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For Microsoft, Market Dominance Isn't Enough
chemstar writes "Last summer Orlando Ayala, then the top sales executive at Microsoft Corp., sent an e-mail titled 'Microsoft Confidential' to senior managers laying out a strategy to dissuade governments across the globe from choosing cheaper alternatives to the ubiquitous Windows operating system. Ayala's e-mail told executives that if a deal involving governments or large institutions looked doomed, they were authorized to draw from a special internal fund to offer software at a steep discount, or free, if necessary. Steve Ballmer, the Microsoft chief executive, was sent a copy of the e-mail.
The memo, which focused on system software for desktop computers, specifically targeted Linux, a still small but emerging competitor. "Under NO circumstances lose against Linux," Ayala said." Perhaps that's because, as roomisigloomis writes, "Seems that MS' licensing practices are working against the company," pointing out this article which "suggests that open source, Linux and other software is actively being sought."
Halman: Perhaps we both have less freedom than we imagine.
It's not the price, really. Corporations and governments are willing to pay the price of Windows to ensure that they have support and stability. But the licensing of Windows -- product activation and the like -- are what's really kicking Microsoft's teeth in. Consumers are willing to overlook a lot, but not things that actively make their life harder, for no personal gain for them.
To want to beat out the competition.
Many large corporations drive prices down to crush the little guy.
--------
Free your mind.
I hate Microsoft as much as the next geek, but really, what do we expect from a company? Companies aim to make as much money as possible -- excluding not-for-profit & charitables -- so why should anyone be surprised that they do anything within their power to make their software as widespread as possible?
It seems to me that every time there is a posting about something else MS does, it's the same old stuff: they want more market share, just like everyone else. That's it, it should be expected by now.
Keep in mind that I am not excusing them for any unethical practices, just something that nags at me.
Maybe the EU should look into dumping charges against MS, if they offer to give it away for "free"...
Fascism starts when the efficiency of the government becomes more important than the rights of the people.
Any company with a bussness stratagy that has the words "at all costs" in it really has some f'ed up company heads. I mean think about it microsoft wants everyone on there systems cause everyone knows there is no such thing as "fre windows" especially with some of the newer business plans microsoft has been tossing around. Here ends the rambling; It is miss spelled? i dont care.
Everyday You see me is the worst day of my life -Office Space
Isn't this illegal? Here we have a convicted monopoly selling it's products at a loss to shut out a smaller competitor. Isn't that illegal?
Lesbian Nazi Hookers Abducted by UFOs and Forced Into Weight Loss Programs - -all next week on Town Talk.
After a while, we discovered that we were only being used as a tool of negotiation to get lower prices for WinCE licensing... it seems that using Linux as a disuasve weapon was effective. It seemed that they would do anything not to lose to Linux
a special internal fund to offer software at a steep discount, or free, if necessary
What about the support, source code, DRM crud? Sorry, but when MS says "Free" you have to look for the fine print.
Trolling is a art,
Of course, if MS had charged them full price, they'd be pilloried for contributing to the "digital divide."
Stop by my site where I write about ERP systems & more
So now one of the US's foremost companies is going to try and squeeze other countries to use their system? Other countries can do little about our government's arrogance, but they sure can do something about Microsoft's!
Besides which, investing in open source allows them to grow their own in house experts to learn and take care of the software.
If brevity is the soul of wit, then how does one explain Twitter?
Seems to me the business/government market has clung to MS for the sole purposes of familiarity and ease of support. Hire any MCSE off the street and you have qualified support personell. Have a problem, call up Redmund and tell them about it.
Windows has kept essentially the same for the past few years, minus a few "enhancements" (a.k.a. extra features not many people need). This facilitates people turning their heads towards more customizeable software, where a kernel can be compiled for any given specific purpose, and only the required software runs.
Aside from the incredibly cheap software itself, the unmatched compatibility-for-purpose, and customizability make Open Source a very viable solution for previously proprietary, overpriced, "as is out of box" software. And as potential support people and developers materialize out of the mould, it's getting more and more serious consideration.
