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Forbes Ventures Bold Predictions For IT, Linux
LinuxThis writes "Everyone's favorite, Daniel Lyons and other Forbes journalists have made some bold predictions about IT in 2004. Interesting quotes include 'Microsoft warms up to open source, and tries to make a buck off it', and the best, from our main man Daniel Lyons himself: 'The end of 'free'. Free didn't work for dotcom pet food stores, yet much of the rhetoric around technologies like Linux and voiceover-IP still involves this crazy notion that companies can make money by giving things away. They can't.' Even better, he suggests: 'SCO Group will settle its lawsuit against IBM. Both sides will declare victory. The Linux community will turn on IBM.' This is interesting considering his previous observations about OSS.."
...to anyone, technie or luddite alike, that IBM has a vested interest in seeing this lawsuit through to the end and making sure SCO is crushed into a fine-grained dust.
Yes, it would probably be cheaper for them to stop short. But that's kind of like negotiating with people who take hostages - you do it once, and it encourages others. Which is why this one is going all the way to the end, and IBM will not settle for anything less than complete victory.
To make laws that man cannot, and will not obey, serves to bring all law into contempt.
--E.C. Stanton
It is possible to make money giving stuff away for free, but you have to be very precise about how you do it. You just need to give out enough of your product to make the public want the stuff you need to pay for. A good example of this is the IRL company 'Primerica'. They're a financial managment service that gives out financial evaluations for free. That is, they will take what you make, how much you want to retire off of, how much debt you have, etc and figure out a way to make everything managable and possible. However, they make money off debt consolidation so you can pay off your bills faster, insurance, etc. You go in, get everything sorted for free, and then hopefully you'll get your loans and such from them. They're making a very large profit from this strategy, from what I can tell. Another good example is a band who releases low-bitrate MP3s for download off their website. You get the songs and can tell if you like them or not. However, if you want the versions that don't sound poor with all the case artwork and such then you'll buy the CD.(This is what got me to buy both of Rilo Kiley's CDs.) I've noticed that the reason a lot of these companies fail at selling stuff by giving other stuff away is because they give out the wrong stuff for free. It's like crack - give them just enough to give them the need for your product and you're set. Kinda like Google's expert search. Can search google for free, but if you need help finding that one obscure thing then you can pay to have others with a lot more experience do it for you. I'm rambling. Damn, do I love coffee.
Why is everyone so afraid of the concept of anything being 'free'? Is it that radical of a proposition that a broad-based community can create and support an infrastructure without the need for it to turn into a for-profit corporation? Community WLANs, VoIP, Open Source projects....aren't these things all technologically and socially proven by now? All of these analysts and experts can't be that shackled to the bottom line, can they? Paradigm shift, anyone....
"...(and unreliable) hardware" *cough* *sputter*
I might call Sun hardware a lot of things but unreliable ain't one of em. Sorry but the only x86 hardware that comes close is the top end of the Proliant line and the "mainframe" stuff from Unisys. As far as performance goes remember that mainframes are often several generations behind the bleeding edge and yet most of the worlds usefull computing is done on em, some of the time its about knowing that a job will get done on time, not how quickly it *might* get done.
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
The shills at Forbes are so obsessed with money that they have no understanding at all of the technical aspects of SCO vs. IBM, and live in a reality distortion field. Remember the outrageous article that called linux users terrorists? And of course, the "Linux's hit men" article showed that the author is unable to perceive the difference between GPL and public domain. These people are mentally retarded, there's nothing else to describe them.
If they were dealing with an entity with lots of money they would likely have been sued for libel or whatever, but since its a community they can take their liberties with their "analysis" and "predictions". When I looked at Truman holding up a copy the Chicago Daily Tribune making fun of the analysts' predictions (in the recent cell phones article), I realized that this is perhaps what we need. And in fact, slashdot could be the ideal vehicle for that. What I mean is, if we had articles laughing at them and ridiculing them and exposing their idiocy every time one of their tech "predictions" went hopelessly wrong, and if some other news outlets picked up on it once in a while, then may be it would knock some sense into these morons' heads.
