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OSS Officially On Microsoft's Financial Radar Screen
seldo writes "More news from Microsoft's latest quarterly filing: according to eWeek, Microsoft says it may have to lower its prices in response to competition from open-source software. From the filing: "To the extent the open source model gains increasing market acceptance, sales of the company's products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline". This is a fairly major revelation from Microsoft, and if it happens, it may be one of the biggest wins yet for open-source software: what do you know -- competition works!"
Before the muppets start talking about products can't compete with free, remember support costs, staff costs etc etc.
One element on margin is that it is estimated that Microsoft work around the 30% mark, while IBM work around 7% and are booking multi-millions in association with Linux. So this means that Microsoft will be reducing their margin, not becoming unprofitable.
An Eye for an Eye will make the whole world blind - Gandhi
PR... nothing more than PR...
It's not that they're wholly unaffected by the advance of Linux, but this statement should be bundled with others they use to show that "We have brutal competition... really!"
It was about time.
The thing that pushes ppl to Linux and Open Source is the price. Depending if MS lower its prices too much, it may cause a lot of ppl not to consider OSS software at all.
Who would want use and a disgruntled OS if they may get nice box, nice gradient buttons, stylish consistent GUI for a reasonable price?
Maybe it forces OSS software to evolve from merely copying proprietary functionalities to actually improve users' life in order to make a differentiation. A reason for ppl to use it. For now, it's price.
This is a fairly major revelation from Microsoft, and if it happens, it may be one of the biggest wins yet for open-source software: what do you know -- competition works!"
...Now if Microsoft interpreted the OSS threat the way they should and decided to counter it by open sourcing their stuff... THAT would be a major win for the OSS (by definition)!
Sigh. Since when was lowering Microsoft's prices a major objective of OSS?
This is *not* a big win. Contrary: it reduces the perceived difference between OSS and MS from a consumer's perspective and may even force Linux vendors to lower their prices and thus reduce their revenues.
This is really quite analogous with what happned when MS's cheaper solutions began to eat the Unix market from the workstation up.
At first, MS's main advantage was price, but gradually they innovated(*) and re-engineered so that their product was always high enough quality to attack the next layer up -- from word processing platform up through file/print server to heavy-duty servers and workstations.
Now MS are being eaten from below by a new generation of even cheaper systems. Like early MS systems, these open source offerings are both derivative and weak except for their price advantage. However, a price advantage is enough to secure a foothold, and over time open source systems will be strengthened and will begin to innovate and will be able to take over better and better MS-held markets.
In about 10-15 years, the cycle will probably start again, taking us another step further from the days of monolithic systems and proprietry hardware/os/support lock-in (which is where we were at before the Attack of the Killer Micros, young'uns). It's all good.
(*)Rather than freaking out and writing posts about 'M$' and so on, why not go outside and get some fresh air?
Whence? Hence. Whither? Thither.
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Runs (nearly) all desktopsoftware, because they have 95% marketshare.
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Support people are easy to find, because they have 95% marketshare.
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If you hire new people they are already familiar with it, because it is so widespread.
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All consumer hardware supports it, because it has 95% marketshare
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OEMs preinstall Windows because it is so widespread.
All advantages of Windows vs. Linux are a result of it's domination. If you take that away, Windows is dead. The OSS comunity can write most drivers for thousands of different devices and architectures. - Microsoft can't even support Alpha without hand-holding from Compaq, never mind write all the drivers for all those devices!No. There will not be a lasting coexistance between Windows and something else. Windows will die within a few years once it no longer runs on the majority of desktops.
The pressure on Microsoft is getting bigger. Every year PCs become cheaper and the Microsoft tax represents a bigger and bigger share of OEMs revenues. They have just raised the cost for their corporate customers.
The question is, where shall all the revenue come from? Nobody really needs any MS Office version newer than Office97 and nobody is really excited about Longhorn or however it will be called.
Microsoft knows that they are doomed (that's why Bill Gates and all the other executives with a clue sell thousands of shares each month) and that it's right now just a matter of how much they can milk out of their customerbase.
Businesses are willing to pay for value delivered. They are not, however, willing to be raked over the coals, especially by someone who is making the profit margins that Microsoft makes in an economy that has everyone else scrambling to make a buck.
Add in the costs of continual upgrades -- required by Software Assurance, BTW -- and the hardware to support them, and the lost productivity due to bugs and security flaws, and we have some unhappy campers out there.
OSS alternatives mean that Microsoft will have to lower prices, probably to a level lower than pre Software Assurance days. Customer anger and memories mean that it may not be enough to keep some of those customers from going away for good.
That driver argument is starting to really annoy me. I've almost never installed any version of MS-Windows where I didn't have to install separate drivers from the manufacturers website: Video drivers, sound drivers, motherboard drivers, AGP drivers, network drivers, printer drivers, scsi drivers etc. On the other hand, I've seldom had to download anything for Redhat, all the drivers I've needed are included in the distribution. And considering that my fiance just had to buy a brand new scanner to replace her three year-old one because the manufacturer said that they were not going to support Windows XP, I'm just now sure how you can say that XP supports more hardware than Linux.