It's just plain sick of Microsoft that they would consider just giving their multi-thousand dollar software away simply to keep market share. Wonder how that would make me feel, if I were a business owner. Knowing I paid $2,500 for an enterprise server, when a friend of mine's business gets it free just so they remain a Microsoft customer. Really would make me consider the alternatives all the more, for fear of getting played like a fiddle by the monster of dominance.
The reason that Microsoft is concerned about governments is that they know that governments have the power to set de-facto standards. If a business partner sends me an unreadable document I can probably work something out with him or her. If the government demands that any electronic communication be in a particular format, that's the format that you use. What's more, nearly everyone has at least some business contact with the government. If a government switches to StarOffice/OpenOffice then you can bet that within a few years StarOffice formats will be the standard in that particular country for almost everything. It won't matter that it some ways OpenOffice isn't as good as MS Word, because it is definitely "good enough," the price is right, and it is the format that you need to use to communicate with the government.
Large institutions are a similar deal. If your University demands that you turn in your assignments in Microsoft Office formats, then you don't use WordPerfect or OpenWriter (or if you do you make sure to double check the formatting with MS Office before actually turning the assignment in. Likewise, if you supply parts to Ford Motor Company and they require that documents you submit be in MS Word format, then you don't use something else.
Microsoft can't afford to lose these big accounts. If they do their entire monopoly will start to unravel around them. It is far better business for Microsoft to give away software to these key accounts than to lose them to the competition.
What's below cost?
It costs maybe 25 cents to produce a copy of Windows 2003.
Dev costs are already written off/recouped.
Software isn't a tangible product. It only "costs" what people are willing to pay.
I don't need no instructions to know how to rock!!!!
Ah, but Microsoft software is free only if your time is worthless.
Ita erat quando hic adveni.
But in this case the corporation in question has a monopoly - traditionally, they should be required to play by different rules than corporations which do not.
zWhat would an EWOULDBLOCK block, if an EWOULDBLOCK could block would? -- me
As a goon in the network brute squad for an enormous and paranoid company, I'm gonna say: How come all of these high level memos get out? Ok granted they've been able to keep their source code contained, but executive memos like this should be at approximitly the same sensitivity level. I could, if I were petty, ask why we should trust security and operation processes from a company that seems either not know what they are, or at least how to follow them. The information in the memo is not a great suprise to any market observer, but it could be, as experessed in other comments, legally damning.
Spyder
These products are "free" like cocaine is "free". Free for the first buy. Free for the second buy. Free as long as it takes for you to be completely addicted and dependent -- then it's a leg and an arm.
MS will not continue giving it's products away for zero cost to anyone. They will do so long enough to ensure dependency, then charge full price. If they kept on giving it away at zero cost, they'd go out of business, despite everyone using their products. That's obviously not what they want. Their plan is obviously to make governments and citizens dependent on MS software using mechanisms like the Word incompatability fiasco.
At the very least, all government agencies should require that the formats in which they store information are completely OPEN and FREELY AVAILABLE for anyone to implement.
social sciences can never use experience to verify their statemen
...watching the last Dinosaurs do everything in thier power to draw down the asteroids.
These guys are *so* missing the point that they can't even comprehend the big picture.
Well, here it is, MS-boyz. Not that it will help.
*Everything* that you hold dear about the way your company is. That's the secret. That's the gimmick.
It's not pricing that's driving organizations to OS en masse.
It's not security that's giving them your current and former customers motivation to migrate.
It's not a desire to contro thier own destinies that has governments around the globe cheering "free the source" and "All GNUs is good GNUs"
It's not the fact that your entire customer base is at, or just below the threshold of "having been put through too pain and oppression (YES!! OPRRESSION is the word!!) just from ONE vendor."
It isn't that the companys leadership is severley out of touch with the needs and sentiment of the marketplace.
It isn't that we are entering a new era when companies such as yours simply can not compete against volunteer services (i.e. Open Source / Free Software programmer-teams)
Here's the secret.
