reliability, but doesn't want to know "what's inside the box".

They are aware of and worried about security issues, and willing to pay for a robust, reliable, well-supported system. You could manage security/maintenance upgrades for them, and backups.


One last note: don't act in such a derogative way to people who replied to your post. [...] With that in mind, I feel like all the responses here so far, including blithen's, were completely justifiable.

If anybody made a condescending remark here, it was the one who said "dream breaker"... but then, yeah, no need to get angry with someone if he thinks it's unrealistic for you to start a PC company because PCs are too expensive - obviously blithen needs to reconsider that. Ask Michael Dell... ;)

[billgoldberg]

If I can make some suggestions.

It could be a good thing to have an ultra cheap, low-end machine with xubuntu and a cheap kids pc with edubuntu.

Besides that, try being able to ship to the EU. I was thinking about buying a pc from shuttle and system76 and both of them only ship to the US, so they lost customers.

[maniacmusician]

In the low-budget segment, customers don't value service and support as much as they should. You'd be competing with crufty Wal-Mart/Tesco/Aldi products (depending on where in the world we are) and you'd probably lose that battle.

I'd rather target users who are willing to spend money on service and support but didn't know such a thing existed yet. They're not "power users", but they use their machines a lot and want them to Just Work.

Two stereotypes drawn from the people I know: a senior who wants to have a word processor, a digital photo album tool, and a web browser and email, or a social sciences student who is typing away hard at his thesis and needs reliability, but doesn't want to know "what's inside the box".

They are aware of and worried about security issues, and willing to pay for a robust, reliable, well-supported system. You could manage security/maintenance upgrades for them, and backups.

You make some good points, but the fact is that when it comes to more expensive, mid-range systems, these types of people will almost always choose to go with a major OEM manufacturer or retailer with a system that they're familiar with. Even though they could be familiar with security issues that these systems have, they'll insist on things that only these retailers can offer them; complete compatibility with the latest proprietary binary formats, and the usability of many proprietary protocols that haven't been fully reverse-engineered yet (Exchange being one such example).

I think the EeePC is a well-executed example of the success that can be achieved with a low-budget system. I think that low-cost solutions simply appeal to a much broader audience; just because a system is low-budget doesn't mean it can't be functional. One of the strengths of linux-based systems is to be able to take advantage of hardware that's not up to modern specs without sacrificing an exorbitant amount in terms of attractiveness.

The fact is, that while the target audience you propose has a higher possible maximum revenue return, it being a smaller target audience has a lower chance of being successfully targeted. Low-budget systems simply appeal to a wider audience, and with that strategy, your chance of turning a target audience into consumers of your product is significantly greater.

Also, low-budget systems would also suffice for the scenarios that you provided; the tasks that you mentioned being performed (word processing, digital photo management, web browsing, email) could very well be handled by a properly configured low-budget system. In fact, students are among the most attracted to low-budget solutions as many of them are often chest-deep in student loans and have little money to spare.

If they had the option to pick up a reliable desktop station or some sort of laptop form factor for an unusually cheap price, that would get their work done, they will be attracted to that choice. Also, keep in mind that low-budget isn't necessarily equated with bad service from the retailer; if the retailer shows a strong commitment to service, and offers reasonable, solid guarantees, the option of a cheaper system only becomes that much more attractive.

So while there are types who would prefer a more robust system, the market for cheaper (but still functional) systems is much greater. The critical factor here is initial success of the company; if the returns within the first couple of years are satisfying and result in actual revenue, expansion to more robust systems becomes more viable. But the fact that they are a) more expensive to produce, and b) have a target audience that is harder to engage, makes them a less attractive choice as an initial offering for a brand-new startup.


If anybody made a condescending remark here, it was the one who said "dream breaker"... but then, yeah, no need to get angry with someone if he thinks it's unrealistic for you to start a PC company because PCs are too expensive - obviously blithen needs to reconsider that. Ask Michael Dell... ;)

I don't know how much attention you paid to my initial post, but I said their comments were justifiable considering the information that the OP gave them to work with. And I'm not entirely familiar with the story of Michael Dell, but I highly doubt that the PC manufacturing market was as highly saturated when he dove into it as it is right now.

Everybody and their mother has tried their hand at the mid-range PC manufacture and retail business, and this intense over-saturation is what makes it so hard to succeed in today's, current market scenario. So if the OP just goes ahead and tries to market mid and high end systems with Linux, they will have an extremely hard time getting anywhere (as the initial responses were saying) unless they have an enormous amount of capital backing them (the likes of which even Dell isn't willing to spend on Linux), and even then, they will suffer huge losses that will take a long time of successful sales to flip into revenue.

