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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."
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.
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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.
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
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.
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
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
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
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.