It's all of that.
The platonic archetypical Form, the essence, the very nature of software megacorp is the problem. You are losing because of WHO YOU ARE, not because of any one thing you are doing.
If you can make the change, transform your enterprise completely, great. You will still be around 10 yrs from now. Of course, you'll be just another OS/FS programmer-team, albeit a large one. And hey, a lot of us would welcome you.
But as you are, you're a dinosaur. And the more you try to be a dinosaur, the sooner you'll pull down those asteroids.
So go on. Fiddle with the licenses some more. Give your software away to anyone who suggests they're tinking of migrating to Linux/ free software. Spew more lies, obfuscation, FUD, and marketspeak into the public's ear. "Embrace extend, and extinguish" to your heart's content.
We'll raise a toast to your valiant struggle and determination to fight to the very last. It's not much as virtues go, but if it's all you got, use it.
And after the toast, we'll log back on and make some more changes to our software, publish them, and wait for feedback from our Users.
The Users know the difference between a friend and a predator.
The Users Know.
The Users Know.
The Norwegian government resigned last year from their deal with Microsoft for delivering software to the whole administration to look at alternatives. Linux was mentioned as one of the possible ways to go.
Last week Steve Ballmer visited to have a meeting with the Minister of Administration. The most published result from the talk was that the government get disclosure of the source code. And probably, according to this, got an opportunity to renegotiate for a better deal.
Just an example. But what it means is that Linux and Open Source gives (large) organizations a hand in negotiating price and conditions with Microsoft. I'm not sure if that means anything to the Open Source Movement at all.
I'm not even sure if that's good for Open Source. Expensive and closed Microsoft is good for OSS, because that means Linux et al is where to go for open systems. If large corporations (in Norway, the government, military and one large corporation now has access to Microsofts source code) can get to the insides, that means a lot of resources that could go to the public good is kept locked up by MS anyway.
The same is true for any other software though, there's really nothing significant about the comment. Linux is free, but if I want to use it as the infrastructure for my company then I need to invest manhours into it, whether my own or somebody elses. Depending on which flavour of zealot you ask you'll get a different answer as to which is more expensive in terms of man hours required to implement that infrastructure.
Chris Kuivenhoven is a thief, beware
They at least know Linux IS a threat to them. This has been said 1,000,000 here so I won't go further but another point I will make is that you would think the same Government in the USA that may be getting free software from Microsoft due to the competition of Linux would also say Microsoft is not a threat. It proves, once again, that competition is good and I cannot believe the government would not try and give technoligies every advantage such as Linux more help by seeing MS is a monopoly, considering THEY may get free software out of it.
Not to mention, if MS can afford to give away their software for free, there has to be some anti-trust involved here. I though there were laws stopping a huge company from selling their products at a loss, or even free, to stop the competiton?
"If you are a dreamer, a wisher, a liar, A hope-er, a pray-er, a magic bean buyer
Naturally, but people (and management types in particular) are liable to forget that fact when $(SOFTWARE COMPANY) rep offers $(EXPENSIVE SOFTWARE PACKAGE) free of charge - and that's highly unfortunate.
Ita erat quando hic adveni.
Some say this is dumping -- selling their product below cost just to push out a smaller competitor. Sure, it fits that definition, but Microsoft is lowering its price to that of a competitor who is also selling below cost. Alan Cox's labor alone probably ads up to more than a penny on the two debian machines I have right now which would be two more pennies than I spent on their software. (Aside, if each of us sent Alan a penny for each of our servers, how much money would he have?)
Some are calling this just another unfair tactic, losing money to maintain marketshare. Well, maybe it is, but isn't that what M$ is doing with the XBox? Rumor has it that Sony did it with the PS2 at least when it came out. Numerous other business models do this as well. Maybe Microsoft is turning to a business model where the software is free (under certain circumstances) and they earn their money on the support calls and Must Consult Someone Else certifications? Isn't that the business model all the free software people advocate?