To maximize the chance of success, the OP's company will want to have something unique. Is Dell selling any really low-budget systems with a customized configuration to take full advantage of the hardware? No. Dell sells mid-range systems with vanilla Ubuntu, because that's their business. Even system76 doesn't have any remarkably cheap systems that are worth it, because they ship a vanilla Ubuntu (gnome) installation.

So, right now, something unique, with a largely uncultivated market, is a low-budget system with an optimized configuration for work-related performance. The only visible competition with this kind of product, as you said, are the cheap walmart "gOS" or other such variable brands. But if you take note, none of them have received exceptionally good reviews. So, evaluating the entire PC market in context to Linux, I'm fairly sure that what I proposed is the most viable solution for initial commercial success.

[Patsoe]

If they had the option to pick up a reliable desktop station or some sort of laptop form factor for an unusually cheap price, that would get their work done, they will be attracted to that choice. Also, keep in mind that low-budget isn't necessarily equated with bad service from the retailer; if the retailer shows a strong commitment to service, and offers reasonable, solid guarantees, the option of a cheaper system only becomes that much more attractive.
I think that we mostly agree :) What you say about mid-range pc users is probably quite right. So I guess I was thinking of *entry-level* hardware, but not low-budget. I mean for the price of the Wal-Mart stuff you can't afford truly useful service - the margins are too small. And good, linux-specialised, daily-usage-oriented (as opposed to failures-oriented) service is exactly what would set your company apart.

Actually, I was thinking of something like http://www.zonbu.com/

As far as I understood the opening post ("take advantage of the scarcity of Linux in our local area and offer Ubuntu based packages with customer service included in the deal") the idea was to provide something like that on a local scale - I suppose to customers who want to see a real person for support.

It doesn't necessarily involve designing and building your own hardware, you could also do like e.g. Emperor Linux do.


I don't know how much attention you paid to my initial post, but I said their comments were justifiable considering the information that the OP gave them to work with. And I'm not entirely familiar with the story of Michael Dell, but I highly doubt that the PC manufacturing market was as highly saturated when he dove into it as it is right now.

Ok, you're right about the Dell remark. I should have left it at pointing out that calling somebody you don't know a dreamer, especially in the context of this discussion, is just bad form. If I thought such, I'd just leave a note saying it seemed unrealistic to me.

[maniacmusician]

I think that we mostly agree :) What you say about mid-range pc users is probably quite right. So I guess I was thinking of *entry-level* hardware, but not low-budget. I mean for the price of the Wal-Mart stuff you can't afford truly useful service - the margins are too small. And good, linux-specialised, daily-usage-oriented (as opposed to failures-oriented) service is exactly what would set your company apart.

Actually, I was thinking of something like http://www.zonbu.com/

As far as I understood the opening post ("take advantage of the scarcity of Linux in our local area and offer Ubuntu based packages with customer service included in the deal") the idea was to provide something like that on a local scale - I suppose to customers who want to see a real person for support.

It doesn't necessarily involve designing and building your own hardware, you could also do like e.g. Emperor Linux do.



Ok, you're right about the Dell remark. I should have left it at pointing out that calling somebody you don't know a dreamer, especially in the context of this discussion, is just bad form. If I thought such, I'd just leave a note saying it seemed unrealistic to me.

I agree that blithen could have phrased it better, but I think it was also somewhat misinterpreted. Which is a small point to be arguing, either way.

One of the biggest problems from the start with this was that the OP wasn't really very clear about their business plan. We have no idea whether they were planning on building their own hardware or just re-selling computers with Ubuntu on them. the first post said some stuff about preconfiguring drivers and stuff for users, which made me think that they were going to be at the very least assembling different hardware setups (because otherwise, one would assume that the drivers would already be there, especially if they're reselling from someone like Sys76).

What I wrote previously was partially based on the assumption that they would be assembling hardware. In which case, I felt like a low-budget model would be best.

Either way, I think the OP needs to clarify a little on what their business plan is so far, and give us some details. I'd love to chat about this for hours, but I have final papers to write :) I'll give it some more thought if the OP ever comes back.

[Diabolis]

I just went to a Intel conference and they are about to launch to the market smaller microprocessors, which are faster and they are supposed to consume less power. This allows you to build smaller and better laptops.

I don't know if they have an arrangement with any of the big name laptop manufacturers, but They showed a low budget laptop. Its planned to cost 300 bucks. They didn't mention which were its specifications, but its planned to be a student equipment. So it has all the basic stuff such as messenger, word, internet explorer etc. It is also waterproof and drop proof, I saw the guy from the conference drop it to the floor.

