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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!"
Most definitely: It is good to not have a monopoly controlling a market.
perl -e 'printf("%x!\n",49153)'
Here's my scenario:
First, MS Office revenues will be hit and hit hard. OpenOffice does almost anything MS Office can do and it is not more difficult to upgrade from Office97 to OpenOffice than it is to upgrade to OfficeXP. - But a lot cheaper.
Only after an organization has successfully converted to OpenOffice, we will see full conversion to Linux.
Now we'll all have to see what Microsoft does without the hefty MS Office sales... Maybe XBox-gamers will have to pay a lot more because Microsoft can no longer afford losing millions over millions on it?
I suppose the continuing sluggish growth in the US economy has nothing at all to do with it either. Isn't this the same sort of argument that the RIAA used to explain the drop in CD sales? "The competition from free sources is reducing our sales!" In fact, slow growth in the economy impacts all kinds of sales, including Microsoft's products.
Sometimes I worry that I'll develop Alzheimer's disease, but no one will notice.
I don't think OSS is making a big dent in MS revenues - it's still virtually impossible to buy a new PC without windows pre-installed (and pre-licensed).
Instead, I think MS is suffering from a lack of innovation. There is simply no compelling reason for corporates to upgrade their software anymore - Windows 2K is fine for business use, they don't get anything in XP other than support problems. You might upgrade Office to be able to read other people's files, but there are precious few "must-have" features to differentiate the current offering from Office 97.
The most significant reason for users to upgrade in the recent past has been MS's change in licensing policy - signing up before the deadline gives "free" access to upgrades for a limited period. I know that many corporates bitterly resented this pressure. However, the next version of "Windows for Servers" keeps getting pushed back, and many corporates are only now upgrading their servers from NT4 to W2K - not to take advantage of new features, but because support is being withdrawn.
So, while OSS is undoubtedly snapping at MS's heels, providing a much-needed alternative and nibbling away at the revenues, the bigger problem is that historically, Microsoft have taken ideas developed elsewhere and "embraced and extended" them. Right now, there are precious few radically new ideas to embrace, and the only way for MS to continue to grow their revenue is to find new must-have features. In short, they need to innovate under their own power.
Welcome to the real world, Bill....
It's all very well in practice, but it will never work in theory.
... or less then OSS is dead (unless it really starts embracing the making of Win apps). It's a lesson the music industry may learn as well if they want to truly end the Napster Clone Wars.
"Consensus" in science is _always_ a political construct.
I always wonder about this nonsense talk about product's price being only part of the TCO.
I agree that price of the box with OS/DB/whatever is only part of the equation, but since when MS/Oracle/whoever started to give away product support for free?
I mean, whatever software you are using, it usually requires some helpdesk/administration. And support that you've got in the price of the software package is good for nothing.
I know because I tried to get several times support for NT, MSSQL etc. About the only advice is to reinstall system, database, or (sic!) decrease the size of database.
And paid support for Oracle or MS SQL... Don't get me started. Prices of that software even in the highest version with unlimited users, processors etc are nothing compared to costs of those support contracts.
Robert
Bastard Operator From 193.219.28.162
Most people already pay for Windows for each of their machines, whether they want to or not. I certainly have a Windows license for each of the dozen PCs that I have, and only one of them actually runs Windows.
So, your notion that people use open source because they have to pay for Windows flies in the face of reality. People use open source software because it simply works better for them.
Depressing for Microsoft, isn't it, that people throw Windows away even though it is pre-installed and they have actually been forced to pay for it and wouldn't incur any additional costs by just using it.
This is not really signifigant news. When preparing to post financial news, publicly held companies (as part of the "full disclosure/safe harbor" process) are required to state any risks, however remote, that may impact future earnings.
Some smart lawyer in Microsoft's legal department probably said "Hey, we'd probably better start quoting open source software as a possible financial risk to avoid shareholder lawsuits in the future."
This is probably just typical legal boilerplate stuff, not any signifigant change in MS's assessment of the impact of OSS.