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Software Piracy Due to Expensive Hardware, Says Ballmer
frdmfghtr writes "ZDNet is running a story where Steve Ballmer tries to pin the blame of software copyright infringement on expensive hardware: 'One way to stem piracy is to offer consumers in emerging countries a low-cost PC, Ballmer said. "There has to be...a $100 computer to go down-market in some of these countries. We have to engineer (PCs) to be lighter and cheaper," he said.' Does he think that cheaper hardware will make copying software harder to do?"
When Google integrates an OS as their service. Imagine that one-day a Google like service where you turn on your computer and it connects to Google without any local OS (other than a BIOS and hopefully the BIOS is the Open Source one). Your files, settings and information are stored on the service. Sure you could have USB drives locally to store private info if you desire. But I wonder what Mr. Ballmer would say to that lowest of low price cheap hardware? You could take the money that would have been spent on the OS and allocate that to help pay for the service. At $100/12 = $8 a month; even at $300/12 = $25 per month - not bad having a use anywhere service whereby you don't have to maintain the OS or the Hardware.
He's really grasping at straws, isn't he? Anecdotal evidence suggests the exact opposite. When the price of hardware goes down, the market generally demands that software costs go down as well. That's why there's so much griping about Windows being large chunk of computer costs these days. I've even heard people use that as justification for pirating software! ("My computer only cost $500, so why should I pay Microsoft $250 for Windows?")
In addition, many people seem to be particularly upset that they're forced to pay Microsoft enormous sums again, and again, even if they don't want to. In other words, people feel like they've already payed Microsoft their dues, so why should they pay it all over again? This has the effect of delaying upgrades until new computers are purchased, with businesses being the primary exception.
Because of Microsoft's stranglehold on the market, they are able to rope companies into upgrade contracts that extort payment for new versions. Under these contracts, failure to upgrade results in higher costs for later upgrades. So much higher that it makes more sense to upgrade now rather than later. Could any other company pull these sorts of strong-arm tactics? Of course not! In any other business, you'd find a competitor and switch to them (or at least use it as a negotiation tactic).
Let's hope that the rise of Mac OS X, Linux, Novell, and Sun as desktop competitors will finally provide a viable choice for both home and business.
Javascript + Nintendo DSi = DSiCade
OK, give me a $100 computer, but I'll still refuse to pay for Micro$oft crap on my computer!
It's absolutely amazing that the head of one the biggest corporations can publcily say something so totally and utterly stupid.
In other news, it was announced that speeding was primarily due to long roads. Starting next year, all roads will be shortened by 10% and this should achieve a 10% slowdown in highway speeds.
Agile Artisans
When you can buy a pretty good OS-less computer at Walmart.com for around $250us, that's pretty good. No, BALDmer, we need cheaper software.
So I buy a $100 PC, but then need $700 for an OS and desktop suite (WP, spreadsheet, et. al)? Steve, put down the pipe, you've been hanging out with Darl too long.
Or is this a sinister MS plot to get people hooked on cheap PCs, then use a subscription $9.95 a month model to 'rent' the software?
I want to delete my account but Slashdot doesn't allow it.
PCs are cheap here. You can get an entry level PC for less than $500. Still there's piracy.
Look at the Palm or mobile phones. Cheap cheap cheap. Still there's piracy.... and a lot of those programs only cost $5.
The cost of hardware and software have nothing to do with it. If there's a way to get a "free copy", some people will always go that route.
MS's problems aren't because they don't understand security, or customer satisfaction, or that monopolies are held to a different standard..
It's because the people in charge live in a different universe!
You have something with almost zero marginal cost, and mark-up measured in thousands of percent, and he thinks the problem is because the *hardware* (which has a large marginal cost, and has mark-up measured in the single-digit percentages) is too expensive?
Sweet Jebus, software is pirated in third world nations because the software is too expensive.
I wonder what color the sky is in his world?
I'm sorry, but less than 24 hours after a story here discussed the pirate industry in Russia, and made the point that the average monthly wage is $240, and some software licences cost $600, comes this?
Please. Cheaper hardware is going to exacerbate the situation by providing even more poor people with the desire for new software that the can't affoard. The only solution is to take computers from poor people. I'm joking, but I hope you can see my point...