Everything is getting cheaper, so I don't think that relying on low budget equipment is a good strategic. For instance, the laptop from which I'm writing right now probably costs at much 200 dollars and is not too bad. I write JAVA code with it through netbeans, watch videos, download lots of music, play some games (old ones of course). So if you really want to offer attractive low budget computers in the next few years, they must go for less than $300.

I think that the sweet spot is in customer service.

I've been looking for a new laptop, so I googled around a bit and found the ibuypower site. They have some really good deals, but from what I read on review sites and even in a couple of threads in this forums, they are not very good at consumer service. I read that some desktops are shipped with missing cables or not well assembled. So I'm not risking my money and specially my time with a company that does that kind of stuff. I wouldn't be too worried about the money if that would happen, maybe they'll give you a full refund, but wasting time... that really makes me go mad.

[smoker]

customer service is where it's at, you have to make allowances for spending time on the customer, no matter what margin you are making, or what spec of system they buy. treat every customer like a member of your family, especially in a localized business. if they try a system, and decide it's not for them, don't quibble, refund them (or put windows on it, if it will keep them (they pay for that, of course!).

if you make out to every customer that they are special, then they will be back, and they will recommend you to others, and good word of mouth is the best advertising a local business can have.

anyway, best of luck

[AllenGG]

Hola ! Diablo ! yes, you can start a business like that and be successful. Ubuntu is the way of the future, and most people have very little interest in operating systems. Very few people really want a cheap machine, look at "Dell" who sell overpriced equipment. Or Business Depot / Staples.
Small businesses want a computer that is reliable. A small robust network. No virus problems.
Custom building the "software" is easy in Ubuntu.
For example: want "GIMP", better than Photoshop. Open Office, way better than MS Office, want music? you get the picture.
But SERVICE is always the key. People bought "Gateway" with a 20% failure rate out of the box.
Ask the small business, the 'senior', the work-at;home Guru, local doctor or dentist, what he or she needs, yes needs, and it must be reliable.
Now I have a dilema, see my post "who needs a new machine"

[diablo75]

I agree that blithen could have phrased it better, but I think it was also somewhat misinterpreted. Which is a small point to be arguing, either way.

One of the biggest problems from the start with this was that the OP wasn't really very clear about their business plan. We have no idea whether they were planning on building their own hardware or just re-selling computers with Ubuntu on them. the first post said some stuff about preconfiguring drivers and stuff for users, which made me think that they were going to be at the very least assembling different hardware setups (because otherwise, one would assume that the drivers would already be there, especially if they're reselling from someone like Sys76).

What I wrote previously was partially based on the assumption that they would be assembling hardware. In which case, I felt like a low-budget model would be best.

Either way, I think the OP needs to clarify a little on what their business plan is so far, and give us some details. I'd love to chat about this for hours, but I have final papers to write :) I'll give it some more thought if the OP ever comes back.

Sorry for not being a little more clear in my original post. And I wish I would have had more opportunities earlier this week to watch this thread more closely. But at a glance, it seems like things would have gone a little more smoothly if I had been clearer from the start.

The Marketing Plan: Something I did not mention was the fact that I do a lot of tech support already by remote, for both Windows and Ubuntu users using VNC (I actually have a custom VNC launcher just for Windows users that allows an easy one button reverse VNC connection to be initiated with ease on their end). In most cases, many problems can be quickly resolved using this method, and can save time for both parties. It is certainly a lot easier than imagining what a user is looking at while talking to them over the phone. And will help dissolve the barrier of what you might call a "local" customer.

Next, we intend to offer (though not pressure) new clients who happen to be Windows users the opportunity to migrate from Windows to Ubuntu. We would act as consultants and ask clients questions about what they need out of their OS, and whether or not there are comperable alternatives available they will be happy with. Thanks to WINE, we'll be able to migrate a range of Windows based software "seemlessly", but for some titles, this may not be an available option. Emphasis on the impending death of XP support from Microsoft, and the lack of performance in Vista (as well as it's standard vulnerablility to viruses, which people are really feeling the heat from) should help persuade users to switch. We realize this will not appeal to some power users who absolutely must have (fill in the blank) application running, but the liklyness of their app not running on WINE is decreasing by the day.

Selling people new PC's with Ubuntu pre-installed will be another service we would like to offer (though are also considering arm-wrestling with the licencing mess that comes with selling XP machines). Lower cost (in the short and long term) that comes with simply being an Ubuntu user is one attractive incentive. There are a lot of other benifits that come with being a Linux user in general, than I shouldn't have to expand upon in here (no viruses, faster, free, easier to use once you're used to it, and better looking eye candy... which is a selling point for some people).

Well, we are about to meet up with some volunteer business consultants ("SCORE") (something someone else suggested we do earlier in this thread), so I can't write any more for now.

Thanks everyone for the suggestions and advice thus far.