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Microsoft Sees IBM as Biggest Threat
Anonycat writes "Bill Gates gave an interview at the Consumer Electronics Show, claiming that IBM is the rival company Microsoft has their sights set on. From the article: 'People tend to get over focused on one of our competitors ... We've always seen that ... I'm never going to change the press' view
about what the cool company to write about is. That's Google number 1 and
Apple number 2 ... [IBM has] four times the employees that I have,
way more revenues than I have.'"
Begging Bill's pardon, but Microsoft's attitudes and practices are their own biggest threat.
Over the years, Microsoft's biggest threats have been:
I've heard Bill talk at a CES a few years ago and between the words, you could most definitely hear him placing Microsoft as not a technology partner to consumer electronics firms, but as a direct or indirect threat to their product lines and/or ways of doing business. While he waxed enthusiastic about how Windows CE would be some great enabling force, you could almost hear people break out in a sweat wondering what "Microsoft-tax" they would encounter to hop on or compete with the Redmond bandwagon, whether it actually added anything truly positive. I'm positive more than a few show exhibitors could almost see him in a pinstripe suit with a couple gunsels behind him and a moll on his arm.
<James Cagney Voice>
"We're the new business men in town, see? And you're going to like doing business with us, see? Because when you do business with us nobody gets hurt, see? Yeah. I think you do see. That's very good. Very good for business."
</James Cagney Voice>
Bill most likely sees threats to his company because he cultivates them. Microsoft has profited at IBM's expense for the past 20 years. Why shouldn't IBM be competing with Microsoft?
"We have met the enemy and he is us." -- Pogo
A feeling of having made the same mistake before: Deja Foobar
I can see Gates' point. If IBM continues to flex its muscle with OSS and releasing IP for OS use, it could have a very negative affect on Microsoft. But on the other hand, dismissing google is just FUD.
My
They also have way more expenses than Microsoft from what I've heard.
I mean... how can he expect anyone to believe this. Just a month ago in an Television interview he accepted google as its main RIVAL in the coming times because of its high number and quality of innovations. He also vowed to beat google out of search engine market... I guess Bill is having Nightmare... amnesia these days.
That's the thing. When Bill speaks at these shindigs, everyone listens. I was lucky to get a seat when I was there. I don't think people go to see what great marvels he and his people behind the curtain have rigged up (and whether or not it will fail most spectacularly at the worst moment [blame it on cell phones, nobody in a real business environment is going to have those] *snicker*) They go to hear whether or not Microsoft is going to make a move on their turf.
So look over that way. And pay no attention to the man behind the curtain.
Yes, because the man behind the curtain has a chair and he's going to f**king kill you!
A feeling of having made the same mistake before: Deja Foobar
In other words, where Microsoft's bullying business tactics don't have a way in? What think ye all?
...Open Source isn't the only answer -- but it's almost always a better value than the alternatives...
Then there's google.... Also a Linux user/proponent.
And apple insists on using Open Source (BSD) too....
So Microsoft's top-3 opponents are Open Source friendly companies.
See a pattern there?
Sometimes boldness is in fashion. Sometimes only the brave will be bold.
The lack of splits is why the price of any individual share is so high; but it doesn't excuse the inflated total capitalization. According to the market, Google is worth 132.5 billion dollars; but is it really worth more than IBM or Coca-Cola, and almost three times as much as Disney?
Tarsnap: Online backups for the truly paranoid
Agreed, .... hint ) so you don't bet bogged down with license costs while you get the maximim value for your service expenses. The consultants who got nailed during the dot com crash have already learned that lesson the hard way. Both Linux and MS professionals got nailed hard, but the Linux experts recovered while the MS ones never really did.
IBM is a hardware and services company, Microsoft is a proprietary software vendor. If you want to maximize your profits from service standpoint, the best route to go is to have a non-proprietary infrastructure ( like Linux
So anyone think that if Google or Apple were the top competitors Gates would acknowledge that and give a boost to the underdogs? It's more beneficial for MS to play the underdog itself and acknowledge IBM as the top competitor.
I think most of you are failing to recognize that Google is competing against only a tiny sliver of Microsoft. Note that a large majority of Google's employees are devoted to their search engine technology, whereas Microsoft operates in MANY different markets, and MSN Search is only one of them with less than a tenth of Google's corresponding group in employee count. Seeing as how all the rumors about Google planning for their own office suite etc. have been debunked, I don't think Google is as big a threat as people think it is.
IBM on the other hand, is the largest service sector company and the largest IT company. IBM's rock solid line of servers provide a much larger push for Unix-based systems (not just IBM's AIX, but really any of them) than does Google's use of FOSS in their products, or Summer of Code. Furthermore, IBM is by far the strongest presence in the HPC market, which as Bill indicated previously, is something MS wants to get into. We've also seen that IBM consistently produces great software (DB2, Business and Commerce software, OS, Application Server, and much more) as well as hardware (their hardware line includes complete server solutions, processors, storage systems, etc.) and is capable of using only its own products end-to-end.
