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ESR Says as PCs Get Cheaper, Windows Will Die
james writes "Eric Raymond reckons Windows will be obsolete because people won't be able to afford it soon." Owning the OS gives MS too great of
an advantage. They'd sell the client for 5 bucks if
it meant that they could still control Office, the
server market, and the zillions of other markets that
their OS monopoly lets them crush.
Okay, so the idea here is that once PCs drop to a certain level of cost, the idea of paying Microsoft a huge sum goes out the window. Two problems. One, which has already been noted here, is that Microsoft can just lower their own prices.
But two, and most importantly: What ELSE are you going to install on that computer if not Windows? Linux? Then we get into the 'is Linux ready for the desktop' thing. It doesn't matter if Microsoft charges your first born son, if they're the only viable, usable OS available for Joe Q. User to check their e-mail and read the web with, they'll still get payment even with ultra-cheap computers.
Of course, if some OS steps up to the plate to replace them for free/cheap AND the PCs drop in cost, then we've got something. Perhaps OEMs will start developing their own user-friendly, stripped down blends of Linux to ship with new PCs?
But he has not taken into effect the combined microsoft plus PC industry strategy, which goes like:
(1) Build a fast expensive computer
(2) Write an operating system that uses all the resources of (1) just to run a word processor.
(3) Go back to (1)
That can keep the price of both inflated indefinitely. Hopefully someday people will think "Gee do I really a 1 GBit Quantum computer just for the latest version of Word?".
My handle breaks slashcode, what does your handle do?
Just because an MS product is not profitable does not mean it will "die" as in go away.
If MS has to give away windows for free, that will just cause windows to proliferate even more. Which means that MS will have an even tighter grip on the industry.
I think Eric is misreading the situation. If a PC goes below 350 bucks, people will be willing to spend much more for the OS. The reason for this is simple, 350 bucks is nothing relative to today's cost of a PC, thus $350 + OS
People won't move away from Windows for 1 of 2 simple reasons, "I don't have time to learn something new" or "I can't transfer my MS Office documents to ". While there are falacies in both arguments, end users are a stubborn ignorant bunch for the most part.
Linux will have a heck of a time breaking in on the desktop due to the illusion that there are no apps and that it's difficult to install. All slashdoters know this isn't true.
GeneralKael -- Slacker Extraordinaire
the point of the cost is that when a pc costs $350 new from a store, that the microsoft software would be taking up say, $200 of the price the store had to pay to get the system set up. that would only leave them $150 for the components, labor, and profit. with that little revenue left going to the store it wouldn't be profitiable for them to put window on it anymore.
I can remember a time when all of our applications and data were locked into proprietary hardware and software solutions. (Wang word processors, among others.) The next step was to break our dependence on one vendor to supply the limited set of choices.
Today our data can be stored on many different manufacturers' hardware, but we are largely locked in to one vendor's OS because of proprietary file formats. (And the same architecture, to boot.)
Long term I hope that our data is freed from that prison. We continually re-engineer systems to perform the same functions on different platforms because of the mindset imposed by the prison. However, we are a little closer today. Things like SQL allow us to migrate data reliably from one database to another. I can foresee a time when application vendors allow reliable interoperability, but it will be a while.
It also occurs to me that MS is in a bit of a pickle. There was a time when new applications provided greater functionality, and people migrated to them because they were superior, or at least people perceived that the new features were useful enough to justify the change.
Eventually the functionality of the applications on the market increased to the point where they were functionally very similar, and most consumers didn't need much more in the way of application functions.
Outside of a major paradigm shift, I don't think that many people competing with MS need to do much besides catch up. They are getting closer each year. You can't continually embrace and extend because at a certain point, it's just too much trouble. As an example, my MS desktop here at the house has 93 different typefaces. I use about 10. If you gave me 500, I would still use about 10. I just looked at my Linux system, and it has 2200 typefaces installed! I still use about 10.
Even if MS makes their OS and apps do 5000 new and snazzy things, most people simply won't use them. Look at the Outlook-based emails that are sent in Arial or Tahoma, and the documents that are printed in Times New Roman. People stick with the deafult because it's too much to think about to do otherwise. My hope is that we break free from the prison imposed by proprietary interfaces and formats.
