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Ballmer Sees Free Software as Enemy No. 1
geekinexile writes "Bloomberg is running this Microsoft vs. Linux article as a top story on the Bloomberg system. Not so notable for what it says about Linux, but rather for the fact that the financial community is starting to actually get open source."
Ballmer sees Free Software as Enemy No. 1
Well, why not? It is.
"If you think education is expensive, try ignorance" - Derek Bok
Microsoft's Ballmer Sees Free Software as Enemy No. 1 (Update5)
2002-10-17 18:19 (New York)
Microsoft's Ballmer Sees Free Software as Enemy No. 1 (Update5)
(Adds first-quarter results, beginning in sixth paragraph.)
Redmond, Washington, Oct. 17 (Bloomberg) -- Microsoft Corp.
Chief Executive Steve Ballmer is telling his employees to focus on
the threat that Linux and other free programs available on the
Internet pose to sales at the world's largest software maker.
The programs are called open source because thousands of
developers on the Web can collaborate to tweak and customize the
underlying code. They may undercut Ballmer's plan to counter
slowing sales of personal computers by selling more software for
the server machines that run company networks and Web sites.
``We have told our sales force to really understand that this
is kind of job one,'' Ballmer, 46, said in an interview last week.
``People are saying by and large, `It might be easier for me to
move my Unix apps to Linux than to Windows,' although we're pretty
close to making that untrue.''
Ballmer and his salespeople will have a hard time convincing
business clients that their networks should be moved from the 40-
year-old Unix operating system to rival Windows if customers have
a cheaper option, investors said.
``Linux has achieved the top billing in terms of their No. 1
enemy,'' said Scott McAdams, chief executive of McAdams Wright
Ragen, which manages about $1.7 billion and owns shares of
Redmond, Washington-based Microsoft.
First Quarter
Microsoft today said server software sales rose 14 percent to
$1.4 billion in the fiscal first quarter ended in September.
Server sales increased 5.8 percent to $5.11 billion in the 12
months ending in June, the smallest gain in at least three years,
as customers pared spending on computers and services and
evaluated free programs including Linux.
``Linux continues to grow share on Intel servers,'' Microsoft
Chief Financial Officer John Connors said on a conference call.
``For investors in Microsoft, the ramifications are obvious.''
First-quarter net income more than doubled and sales rose
26 percent to $7.75 billion, topping the average estimates of
analysts polled by Thomson First Call.
Unlike Linux and other open-source programs, Microsoft owns
and controls the Windows code. Rivals including International
Business Machines Corp. and Red Hat Inc. use the output of open-
source developers to build products and services that compete
against Microsoft software.
``The advantage of open source is pretty hard to match,''
said Ram Mohan, chief technology officer at Afilias Ltd., which
uses the free Postgres database to store and manage 3.5 million
Internet addresses. ``Microsoft makes awesome products, but
they're not aimed at my specific needs.''
Mohan, seeking a cheaper alternative to the Sun Microsystems
Inc. Unix-based gear he uses now, says he'll probably switch to
Linux because he likes the flexibility. He overhauled Postgres
with new features last year.
While Windows-based server computers are growing increasingly
powerful and can cost 40 percent less than Unix systems, open-
source programs have improved enough to replace Unix systems,
investors said.
Less NOISE
Ballmer a few years ago summed up Microsoft's competition by
using the acronym NOISE -- Netscape, Oracle, IBM, Sun and
Everybody else. Netscape Communications Corp., now owned by AOL
Time Warner Inc., isn't on Microsoft's radar anymore. Ballmer now
talks less about Sun and Oracle Corp. and more about Linux and
IBM's WebSphere program, which works with Linux.
Ballmer made $758,810 last year as Microsoft's stock fell 25
percent. The shares rose 34 cents to $50.75 at 4 p.m. New York
time on the Nasdaq Stock Market. They have declined by 23 percent
this year.
Tougher Sell
Microsoft marketers must rely on studies that show the cost
of maintaining a Windows system is lower than that of Linux
machines. Research has yet to show that people are replacing
Microsoft products with free programs, analysts said. Linux ran on
4 percent of servers in 2001, and the share will increase to 11
percent by 2006, according to researcher IDC.
``If Linux takes share, it will take down Microsoft's pricing
ability,'' said Michelle Connell, vice president at Wells Fargo
Private Client Services, which manages $75 billion and owns
Microsoft shares.
Microsoft this month introduced a program to help Unix users
switch to Windows. The company said in July it will increase
spending on research and development this year by 21 percent to
$5.2 billion, bolstering server programs and other non-PC
products. It's adding 5,000 workers.
Emulating Linux
Microsoft sponsored a booth for the first time at the
LinuxWorld trade show in August in San Francisco. The company
argued that Windows is cheaper to maintain because it has more
compatible programs and comes with better support.
As part of Ballmer's plan to woo open-source users, Microsoft
is sponsoring Web sites to provide advice to developers and let
them pool resources. He's seeking to emulate the way hundreds and
sometimes thousands of developers collaborate on open-source
programs.
``He's got it tough,'' said Walter Price, who helps manage
$35 billion at Dresdner RCM Global Investors and holds Microsoft
shares. ``I don't know what you do to protect your shareholders
and preserve your market capitalization except to out-innovate the
Linux community.''
``I don't know what you do to protect your shareholders and preserve your market capitalization except to out-innovate the Linux community.''
Good luck.
I haven't lost my mind!
It is backed up on disk...somewhere...
Wow. That's one for the books! Great insight.
You broke the chain jerky! That's the first time I've EVER seen 6 insightful(ly modded) comments in a row, and you had to go screw it up. Figures it be you, "Anonymous Coward". All you post is crap anyways...
Sometimes the best solution to morale problems is just to fire all the unhappy people.