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!"

Comments

MS Office will be hit first

[rseuhs]

Definitely good news.

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?

Upgrade cycle slowing

[PinglePongle]

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only now upgrading their servers from NT4 to W2K - not to take advantage of new features, but because support is being withdrawn.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....