The BBC is reporting that Tesco (the UK equivalent of WalMart) will start selling low cost software on their own brand. Apparently the software will include CD/DVD burning, productivity, image editing and security software packages, with each one costing ‘less than £20′. The software has been developed in conjunction with Formjet, which tells us something about the nature of the software which will be released.

Formjet describes its business model, saying that it ‘acquires territorial rights to ‘alternative’ software products, and markets, sells, distributes and supports these products in place of the vendor in the UK.’ So, in fact, the software which will be sold by Tesco is not new software. Formjet lists the packages it has the UK distribution rights for in the UK. From that, the security suite will (probably) be Panda Platinum Internet Security, the office suite Ability Office and the image editing app Image Broadway 5.

This shows Tesco’s mistake, and why I think that this strategy will fail. The software they are selling is ‘alternative’ for a reason; it is simply not as good as the market leading alternatives, or more importantly open source alternatives. By taking the approach they have chosen their brand by selling inferior software.

A much better approach would have been to take open source software and sell that, where necessary developing a proprietary UI (or OS if they were feeling benevolent) to sit on top to improve ease of use. This is entirely legal under OS licences and would result in a much better product. They wouldn’t have to do any work to OpenOffice.org - they could sell that today. A new UI to TheGIMP would be useful, as it does not have good usability. This is entirely possible, as has been shown by the GimpShop UI which makes the GIMP look like Photoshop.

This looks like it might be the end of Tesco’s midas touch when it comes to entering new areas of business. We shall have to wait and see.