He may look like Young Frankenstein, and dance like Elaine Benes, but the man is a shrewed business shark. Either what he says is true, or more likely it is a "FUD" plan by Microsoft to achieve some sort of effect that we are not discussing here. From my point of view, however, his statement makes no sense at all.
Don't blame Durga. I voted for Centauri.
A $149 PS2 didn't stop GTA: San Andreas from being pirated.
It's a sport for the crackers, often easier than buying for the consumers and always cheaper. So how is paying for software to compete with getting it for free and without leaving the house?
Umm, Steve, it's partly your fault people need faster hardware? Each new release of MS {Windows,Office,Whatever} needs bigger and bigger specs. If Windows Longhorn ran faster than Win XP on the exact same hardware, the base price for new machines would drop due to natural market pressures. Instead each new release inflates the system minimum requirements which naturally inflates the cost of a baseline system.
Disclaimer: pretty much all of the computing industry, including open source software, are constantly requiring more and more powerful CPUs.
is because Microsoft now has cheaper versions of the software available to put on these cheaper PCs. The stripped down versions of Windows, for instance. It would certainly be hypocritical to say PCs should cost $100 when the OS itself costs more.
And the reason for this, after all, is to open up the low-end market so that Microsoft can tap that revenue source. After all, if they offer something for $200 normally, and offer a strip down version for $50 such that people can afford it, it's still better than getting $0 because people can't afford to pay for it and end up pirating it.
The funny thing is, from a certain standpoint, Microsoft is actually NOT trying to stop piracy (the official line is always to be anti-piracy, of course), but Microsoft probably realized that their software will be pirated, and in some ways, this loss leader in the emerging markets should strategically be allowed. Because then, Microsoft will dominate even more, especially where Linux is popular. On the other hand, Microsoft can't grow that market if the people cannot afford to pay for the hardware. Keep in mind that Windows is as dominant as it is today partly because it was easy to copy Windows. They could have put really difficult schemes to prevent piracy, but they didn't, because ultimately, that's not how they make their money anyway. They make their money by having dominance and then sell software based on it (Office, for instance).
And in the future, Microsoft want DRM and they want to do transactions. They want more people on the internet using windows, and the way they can get that is to have as many people as possible with little cheap boxes that run some form of Windows that can at the very least access the internet so they can spend money through Microsoft channels.
This, of course, is nonsense.
They are asking "How can we stop piracy?" when what they NEED to be asking is "How can we increase sales?" These aren't equivilent questions in the least, but they seem to believe they are. We all read that story about piracy in Russia. If a single $15 CD costs approximately 1/4 of an average citizen's weekly pay there, there is simply no way in hell they're going to be paying $200 for MS Office. EVER. Doesn't matter how frigging cheap you make the computers, even if you give them away in very large cereal boxes, the people are NOT going to spend half their month's paycheck on a piece of software.
This will not hold true in ANY scenario. Ballmer & Friends appear to believe that if they eliminate piracy, copies of Office will fly off the shelves. Even if they did manage to make a copy of Office which was 100% unpiratable (for the sake of argument), that wouldn't spur sales any. The people would just start pirating some other piece of software, or use OOo.
The *only* rational solution to the problem is to drop software prices. The ONLY one. No other solution has the potential to actually increase software sales. (which certainly should be their goal, unless they've given up on actual profit in their eternal search for scapegoats) Yet that's the one measure Ballmer says they will NOT implement.
Interesting, huh?
My theory, incidentally, is that Microsoft is terrified of these hypothetical localized copies of their software leaking into the mainstream and selling at a discount. That's why their cheap XP-lite is so crippled. It doesn't HAVE to be, but they're so protective of their market share that they're unwilling to risk it in any way, even at the potential benefit of even more markets.
Either that or, as I said, they've become so focused on pirates that they've forgotten to actually do business in the meantime.
Bush: He's Liberal in all the wrong ways.
IT budgets are finite .
IT budgets typically cover hardware, software, and (sometimes) services.
Services are not much of an issue since that typically comes from staffing. It's a lot easier to shift capital money from HW to SW purchases than to shift expensed money from staffing to purchases.