Regards,
Anomaly
Ps - God loves you and longs for relationship with you. If you would like to know more about this, please contact me at tom_cooper at bigfoot dot com
But Herr Heisenberg, how does the electron know when I'm looking?
I agree with Raymonds conclusions but not his logic (he seems to be doing worse these days ;)
Here is my reasoning: There are two markets for PCs-- They are an absolute necessity for the corporate environment because without them, larger companies cannot move the information in sufficient quantity or speed, nor can the process the inforamtion fast enough to remain competitive in today's environment.
In the home market, they are a luxury, but are slowly becoming more necessary.
The real problem is that hardware is progressing much faster than software, and this leads to a couple of very bad scenarios for Dell, Compaq, HP, etc. and also by extension Microsoft. If hardware is more powerful than necessary, it stays around a bit longer. This means fewer sales for PC manufacturers and often longer upgrade cycles in the IT world. We are already seeing sluggish sales, and the IDC has forcasted very modest growth in the next couple of years-- we may already be in the flattening phase.
In the PC manufacturing market, there is a strong economy of scale, but this is even more noticeable in the software world where the vase majority of expenses fall under R&D and marketing. Shrinking markets mean higher costs both of hardware and of software. Again, this is far more deadly in the software market than in the hardware market.
The single best thing we could get out of an MS settlement (since we're not going to get the break-up that they deserve) would be to require all PC sales adds to prominently display the cost of Windows and the percentage of total cost that it represents. That would certainly open a few eyes.
To be honest I have never understood this logic-- the breakup plans were very bad from a marketplace perspective. Why should we breake one predatory company with two monopolies into two predatory companies with one monopoly each? IMO, this could have drastically harmed Linux and all competitors and created a baby-bell situation (referring to local service, not long-distance). Furthermore, two predatory companies are far more agile than one, and so I would FAR prefer to see Microsoft deemed guilty and only slapped on the wrist than broken up. (That way, further predatory activity could be handled by civil suits which even when unsuccessful have been shown to be effective in most circumstances, as per IBM.) Basically, I feel that we are dealing with the IBM of the early PC market here, not Standard Oil.
LedgerSMB: Open source Accounting/ERP
That's hardly the only place where Mr. Raymond has been making an ass of himself these days. He apparently spends more time stirring up flamewars on lkml than he does actually coding his magical kernel configuration machine. He has a tendency to make it sound like his pet project is the most important thing to happen to linux since TCP/IP; the huge threads he spawns would be amusing if he wasn't wasting the time and inciting the anger of the people who actually work on the kernel itself.
If you're a college student, chances are that you can get Microsoft products very inexpensively. I'm a grad student at the University of Michigan, and I bought a copy of Office 2k for $35 a few years ago. IIRC, the price hasn't risen, and a complete (i.e. not just an upgrade) version of WinXP Pro is $45. The first place to check with is your university's computer sales department or just check with the helpdesk and have them refer you to the right people. Even if your school doesn't have a deal with M$, there are some web sites that act as clearinghouses to sell students most popular software at the manufacturer's student prices.
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Like this little gem. Conspicuously absent link from the story, don't you think? ESR prediction story on /., clearly topical.
+5:offtopic,but anti-American
In essence, they will not be able to charge the kind of prices they have before and they will either have to cut prices (almost a certainty) or see people stick with older and cheaper versions or perhaps used copies or bootlegs. (very likely)
I suspect that this may eventually trigger a copyright lawsuit that gets lost by them if they (or the SPA) really try to enforce their no transfer rule on bundled software, a restriction the Supreme Court has ruled was not permissible back in the Bobbs-Merrill case back near the turn of the (19th) Century; despite what the software companies claim, their mass-market software is sold, not licensed and is subject to the "first sale" rule.
Inexpensive computers are going to be real trouble for Microsoft's bottom line.
Paul Robinson <Postmaster@paul.washington.dc.us>
http://paul.washington.dc.us
The lessons of history teach us - if they teach us anything - that nobody learns the lessons that history teaches us.