I don't like Microsoft's history or how they do business, but I'm racking my brains here to find a way that they're evil and my favorite business OS, Linux, is good. All I'm coming up with is either ways to kill Linux accidently or ways that this is a legit thing to do.
Perhaps there's something to do with how the prices are different? Can it be proven discriminatory, or is it along the same lines as airline seat price differences?
The best I have is that foreign governments can prohibit or tariff Microsoft OS imports that are under priced because they're being dumped-- when and only when they have local developers working on Linux and consider that flavor to be domestic. Much like the US is doing (illegally due to WTO agreements) with steel.
Microsoft was evil, in my opinion, when they released IE for free against Netscape's paid-for product. Why is free as in beer Linux good when it's apparently forcing Microsoft to give their OS away for free? Aside from brand hatred of Microsoft, why do I want Linux to succeed? Simply because I can and have modified the source code (but that gets back to it being Free as in libre which I think should stay out of this argument).
If it's reasonable to cast licensing paranoia aside for a moment, Microsoft appears to be offering those who cannot afford their software the ability to get upgrades for free without having to pay for migrating proprietary code to the Linux platform. If I replaced "Microsoft" with another business name, that would be A Good Thing.
Can we write a law that refers to the Microsoft business entity specifically and prohibits them from "selling" their product at a loss as punishment for prior practices?
I'm afraid it's a little short-sighted. To understand this one has to think a little, not just fall back to a reflexive non-thinking response like "Government, taxes, bad, yuck."
<OL>
<LI>The initial one may be free. The upgrade certainly won't be.
<LI>If the TCO of a Linux server is less than that of a Microsoft one the free disk is a false economy.
<LI>If there are no alternatives Microsoft can apply monopoly pricing at some future date. This will raise the price at the next go-around. The only reason they are offering a more reasonable price is that there are credible threats.
<LI>Your taxes are not the only place you spend money. If governments go to Linux/Open Source/Free Software alternatives to Windows/Office/etc will be more readily available in general. The price you pay for your open source software will be lower. And even if you go with MS it will have to lower its prices to compete with its OS competitors.
The man who never alters his opinion is like the stagnant water and breeds Reptiles of the Mind -- William Blake
They're protecting their market position in the face of a potential competitor. I wonder how many Vacuum Tube manufacturers scoffed at the transistor when it first came out. Where are they now? Micro$oft is correctly seeing Linux as a threat to their long term OS dominance. Their product may not be too great, but neither was VHS compared to Beta and where is Beta these days? M$ knows how to market...and maybe the OS/Linux community needs to learn how to also!
Why do they need to draw from a special
internal fund to give their products
away for free?
Ansi's and stupid tricks!
Oracle and SUN didn't crush Dr Dos, and other competitors by writing there apps to not run on competitive OS's. They didn't crush the competition in the courts to suppress the new technologies, so they could remain dominant. They didn't buy competitive companies so they could bury the technology, to eliminate the compitition. They didn't give away they're software, so that competitors couldn't stay in business (netscape for example) They didn't buy judges and polititions to win cases in court. Any evidence of this is buried, so we'll never see it of course. They didn't use embrace and extend policies to corrupt and distroy open standards, which would have kept the technologies open for all platforms. Have you ever seen directx run on a Linux HP or sun computer?
I'm not going to tell anyone that Oracle or Sun are Perfect. But they didn't break every law in the book, and hire the best lawyers in the business to get them off the hook.
Yes, microsoft gets slammed on Slashdot, etc. But they've earned it!
I take no responsibility for what I say. Even though I'm never wrong
Sure... you get it free this year. Then when you have everything installed and all the people trained, do you expect them to be as generous the next time?
The OS and Office are their only cash sources. They can't afford to give them away forever.
The first one is always free.
