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Google is Microsoft's New Open Source
Robert writes "Steve Ballmer told investors recently that Microsoft's biggest challenge is embracing software-as-a-service business models, as
embodied by rival Google Inc. Investing in software as a service and advertising-supported businesses is a challenge
like that which the company faced at the dawn of the open-source movement. To paraphrase
him heavily, the takeaway was: Yes, we're investing a lot, but it's riskier, long-term,
not to do so. We have a lot of cool stuff coming up and, yes, we are also playing catch-up
on a couple of fronts. His speech came a
month after Microsoft revealed that its R&D budget for fiscal 2007, which ends
mid-2007, would rise to $6.2bn." From the article: "We've
got to make this transition, which our industry is making, from software as a product to
software as a service ... If you want to be a leading software
company, you've got to be a leading software-as-a-service company."
Microsoft has real competition, forcing them to develop better, more competitive software. Downside?
Excuse my speling.
Making The Bar Project
Ever the follower, never the innovator.
Go ahead and call me unreliable; reliable is just a synonym for predictable.
Microsoft will gladly embody software as a service. Infact, it might as well be their idea, as they are going to be generating much more revenue by doing this, effectively screwing the customer who has to pay more for the same poorly written MS code, and the customer will be more along the lines 'renting' the code since the eons of service renewals will never relent.
The 'software as a service' structure could be one of the worst ideas ever. Google offers actuall services, to mix it up, Microsoft on the same terms would be taking the whole idea out of proportion. You don't want to have to, essentially, RENT Microsoft Exchange Server, for example, would you? As compared to Google, the software they do distribute is completly free.
This is vaguely similar to the RIAA, etc wanting us to merely rent music, or repurchase it in a new format every so often, instead of owning it outright.
Music as a service. Software as a service. What's the difference?
"It is a greater offense to steal men's labor, than their clothes"
RE:"In Soviet Russia, the government controls the commerce."
:p
In Capitalistic society commerce controls the government
Politics is Treachery, Religion is Brainwashing
Maybe they will throw a couple hundred millions at wine, make their own distro and then offer services around it? I doubt they will do that soon, since that would hurt their bottom line for the moment. But as soon as the other business model promises more profit they could be able to make the switch if they are prepared. As far as I understand they are getting ready.
So maybe it is not time to dump your MS stock just yet.
Like with the Xbox they would enter a competitive market. Maybe then they will make better products. At least they should be able to, considering all the brain power they are sucking up every year.
A hammer is not a "service." A paintbrush is not a "service." A car is not a "service." They are tools. And, unless people use them very infrequently, people don't rent their tools. They buy them so that they may own them. Software follows this analogy to a very high degree. Software is a tool and, as such, the market for "rented" tools is way way smaller than the pundits are predicting. This will become even more true as Open Source solutions continue to make inroads and force aside overpriced proprietary solutions that are buggier and offer almost no extra compelling functionality.
Microsoft does know how to Pwnz0r and expand existing markets but, so far, they have largely failed to create new ones. Software-as-a-service is a dead end, especially for a company the size of Microsoft.
Schwab
Editor, A1-AAA AmeriCaptions
It seems microsoft has been pushing this for the last couple years.
A monthly subscription software as a service model won't work that well, especially if microsoft is dumb enough to actually charge their monthly(or yearly, whatever) fee for windows itself. I don't think microsft would ever be that stupid but, things can change. Either way I don't think it would fly well with consumers who already pay an arm and a leg for M$ Software(which is mostly crap anyway) to pay for it again and again. Anybody who does the math will disagree with this software as a service idea, unless they have cash lying around that they are willing to waste.
Do the math:
$250(this can be higher of course) now OR $20/Month (really low estimate)
$20 * 12 Months = 2*10 * 12 = $240 / year !!
if they charge $50/Month: 5*12*10 = $600/year !!
I think many will see this as a bad idea, and there will also be some willing to pay that much but as a model I think it will fail.
What's with all the rants about renting software. That's hardly the point of the article or service-based software.