MS doesn't sell hardware. Well, they brand keyboards, mice and xboxes. But that ain't where they make their nut.
Therefore, it is desirable that the entire IT budget be allocated to software. Hardware has to go.
Hardware has to go. QED.
Ideally, MS would prefer that IT budgets are spent entirely on software licenses, and no hardware at all. Without actually installing the software or even opening the boxes, there would no concerns about tech support, liability, or piracy for that matter.
"Reality is that which, when you stop believing in it, it doesn't go away." - Philip K. Dick
Ballmer is clearly out of touch with reality on this. Cheap hardware will not change the software piracy problem a whit. Why do people pirate software? Because operating systems run $80-$120, Microsoft's Office suite costs $450, Anti-virus runs $40-$80.
These ridiculous software prices, the constant need to upgrade and relicense and pay the same prices over and over and over -- that's what drives people to pirate software. Or turn to open source software solutions. Microsoft's trash got tossed out of my house on its ear 5 years ago. Nuttin' but Linux and there are scant few things I can do without their virus propagation system.
> a $100 computer to go down-market in some of these
> countries. We have to engineer (PCs) to be lighter
> and cheaper,
How much cheaper can Microsoft expect hardware to get? It's almost costless as it is now.
The Microsoft OS is the real cost barrier. The cheaper hardware gets; the more folks will want an OS just as cheap. Microsoft will have to lower their prices.
When Microsoft lowers their prices then they will have to partition their market into full/higher cost solutions and chopped/lower cost solutions; this will give Linux a clear advantage because Linux can offer a fully appointed OS with no cost differential.
I expect Microsoft's momentum to carry it a few more years yet... but after that the energy will have bled off and people will begin to see the benefits of Linux more clearly.
Codifex Maximus ~ In search of... a shorter sig.
This solution exists for twenty years. It is called X terminal.
As for your questions
What if it's compromised
There was posted news on slashdot many times, that Windows system on broadband connection is going to be compromised in 20 minutes without qualified sysadmin supervising.
System offering public service would be supervised by team of qualified admins, so it is much less likely to be compromised.
What if it crashes
Do you have backup device capable of backing up your hard drive? Do you use it daily? What would you do if your system crashes? Spend a day reinstalling everything and loose data?
If public server crashes, it is likely to be fixed by its admins very soon, and your data restored from backups.
It is much more probably that your connection to this server would crash. And deprive you from working with entirely functional server. It is a drawback of OS-as-service solution.
And paying for something that's free now?
Are you sure it is free now? I'm running couple of X terminals home. One of them is more than 10 years old and never need hardware upgrade. But if I count all the money I spent upgrading my home computer last 10 years, it would probably cost more than $50/month. And countless hours administering the system. How much your work-hour cost?
But it seems to me that piracy is so rampant not because of hardware costs, but because software costs will nickel and dime you to death (obviously, this doesn't apply to OSS, so spare me the "OMG use Lunix!!11" responses).
-Firewall........$50 ...and that's just to start; basic sorts of things that a typical home user would have. Suddenly that $500 PC isn't such a good deal.
So, first I start off with the $300 OS.
Then, take a look at the other day-to-day software a typical user will (probably) need / want:
-Anti-Virus......$50 / year
-Compression.....$25
-Anti-Spyware....$25
-Image Editing...$200+
-Decent IMing....$20
-Office..........$150+
-Popup Blocker...$25
This is where it's headed. The Microsoft Tax paid monthly, or your machine turns into a 100% space heater(as opposed to 97% when running MS crap). Will be the best thing that ever happened to Desktop Linux (or other free alternatives).
I have the distinct feeling that this isn't true.
1) I have a work PC, a home PC, a laptop, and a work PC at another site that I spend half my time at. Why does that mean I have to fork out for 4 X copies of Windows XP to keep the corporate standard so that I can connect into the network?
2) People see the OS as an enabler for the hardware, nothing more. People talk about Windows, it's the standard, they don't like the idea of paying for it, as if it's built into the cost of a PC as far as many consumers are concerned. A lot of people don't realise that they are paying for it when they purchase a new PC.