Another ridiculously bad prediction in his article (unrelated to OSS but I'm sure willl be fascinating to slashdotters) is his final bold claim of "To repeat last year's prediction: "In 2004, Nintendo will have followed Sega's lead by exiting the console business." In 2004, it will." This guy obviously doesn't pay much attention to any sales numbers outside the US where Nintendo is well ahead of Microsoft in terms of console sales worldwide. In fact Nintendo was close to getting caught up with MS in North America but a shortage of Zelda bundle Game Cube's towards the late stages of the holiday season caused a slight drop in sales. He's just trying to make a lot of US corporate friendly predictions get people talking, he either doesn't believe what he is saying or is simply looking for attention. A lot of it is pretty ridiculous.
The method of forecasting by asking a few people what they think is going to happen is called the Delphi Method It is, in my opinion one of the overall weakest methods by far, and especially if the views are collected the way Forbes has done. In normal practice the initial and raw opinions are improved by feedback to the group for more refinement, which obviously has not happened in the Forbes article - hence, the almost idiotic "predictions."
And as you rightly said, these people don't have the faintest clue as to what is happening. Their job is to get paychecks by telling their clients what they want to hear ... and they will keep on telling it ... Henry Blodgett anyone ?
There are tons of other methods to do Technological Forecasting, (an article that I wrote many years ago) and I wish some more work that has more solid basis is presented for Tech Forecasting at /. We deserve better "predictions" than this ....
To see a world in a grain of sand, and then to step back and see the beach where the sand lies
IBM could hardly care less about SCO's fate. What is at issue here to IBM is the far more important issue of their software systems' legitimacy in the eyes of the market. SCO has done far more damage to that reputation than anything Microsoft could ever dream of, given their position as a clear competitor to both IBM and SCO. Since SCO/Caldera was very much a Linux company, their FUD rumors have had a tremendous chilling effect.
Now, there is no way to undo that damage with a settlement, as far as I or anyone I've read on Groklaw can tell. Even if SCO admits egregious errors in public, without a clear ruling from a judge and/or jury on the issues of IBM's rightful ownership of their e.g. AIX code, all of IBM's competitors will forever be able to twist the knife in their back. It no longer matters what SCO says or does, because their credibility is only intact with their own investors at this point. IBM, on the other hand, needs to clear their name.
Air is free, yet people make money from scenting it, compressing it or incorporating it into other products like balloons or ice cream, and selling the result.
Water is free, yet people make money from purifying it, bottling it or flavoring it, and selling the result.
Linux is free, yet people make money from packaging it, enhancing it and supporting it and selling the result.
Linux, like air and water, is free for all, yet through effort and ingenuity one can still profit from it.
Someone you trust is one of us.
1. Lisa DiCarlio: More cash-rich tech companies start to pay dividends. Microsoft continues to struggle to make its software secure, which means another great year in 2004 for Symantec. The complexities of integrating Legato and Documentum weigh down EMC. HP's stock doubles. IBM buys SCO to shut it up.
These don't look too far-fetched except for the last one. If anything I've seen on groklaw has any connection to reality at all, IBM will fight to the end in this particular battle. Score 0.7 tempered by a -1, Unlikely...
3. Daniel Lyons SCO Group will settle its lawsuit against IBM. Both sides will declare victory. The Linux community will turn on IBM.
IBM vs SCO as before, IBM will not stop at anything less than full victory. And IBM as the new enemy? Whatever would have happened to Microsoft then? He might be seeing something I do not see of course, it just seems too unlikely. Score 0.2
4. Victoria Murphy: Microsoft warms up to open source, and tries to make a buck off it.
Much as I'd think that would be a smart move on MS' part, I am not sure if they can leave their current closedness behind in time. To them it would be a big change. Maybe this explains what happens to MS in the previous prediction. Score 0.6, I Wish it Were True.
What does concern me is that some managers may read all of this and not realize it is all matters of opinion.
SIGBUS @ NO-07.308
I predict that Daniel Lyons will, after continuously having made completely false analysis and predictions on everything from SCO to Linux, either lose his job at Forbes (watch that MBA smile dissappear in a split second when he gets the slip) or be moved to the comics section, where he will at least do somethiing productive at Forbes.
I see this guy (and most other so called tech analysts for that matter) as one of the worst things to ever happen to both markets and journalism. This is one of those people who were still pushing the dotbomb revolution when it had already collapsed, and then, in true two faced lying son of a bitch sell your soul marketing fashion, turn around and say they had seen it all coming and that people are dumb for not having listened to him.
I think that the best remedy for scum like this would be to actually give them the job of ceo of some tech company and see how long it takes them to run it into the ground.