Service based software has many revenue streams and powerful advantages. First, it'd be great to have a virtual desktop that followed me whereever I logged into. Not only do my files follow, but I can login to a kiosk and actually edit my Powerpoint before a presentation (without the danger of locally saving it). This is a great model (with enough bandwidth) that facilitates collaboration and mobility.
Second, many companies are already paying through the nose for a similar model. We pay hundreds of dollars/year/user for PC service support with software. Many folks only occassionally use the MS apps, but we have to buy licenses for each PC. It would be FAR cheaper if we could centrally host the applications and pay by usage. And this would also enable us to automatically backup files and allow users to access programs from home. Users often lose data when their desktop crashes. No more with service-based software!
Third, look at the Turbo-Tax model. It's $70 for the desktop version (PLUS electronic filing fees) and $20 online with FREE electronic filing. The service based model would be similar. Pay $500 for MS Office or $40/year to use/access the same thing. It's likely to be MUCH cheaper.
Fourth, they'll also license it to folks like Google who will then provide it to us for free (or VERY cheaply as a premier member) as a service and part of their total desktop management.
Just wanted to point out that there's many good things about this. Dismissing anything MS does simply because it's MS totally misses the point. Sure, it could (and might) suck, but it could also be a great thing.
You make an interesting point. The customer isn't going to accept SaaS unless there is a price incentive to do so. Otherwise, the customer keeps what they already have (Office 97 in some cases).
SaaS comes at the expense of traditional shrink-wrapped products. I doubt MS would never allow itself to fully commit to SaaS. I suspect their involvement is to limit the ambitions of others. They want to do just enough to discourage would-be competitors. Otherwise, they cannibalize their own revenue stream.
In theory, satellite TV should kill cable. Yet the plans and pricing are such that cable lives on, despite the high cost of all that copper and fiber. They try very hard to avoid competing with each other. Maybe the MS SaaS strategy is along the same line -- exist as an alternative, but not such a good one as to hurt the shrink-wrap cash cow.
Or maybe it's a way to deal with open source. Find a way to sell something that open source can't give away. As we all know, it is quite possible to give away software, but giving away SaaS is not going to be scalable like OSS.
I'm 100% in favor of people selling what they have to sell on their own terms. And if no one wants to take those terms, they sell nothing or change models. But I get suspicious when people say "let the consumers decide if they want X or Y" and Y is blatantly inferior to X.
When millions of people seem to be choosing crippled, severely restrictive products over comparable ones that are unrestricted and cost less, you have a prima facie case for some sort of market failure, or anti-competitive activity. It could well turn out that the products are not actually a good substitute and the case is dropped.
But no one would choose to have a broadcast flag limiting how & whether they can time/space/format shift the entertainments they purchase. Why do we all just assume the market is working fine, and this is one of those valuable things being put up for sale. The latest rms-bashing piece suffers from this lack of common sense. Your post doesn't necessarily suffer (but you could have made things clear by say '$x' and '$y'. The prices for the two options would vary -- greatly, if the market's working right).
My turnips listen for the soft cry of your love
MS sells primarily Windows and Office. As I understand it, that's where their primary revenue comes from.
Windows 2000 or XP should be good for a long, long time. Remember Ballmer's famous "developers developers developers"? What's implied in that is that the developers want to reach as wide of a target as they can - that's why they're writing for Windows in the first place. The wider the target, the more software the developers sell. In short, to be operable on all flavors of Windows. Just last year I worked on a product and as part of QA we had to verify that it ran on Win95! Versions A and B!
So IMHO, that pretty much makes Vista optional - and it's going to be for a long, long time. Unless MS figures out some amazing way to get the developers to aim for a smaller locked-in target. I mean, think about how many machines are out there running XP today. How is MS going to tell all of those people to stop it, upgrade, and start paying MS rent?
And as for Office, if it's on a pay-as-you-go model, no business will stand for that for the same reasons. Again, they're competing against earlier releases of Office. And OpenOffice. Soon as a halfway competent accountant runs the numbers, the pay-as-you-go model will be avoided.
I'll betcha Vista and pay-as-you-go winds up being Microsoft's next Windows ME. Nobody will touch either with a ten foot pole.
Weaselmancer
rediculous.