3) People don't mind paying a percentage of the cost of a PC for windows e.g. 10%. Now, the cost of an OEM license of Windows is about 1/5 or more the price of their PC. They aren't willing to wear it.
4) People have forked out for Windows again and again and again. They really want something new that will really impress them. (As a community, we really need this ourselves on linux to boot MS out of the market but nevertheless) They aren't recieving that at the moment because of the whole thing about it being the standard...
Either way, they are seriously lost here.
IBM bought Unix and made AIX as an enabler for the hardware they were selling, the market hasn't changed. Microsoft had better realise this fact and fast.
Curiosity was framed; ignorance killed the cat. -- Author unknown
Software is going to become a commodity not hardware. Hardware already is pretty cheap even while hardware development costs and productions costs often exceed the costs of a disciplined software development project. Microsoft has two cash cows and almost everything else they make is a flop at least in part because they are not disciplined spenders. Office and Windows are gradually waning as all cash cows eventually do and that waning is increasing. The software market is undergoing a slow but very major correction in the form of FOSS. Because competition was blocked by a monopoly and because the equipment and knowledge needed to develop a competing product were relatively widespread would-be competitors reacted by building their product in such a way that Microsoft's bankroll it uses to compete (or anti-compete) becomes mostly irrelevent. You can't buy out FOSS, you can't sue it out of existence, you can't target any specific company or person in order to get rid of it. FOSS is a response to the heavy handed tactics of Microsoft and to a lesser extent it is also related to a number of other near-monopolies that developed in the software industry.
Windows and particularly Office cost way too much. One would never think that in this age of 3d-games and super computers in the home and screensavers that cure cancer that an unimpressive package that does word processing, spreadsheets, boring presentations, and a seldom used database would be sold for $400. They simply fought all their compeitors to death or scared them enough to stay out of that market.
Software is what is going to get cheaper. FOSS software makes it possible to get the most use out of each line of code by allowing it to be used over and over by different users who have different needs.
The ever shrinking cost of a low-end PC have already commoditized hardware to about as low as it can reasonably go given that hardware manufacturers are not going to waste their time building old parts to sell for pennies when they can build new technologies to sell at a higher price. Then mass market them at the midlevel and then drop down the price to move out the remaining inventory when they announce something new at the high end.
Some components can get cheaper especially when sold at retail chains like CompUSA and BestBuy where a hard drive still costs $80 no matter how small. Its their minimum hard drive price. You will often see a drive going for 80 or 85 and it will be double the size of the one going for 79.99.
With the advent of cross-platform toolkits like GTK+, OpenGL, and OpenAL, it's becoming much easier to write an application and make it cross-platform with minimal effort AND have it perform excellently. (As opposed to Java, which is a great way to piss off your user by hogging 250M of memory for a freaking IM client... God those were painful days before the TOC protocol and later gAIM. Anyone remember the nightmare that the Java AIM client was?)
retrorocket.o not found, launch anyway?
Mac hardware is more expensive than PC hardware (before any true believers jump on me, I'm not making any value judgement here). Yet Mac software is pirated disproportionally less than software for Windows. Yes, Windows is significantly more popular. Apple is said to have ~3% market share. But I would say there is more than 100 times more software packages that are more heavily pirated under Windows.
Balmer thinks that if hardware were cheaper, people would have more money left over. If people have more money to spend, they can better afford Microsoft software. Balmer thinks that if people could afford Microsoft software, then they would rather buy it than pirate it. He probably thinks that it is less of a hassle to buy software than pirate to it. There are people who think the opposite for good reasons.
However, like traffic tickets and sales tax, MS Windows is a regressive tax; it hurts the poor much more than the rich. The solution is to scale the price of Windows so that it is a fixed percentage (like 10% maybe) of the total PC cost, but with a max cap of say $200. Under this pricing scheme, a $300 PC would cost $330 if you wanted Windows on it. A $10000 PC would cost $200 if you wanted Windows on it. That would make Windows more affordable in developing countries where cheap PCs are in high demand.
