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Former Windows Chief on Microsoft Vs. Open-Source
prostoalex writes "Brad Silverberg, former chief of Microsoft Windows division, who left the company in 1999, is being interviewed by the Milestone Group, on Microsoft specifically, and the software venture capital world in general (Silverberg is currently working as managing partner for Ignition Partners). He provides an interesting viewpoint on Microsoft's understanding of open source: 'I don't think they have figured that out yet, I think that is clear. They are struggling with not so much open source, per se, but rather they are no longer the low price solution. In the past Microsoft was the low cost solution and Microsoft was then competing and attacking expensive proprietary systems from below. Now for the first time the tables are turned and it's Microsoft that's being attacked from below by a lower price solution. Microsoft needs to figure out how it can demonstrate better TCO to justify its higher prices. Another aspect to that, which is an area I think Microsoft is also struggling with, which is when you are as successful and dominant as they are, how do you continue to foster that ecosystem? What really propelled Microsoft Windows success was an ecosystem that they created that allowed other people to benefit from your success. Actually your success was really a side effect or byproduct of their own success.'"
Yup, and they didn't even write that. They bought it (insanely cheaply, IIRC) and marketed it. There's one thing they have figured out and are extremely good at, and that's marketing.
Yes, once upon a time, they were.
Back in the mid-80s, I worked for a little value added retailer which sold medical billing systems. They sold Xenix/Altos and Pick/General Automation systems with several users on several terminals, and competed with IBM, which sold mini computers which cost far more than the tens of thousands our systems cost.
When IBM PC compatibles became a major force in the market, we were able to undercut our old systems dramatically. We weren't selling MS systems, but every PC system we sold had MS-DOS on it. We were able to undercut ourselves, and cut our own throats.
Microsoft gets a bit of the credit for this, because they provided the standard and open[1] (but proprietary) base that companies like Peachtree, Kaypro and Compaq could build on. Suddenly, there was no need to support a group of engineers and programmers in your home town who could integrate hardware and write software to get the job done. Peachtree and the clones did it from the Bay Area, cheaper and better, as long as better meant cheaper.
MS was always cheaper than what it replaced, jsut as the platform it ran on was cheaper than the minis. MS was making it big on volume. Today, they've got more volume than ever before, but the new competition is able to cut prices all the way to zero, forever, and that's just the opening salvo in the price war. MS aren't stupid. They may figure it out eventually, but they may stumble badly on the way.
[1] The PC BIOS sourcecode was listed in the manual. Command.com was simple enough that you could figure it out using debug.exe.
See what I've been reading.