As for his whole palm vs PC argument, his premise is wrong. Palm and PocketPC have two very different approaches to the market. Palm knows its market is the PDA market, i.e., handling contacts, appointments, and other daily tasks, whereas PocketPC is about being a mini-laptop (which largely attracts the techies and trendy types). Well both the PocketPC OS and the tasks themselves demand a lot more expensive hardware. PocketPC also eats batteries for its intended uses like none other. I'd also argue that Microsoft's vision for PocketPC is fundamentally flawed given the battery limitations, the hardware for the next couple years, and the problems with data entry/input methods and screen size on anything the size of a PDA. The point being is that we have a lot of good reasons to believe the difference in sales has a lot more to do with other issues than just the licensing price difference between the two OSes. For instance, completely ignoring the price of the total costs of either units, I would not want PocketPC if I all I want to do is use the PDA as a PDA (the battery life and other issues are too significant to me).
Unfortunately, this doesn't mean that OEMs will all stop including Windows, or even that MS will have to drop the price. All they have to do is move the expense out of the initial purchase. They could give the OS away free to the OEMs with a three-month subscription. That way the OEMs could offer a machine that works out of the box, and three months later, the consumer starts paying Microsoft
Window$(TM)® will become 'free' as soon as .net is in a usable state. I believe they will go to a subscription service. There is nothing that Bill would like more than having Window$(TM)® used like electricity, water, cable, satellite, isp or (ha) garbage services. You'll get a bill every month; don't pay the bill, and no Window$(TM)® for you (and no computer). He is hoping that people will suck this up, 'cause hell! everything else is subscription based...may include features of PVR. Most likely off-site storage would be favored, since control of content would be with MS. Hardware copy protection would be moot, since everything would be installed though MS. (No way to install anything on site)
These suppositions assume that broadband will be widely available, and probably bundled w/ Window$(TM)® (MSN) MS will market this as easy to use! (MS will remotely repair and admin installs) and use passport for security (whoohoohaha....snif.) The more MS can push the death of the 'PC' as it stands now the better off they are.
The return of the network appliance?
Let me wake up from these nightmare visions! Ahhh! Ahhhh!
Google is your friend!
Plus, how much of that cost is actually Windows? No one knows, no one's talking.
Well, a quick look on Newegg shows that Windows XP purchased with hardware runs $140 for a single copy. A jump to look at current prices for Office XP shows us $180 when purchased with software. OK, not the greatest price, but not the hundreds of dollars that you might think. After all, to compare OSes (not office apps, because StarOffice takes the cake there) RedHat 7.2 Professional is selling for $199.99 over at Outpost.com. Hmm. As far as a consumer goes, this is the equivalent purchase. Yes, there are cheaper distros out there. Yes, we here know that you can download ISOs of various distros for "free", but that's not a valid comparison. Consumers as a whole are not going to do that -- they want point and click, graphical installation programs like Windows has given them for years.
Given this info, Windows isn't all THAT expensive. If the cost is $140 for XP as a single purchase, I'm sure the big PC builders like Dell, Gateway, Compaq get them in lots of 10,000 for much, much cheaper. So the whole cost of your OS is probably a very small part of your overall system price, depending on how much your system really is.
As a gamer, I'd probably build a system around $2500, maybe more. This is without Office -- if you go to Dell's (or others') site, they'll charge you at least $200 to upgrade to Office XP. But let's say they get XP for $100 :
$100 / $2500 * 100% = 4% of the price of my system. I think most people would be willing to pay an extra 4% to get something they're already familiar with. At any rate, it's certainly not a major portion of the cost of the computer.
greg
No - he's not a monopoly whiner...but he has said that MS is a monoply and that they have used that power to maintain and extend their position in the industry.
http://www.tuxedo.org/~esr/writings/libgates.html
http://www.linuxjournal.com/article.php?sid=5007
I DEFINITELY agree that he's not as strong a monopoly whiner as some others, but he does appear to rely on the monopoly power argument in some of his writings.
The way I read it, ESR's so-called "Microsoft Tax" is monopoly power...he can call it whatever he wants, but it is specifically in that "tax" that they price above marginal cost...and that "tax" can (and probably will) be lowered.