As far as the big picture is concerned, what Balmer ought to consider is what _Microsoft_ does that is wrong and evil. Exploiting the poor is evil. A lot of people simply don't realize just how _evil_ exploitation really is because they haven't lived in 3rd world countries. Strongarming businesses is also wrong. Releasing insecure software which forces IT folks to spend countless hours dealing with spyware, viruses, and/or trojans is evil too. No wonder Microsoft has an image problem!
I think the main reason why OEM hardware manufacterers still don't sell PCs with no OS installed is because Windows allows them to test their PC's hardware. This comes in handy when you have to provide support for your product. Instead, what OEMs should do is include test software on a bootable CD that tests all the PC's hardware. What do people think about this?
Software is pirated because it CAN be pirated. You're gonna have a hard time pirating silicon. This is the prime difference between SOFTware and HARDware. Trust this, if Linux weren't open source, people would pirate it. People pirate software they will never use to it's full extent either. I wonder how many people have pirated copies of Autocad that they really don't know how to use at all. How many pirated copies of photoshop are used just for resizeing and converting image types? Why do people steal things? That's a real question. They steal what they think they "deserve". It's a real bullshit mentality. At least in the case of stealing Windows XP, people really do get what they deserve. Sorry I'm going on so long here, but new ideas keep popping up. Yes, I'm suffering from post before you think right now. Maybe it boils down to laziness. People will steal Windows XP before they learn to run Linux. People will steal Photoshop before they find out what other options that exist for less money or for free, as in The Gimp. So, who are the real assholes? Sure, Ballmer makes some pretty outrageous statements and basically exists to ruin the good names of the software developers and geniuses that work for him. But, the real assholes are the unwashed masses that allow companies like Microsoft to make products that actually push up the cost of hardware by being bloated and full of useless "features". Let's face it, without customers, a company means nothing. This is not to let MS off the hook entirely though, they do everything in their power (too much power) to keep customers "loyal". As stated in Full Metal Jacket, "It's a huge shit sandwich, and we're all going to have to take a bite." But that's not entirely true either. Believe it or not, Microsoft actually "helps" open source users by forcing an increase in the power of hardware systems. My Linux box really flies on some pretty cheap hardware. It's just a P3 1GHz/512MB RAM/GeForce 5200 and it runs great. Most people wouldn't even purchase a system with those specs if they saw it in a store. I'll tell you what, I bet it runs better than most P4 systems sold with windows in most cases the average user comes across. It's not that I can't afford a fast computer, I'm writing this on a G4 Aluminum PowerBook, a computer I was proud to pay a ton of money for. Anyway, Ballmer, you may be right, statistically, but philisophically, you're dead wrong man. Matt
If this was true, mac users would be pirating "more" than PC users because their hardware is more expensive right? Funny how it seems to be the other way around.
Jesus was a compassionate social conservative who called individuals to sin no more.
And by user-friendliness, I believe the parent means UI. It's easy to find programmers who are willing to contribute to OSS, because that's part of our mindset - most of us are damn near obsessive with computing because we love it so much. However, to find a graphic designer or a UI designer willing to give his or her time to an OSS project, that's a little tougher to find. Consequentially, you end up with extremely powerful software that has a steep learning curve and an oftentimes frustrating interfce.
The parent gave a perfect example - GIMP and Photoshop, but you can extend this analogy even farther into Windows vs. *nix in general.
Maybe the way for OSS to be successful is to be cheap instead of free - the backends, done by the people for whom coding 9-5 just isn't enough, released under some free public license (not sure if GPL would work), and the frontends done by graphic and UI specialists, who charge for the software, but not nearly as much as regular commercial software (because the developments cost are so much less).
Oh, and Denile is a river in Egypt. "Denial" is a bitter surprise.
This should be a wakeup call for hardware vendors to DROP M$ LIKE A ROTTEN POTATO .
They've just come out and said, you guys don't provide value to the equation, we do. We want the biggest part of the pie.
The Dells and Gateways of the world can still make their piddling single digit margins selling their hardware the penguin people just as well as 'doze users. (Hell, if they don't have to pay the M$ extortion, that's more money for them).
Microsoft, on the other hand, has nothing else to offer. They must convince consumers that they provide some sort of value for their money.
The only way M$ can make a rational argument for this is in a package lease kind of deal, where the customer coughs up $25 / month. Out of that, the pie has to get split up among : 1) the hardware provider, 2) the ISP, 3) the software providers.
