Slashdot Mirror
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?
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 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
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
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).
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.
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.