We should publish this in as many places as possible so that noone make a fair deal with M$ after all now as an IT manager you know if you want 90% off all your windows licenses just tell the M$ sales rep that you are seriously considering swiching to linux or *BSD for all your desktops and servers. This is great M$ either looses money hand over fist handing out free copies of their software or they have to give up this anti-competitive strategy. Either way they just lost this little battle.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
...but somehow, forgetmetnot, I think you intentionally chose to overlook the above poster's point: If an artifical restriction (i.e. "law") is put into place making it illegal to sell "below cost" then you better believe that a company with enough incentive will find a way to make it product "cost" as little as possible. Why couldn't a company like Microsoft claim that it costs 25 cents a copy? According to the letter of the law, that'd be true. Does this seem unfair or something? What about silly laws by overly regulatory lawmakers or judicial activists who won't let market forces do their thing? Some people might find that unfair.
I'm guessing from the posts I've been reading that quite a lot of people here on Slashdot have never actually worked in a large organization. Fair enough. But let me tell you: Company-wide memos sent out by senior sales staff (think: "used car salesman with a better sportcoat") urging other salespeople to offer steep discounts isn't really anything unusual.
Damned if they do, damned if they don't. If they do, then you'll have posters like forgetmenot claiming that Microsoft is a monopoly illegally flexing its muscle. If they don't you'll have some competitor (yes, even Linux) undercutting Microsoft's price(remember, Linux is FREE...)
Free enterprise is messy. (I was going to write "It sure doesn't look like a bunch of geeks studying for C-Sci finals are really qualified to talk econ 101, but what do I know..." but then I figured I'd get modded a troll for sure...)
I would have to say that explosives are the most abused technology in all of history.
All they are doing is matching the price of the software they are competing against, how is that dumping exactly ?
Correct me if I'm wrong, but isn't dumping in this case related to how much it costs Microsoft?
The cost of the competing software is immaterial. If M$ are giving it away for free, that is dumping, no matter what, unless the cost to them of each unit is literally zero dollars, shekels, Flanian Pobble Beads, Triganic Pughs, or whatever...
Call me old fashioned, but I like a dump to be as memorable as it is devastating - Bender
(sigh) Once again, somebody fails to recognize the segregation of editorial and advertising content. No biggie. It's just one of the fundamental principles of publishing. Hypothetical analogy follows:
Every issue, Car & Driver takes a moment to remind everybody that the Pontiac Aztek is the Ugliest Car On The Planet. Yet Pontiac doesn't seem to have a problem with buying a 4-page spread promoting the new Grand Prix.
Now, let's say General Motors has a hissy fit and withdraws their advertising from the magazine. The obvious message is "You won't get our advertising dollars..." with a thinly veiled "...unless you start writing good reviews of Pontiacs" in the fine print. Car & Driver is left with two choices. Either capitulate, praise the Aztek as the pinnacle of American design, and ruin their credibility for some filthy lucre; or tell GM "Bugger off. Chrysler wants that spread for a Pacifica ad." Either way, GM is screwed, because they're either denying themselves marketing opportunities in a key demographic, or they'll have to start paying for good reviews.
OK, now let's turn the scenario around. Say C&D refuses GM advertising because their cars suck. Who in the industry is going to try to buy space in C&D now? What's the point, if the ads can be refused on a whim? Now, C&D is screwed. Their ad space will become so devalued, the magazine will probably have to shut down, unless they can get by on ads for "magic" oil additives and gadgets that create turbulent air flow in manifolds designed for laminar flow.
Either way, somebody gets screwed. The only way to keep both parties happy is to keep editorial and advertising away from each other. Pontiac can still promote the Grand Prix, and C&D can still ridicule the Aztek, and neither interferes with the others' privilege to do so.
This is one of the few things Slashdot gets right. Microsoft gets the eyeballs of a large, diverse congregation of geeks, the Anyone But Microsoft crowd gets one more reason to add their two cents, and Michael gets to keep his job. See? Everybody's happy!
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Do you have anything like uptime statistics, historical vulnerability records, or ANYTHING to actually back up this claim? You are believing an image that has been carefully constructed by the marketing department at microsoft.
- You don't know how to maintain a station wagon either!