First he says that iPod owners are all theives (which is weird, because most of the music purchased online goes onto iPods), now he's saying its the hardware company's fault that his product is pirated.
Let me set this straight for you, B-man. The reasons for these two phenomenons are VERY similar:
1) People mainly pirate music because almost NO ONE feels that a CD is worth $17. Its price gouging, its unfair, they stifle competion, and the record company fatcats are getting disgustingly wealthy by ripping off artists and the public while pushing a mediocre product.
2) People priate MS software because almost NO ONE feels that their OS is worth $300, and almost NO ONE feels that their Office package is worth $400. Its price gouging, its unfair, they stifle competion, and the coporate heads are getting disgustingly wealthy by ripping off coders and the public while pushing a mediocre product.
Clear? Good.
There's nothing stopping OSS projects buying a fancy pants design from a professional and releasing it under the GPL - if you give a designer (espescially new ones with zero reputation, who'd love to list your app in their portfolio) enough money for a design he'll give you the intellectual property rights in it, and if you choose to release your IP rights under the GPL, there's nothing anyone can do to stop you.
excepting lawsuits
Face it folks.
You can get a descent PC for $899 including an lcd monitor.
Add $300 for Windows and $499 for office and half the price of the pc is for Microsoft sofware!
Balmer is soooo full of shit and he is trying to make a lie become a truth.
If I can not afford more than $900 for a new pc do you think I am going to pay these outrageous fee's for software? I am just going to install BSD or if I need Windows, pirate it. Plain and simple.
In 1995 MS office cost $175 while the average cost of a pc was around $1800. Do the math with costs?
Now the percentage is approaching 50%!
http://saveie6.com/
20 years ago:
Hardware:
5MHz CPU
512KB RAM
20MB HDD
14" monochrome CRT
Total price: $3000
Software:
MS-DOS: $60
Operating system = 2% of total cost
Today:
Hardware:
2.4GHz Celeron
256MB RAM
40GB HDD
15" SVGA LCD monitor
Total cost: $500
Software:
Windows XP Home OEM: $100
Operating system = 20% of system cost
The price of the OS has increased by an order of magnitude relative to hardware costs... and the cause of piracy is expensive hardware? Pull your head out, Ballmer.
Now, let's see: I want to get MY work done.
My clients are in video, audio, web, and print. I need:
Adobe Photoshop
Adobe InDesign
Adobe Illustrator
Macromedia FreeHand (because I like to work in it better than Illustrator)
Macromedia Dreamweaver
Quark Xpress (for cranky or fussy printers who are still runnning Quark 4 on OS9 or 2000)
Macromedia Fireworks
Macromedia Flash
Ableton Live (for music development)
Adobe Audition (for Windows based destructive editing)
Propellorheads Reason (for composition)
AVID DV Express, Pro edition (for video)
Adobe After Effects
Adobe Premiere (because it comes with the Video Bundle)
And, of course, MS Office
TOTAL COST OF SOFTWARE?
Assuming I buy most of it in Bundles (Adobe Creative Suite, MM MX suite, etc.) I come out to a rough number of:
$7700
At that point, a $1000 computer is one of THE LEAST of my expenses. When you bring in a DV camera, a decent audio ADC, Firewire RAIDs, scanners, printers, and similar crucial items, a $1000 computer becomes even less of a cost to the total operation. A $500 computer becomes insignificant - heck - it's almost impossible to find a decent multichannel audio ADC for less than $600.
Ballmer is COMPLETELY wrong, or, more likely: HE'S LYING. SOFTWARE is the expensive item, followed by peripherals. The last item is the computer. The expensive part of the computer is not in its cost, but in configuring it to one's needs, which takes time (which is extremely expensive) software (which isn't cheap) and peripherals (which can be cheap or extremely expensive).
RS
Shoes for Industry. Shoes for the Dead.
How about Linux on a Xbox? If Microsoft is losing money on the game console and expecting to make it back on game disks ala the Gillette Biz Plan, then Linux on Xbox would be the death-of-a-thousand-cuts!
Apocalypse Cancelled, Sorry, No Ticket Refunds