Thus, it is appropriate to say that IBM is a bigger threat to MS than is Google.
PS: Google's market cap is not a reflection on its strength or presence so don't bring that up as a figure plz.
Microsoft has a pair of businesses that currently yield ridiculous profit margins, Windows and MS Office. IBM has quite a few businesses, some of which are also ridiculously profitable, but most of which are merely very profitable. The most important of these businesses, in recent years anyway, is IBM's service and support business. Service and support will never generate the profit margins that Windows and MS Office provide, but it's a good business nonetheless, and it is a business with critical strategic importance. Here's an example of why IBM is truly Microsoft's biggest threat.
Let's say, for example, that you are the CIO of a really big company or a large government institution, like a U.S. State, and you are concerned about what it is going to cost to upgrade 50,000 machines from Windows 2000 and Office 2003 to Windows Vista and MS Office 12. What's more, you would really like to have one central repository for all of your documents. Something that integrates with email, has a web portal, and is easily accessible to thousands of workers at the same time. So you talk to your service and support vendor (IBM), and you ask your rep what he can do for you. Well, it turns out that IBM has this nifty new portal software called IBM Workplace and it can be used with OpenOffice.org for a fraction of the cost of upgrading to Office 12. What's more, the software is compatible with Linux thin clients and so if you have desktops that don't need a lot of bells and whistles you can replace those expensive PCs with easy to manage thin clients and save a bundle. Not only do you end up with a better system overall, but you save millions of dollars in Microsoft upgrades in the process. What's more, IBM has the resources to guarantee that you don't have to worry about whether the system will work or not. The system is going to work slick. In fact, IBM is probably going to be willing to cut you a deal on the software so that IBM reps can use your installation as a showcase.
Part of the reason that Microsoft can make such ridiculous profit margins is that Microsoft relies on its partners (like IBM) to carry the expense of actually selling and supporting Microsoft software. Microsoft made a conscious choice to stay out of the sales, service, and support businesses for its software because these low margin businesses would have lowered Microsoft's aggregate profit margins dramatically. Microsoft could have become like IBM and built its own service and support arm, but instead it concentrated on the much higher margin business of selling software licenses. That worked fine in the past, but IBM makes software as well. Now IBM has every incentive to cut Microsoft out of the picture in every single one of IBM's many service contracts. Thanks to Microsoft's ridiculous profit margins there is even plenty of fat to cut.
That's why Microsoft has been concentrating so heavily on its service, support, and sales arms. Microsoft has finally realized that its primary customers (OEMs and sales and service organizations) all would be better off if there was a little more competition in the operating system and office suite markets. So now Microsoft wants to start dealing directly with end users. Unfortunately for Microsoft it can't move too quickly because if it does it risks alienating partners that it needs very badly. If Microsoft is successful the finished Microsoft product will look a lot more like the IBM of today. If Microsoft is unsuccessful then it will probably die.
Google is really in the same boat. It currently can demand high profit margins because of the amount of traffic that it can drive. However, Google's success is predicated entirely on Microsoft not using its desktop and web browser marketshare to drive more search results its way. To compete successfully with Microsoft (and Yahoo) in the long run term Google is going to have to invest plenty more.
The threat became apparent when IBM and/or Novell began asking for discovery regarding the Microsoft purchase of an "Unix" license from SCO to the tune of tens of millions of dollars.
If IBM can prove that Microsoft funded the frivolous SCO lawsuits then Microsoft is in deep, deep trouble. It could easily cost them billions of dollars and some executives could see jail time.
We don't see the world as it is, we see it as we are.
-- Anais Nin
Does MSFT make chips? No. Does MSFT make most of thier money from XBox? Any, even?
That brings me to another point, shouldn't IBM be suffering pretty hard now that Apple is moving to Intel for its chips? That must have been a large source of income for IBM
Not according to IBM, and it's probably true. They didn't even make all of the chips Apple uses/used... Freescale ( formerly of Motorola ) still makes the G4s that are in all Mac minis, iBooks and Powerbooks. IBM only supplied the desktop iMac and PowerMac G5 chips. IBM screwed up targets for the G5 badly enough ( remember they were supposed to be at 3 GHz *when*??? ) that they might not have been making much at all depending on what the Apple contract looked like. For whatever reason, volume or contracts, IBM by all accounts won't notice Apple is missing, at least not until Apple sells a lot more high-end desktops that might have used IBM chips.
MSFT properly sees IBM's software business as supporting it's chip business, not the other way around, and would be all too happy to see IBM shift toward the chip business... as a client of MSFT. They're not a competitor in that field. MSFT will not, however, be buying consulting services and Linux blade servers from IBM - they compete in the software and services fields. Apple needed a chip supplier motivated to create great laptop and desktop chips; buying from suppliers who are primarily invested in small devices ( like routers ) and room-warming servers ( like Power blades ) wasn't getting them what they wanted. By all accounts, IBM and Freescale lost a difficult customer and a little bit of clout, but not a lot of revenue, when Apple left ( or well, leaves, it hasn't actually happened yet ).