I see five conditions under which the free model can work.
1) Price insensitive customers: "Free" can work as long paying customers are tolerant of paying higher prices to support the cost of providing some level of free product or service. For every "free' customer (e.g., who does not pay for the bandwidth & IT to provide the download) there must be a paying customer who is willing to make up the difference. If two companies are equal in quality and features of the product and service offered but one company is "giving it away for free", then the free company will have extra costs from offering that free product/service and have to charge higher prices. If customers are very price sensitive, they will eschew the company that offers "free" wares and pay lower prices at the non-free company.
2) Low total cost of "free": The unreimbursed cost of the free product or service must be low relative to the revenues generated by paying customers. This occurs under a combination of two subconditions. First, the marginal cost of the free product or service might be low (e.g., the modest cost of bandwidth). Second, the fraction of freeloading customers might be low (e.g., something prevents everyone for taking advantage of the free offer). The lower the marginal cost, the higher the tolerable percentage of freeloaders.
3) Customers who contribute services: The viability of free is enhanced by service contributions from customers. Thus the definition of a paying customer goes beyond money -- some customers provide valuable services in the form of code contributions, beta testing reports, and support on discussion forums. These contibuting customers provide a voluntary service in exchange for the "free" product. Although such customers do not help pay the bills, they do reduce the organization's costs (eliminating salaried programmers and helpdesk personnel) and they increase the value of the organization's offerings (thus justifying the payment of subsidies by paying customers).
4) Nonconfident customers: If customers are not confident of their choices, they may prefer the "free" model as a way of try before you buy. At some level many proprietary software companies do this by offering "free" trial versions of their software. The companies give away a time or function-limited version of the product and get paid for the full/unlimited version of the product.
5) Obligatory follow-on purchases: "Free" can also work if acceptance of the free product obligates the customer to buy additional products or services down the road. Giving away the printer in order to gain an ink cartridge customer is a good example of this. The challenge, for the provider of the "free" item, is to segment the customer population to ensure that only heavy users of ink cartridges, for example, will accept the offer of a free item (maintain a low percentage of freeloaders who take the printer but don't use it much).
These are neither mutually required, nor mutually exclusive conditions. Some combination of all 5 can ensure the viability, even the superiority, of the free model over more pay-for-what-you -get business models. I'm sure others here can think of other conditions that enhance the viability of the free model.
Two wrongs don't make a right, but three lefts do.
It's simple economics. Everything must be assigned a price and the purpose of production and distribution is profit.
Anything that reduces profits is, by definition bad. Anything that reduces profits reduces the GNP which is, by definition, a social evil.
If a thing has no price it has no value. Replacing things that have a price with things that don't reduces riches. The more of these things you have the less you are "worth." (As if value only meant "price." The primary value of your house is that it provides you with shelter)
From the standpoint of economics free software is just looney. That would be like cars just being free for the taking, like leaves on the ground in the fall. Everyone would be poor if they just get what they wanted like that.
Wealth means buying shoddy things with a high "value." Less stiches, more riches.
Of course things that are "free" can be used as well. Since the river next to your plant has no price it's fine to use it to dump toxic waste into. Clean water and air have no value because you don't have to buy them. They're just there until you pollute them.
Now businesses that aren't directly tied to the ideas of the software industry as part of the their own profit or adding to the value of the GNP are now starting to realize that OSS is like that stream next to the factory now. You can just use it. For free. (And maybe pollute it, but that'a another post).
But if you're in the software industry or an economist the idea of reducing an item that can be produced for free and "sold" (over and over again to the same customer) at usurius profit margins to free as in leaves on the ground is just daft. It can be literally unthinkable.
Of course from the "consumer's" point of view software is truly a consumable. You buy it. You use it. But you don't have anything of your own for it. Your "worth" is reduced. Then you have to buy it again. The flow of "value" is all one way.
But from the economic point of view that's a good thing. There is a schizophrenic rift in economic theory between man the consumer and man the producer.
Everyone's heard about it, but no one these days has read it. Pick up a copy of E.F. Schumacher's classic work "Small is Beautiful." It delves into these very issues.
Finding a copy of Stephen Leacock's (professor of economics at McGill) "Too Much College" wouldn't hurt either.
Even the autobiography of G.K. Chesterton has some interesting things to say about the issue, just ignore the religious stuff if you are so inclined.
KFG