And yes, you are correct - they have market saturation. In my opinion, that's the result of them producing strongly competitive complementary goods (Office suite, IE) for their OS. Some of that is the result of predatory market practices, probably...but some of that is also the result of good marketing and good business sense...both of which have resulted in their capability to price above cost.
ESR may or may not be a nutter but he does speak the truth. The costs of software vis hardware is climbing for low end PCs.
/. would pay big bucks for the latest pc because thats our thing. We are not representive of the general PC market.
r s/specials_ 3x_special61.htm
Game consoles are typically sold at a loss to expand market share and manufacturers recoup their costs by selling games. I don't think games haven't come down in price over the years have they?
I've heard that the Windows OS licence for a Pocket PC is about $5.00. So how low can they go? There are fixed costs included in producing these products. Companies have to provide support and design-build-package them too. Would MS drop its OS to $2? Perhaps if it can sell services!
Commoditization(SP) of the pc market is very real. As you say, manufacturers are quite competitive at the low end. This also affects pdas, phones, all the trinkets that we used to pay big bucks for. I was the prowd owner of an IBM PC, and a Palm 5000. Both very cheap now (Dammit!). Now that the low end of PCs can play games and surf the web, do word processing, how can PC prices --- for your mom be justified at over $1000? Once a low end pc can manipulate video, I can't think of any use for the average user which would require an expensive PC. Then the price will inevitably drop to $100 or so which *will* squeeze OS software providers. Would MS be willing to pay for design-development-packaging-support of a sophisticated OS that generates only $10 in revenue? I doubt it.
Many on
Dude, Your getting a Dell! $999->$899 and counting:
http://wwwc.us.dell.com/us/en/dhs/offe
Did you read the article? The whole point was that it's not a deal breaker now, but as prices drop it becomes more and more significant. His price point was $350. When you compare a Windows machine for $450 (and no office) to one at $350 (which all the free office software being made), things start to look different. $100/$350 * 100% = 28.5% of the price of the system.
Visit me on #weirdness on the Galaxynet.
- In order to keep satisfying its investors, and to keep using its stock options as currency, the price of MS stock has to keep increasing.
- In order for that price to go up, investors have to believe that MS profits will continue to grow.
- In order to keep growing its profits, MS must have lots of current profits that can be reinvested in developing future products (or future versions of current products).
If pressure from low hardware prices makes MS profits go down -- because MS cuts its prices or because more consumers buy cheap OS-free computers -- then this cause-and-effect chain runs in the other direction.send all spam to theotherwhitemeat@ropine.com
RedHat 7.2 Professional is selling for $199.99
Yes, we here know that you can download ISOs of various distros for "free", but that's not a valid comparison. Consumers as a whole are not going to do that
I can get a full version of RedHat 7.2 from Cheapbytes for $3.99 plus shipping and Handling. Granted I don't get phone support or a nice printed manual, but this is balanced by the shear amount of software I get. Developement tools, Mail/Web/FTP/Telnet Servers and clients, alot of other stuff as well that cost extra from Microsoft.
Fascism should more properly be called corporatism, since it is the merger of state and corporate power - Benito Mussoli
They have proven time and time again that they can be a very flexible entity. I have confidence that they would adapt to fit the needs of the market.
You are probably right. I think Microsoft's future will most likely be a lot like IBM. At one point IBM was the undisputed king of computers, and was in fact investigated for anti-trust violations. Now, years later, they are not really leading the industry per se, but they are definitely still a strong company. But I can still haveBut I can still have my d my dreams of Microsofts imminent Enron-style implosion, can't I?
However, everybody is not going to stop buying their product. You don't believe that, either.
No, not everybody. But a lot of people are starting to grumble. Especially overseas, and that's where I think a lot of the change will come from. American's don't mind being beholden to an American corporation so much. Especially one that is often portrayed as an example of everything that is "right" with the American economy. Other countries don't necessarily think it's such a good idea to be under the thumb of an American monopoly. Witness recent stories about movements towards open source in the German, Chinese, and Korean governements. Really, for what a single good sized govt pays out to Microsoft every year, they could probably keep development moving pretty rapidly on needed office software products.