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UK's Biggest Supermarket Challenges Microsoft
An anonymous reader writes "The UK's equivalent of Walmart is taking on Microsoft in the software game. Tesco is famous for it's cheap 'value' food, but it's now offering 'value' alternatives to Microsoft's biggest products. From the article: 'Now, when you traverse the aisles in search of baked beans, sanitary towels and two-for-one packs of raw mince (hamburger), you can grab yourself a copy of Tesco Office (£20) — an alternative to the almost de-facto standard that is Microsoft Office — or Tesco Antivirus (£10), which is designed to keep your PC free of malware.' Tesco apparently 'takes one in every eight pounds spent in the UK'."
Then why don't they just use free alternatives from the internet. Open source or just plain freeware?
What a cool idea! Not only are they damaging MS's market share, but also breaching the idea of alternative software to the masses. Rock on.
who thinks that the vast majority of MS Office purchases (like 95%) are businesses? last time I checked, businesses didn't shop at Walmart or their equivalent when purchasing their software. Now perhaps Joe Random User might buy this stuff, but that won't put a dent in MS sales, other than perhaps the "Student Edition" of Office.
The more you regulate a company, the worse its products become.
Huh? Since when do companies make more money than they know what to do with? The profits are reinvested and/or end up with investors. And since when is it a "bad thing" for a company to turn a profit.
I understand the anti-Wallmart argument where 'the little guy' is driven out of business, but TFA is describing how Tesco undercuts Microsoft and (see 'update' at the bottom) major media outlets. It is acting as if competition between massive multinational, multi-billion dollar companies is 'mean' and 'not fair.'
That, to me, makes no sense. Competition in any marketplace is typically good for the consumers since it keeps prices at a reasonable level, forces companies to innovate, and forces companies to compete for customers!
I wish Tesco plenty of success in their attempt to undercut software in this fashion. If they can use their brand-name to get people to realize that software needn't be so expensive (and moreover to realize that alternatives are viable), this is a net positive.
The average person knows more-or-less what an office suite is for (typing letters, right?). They have probably heard or the Microsoft brand. They have definitely heard of the Tesco brand. They are unlikely to have heard of the OpenOffice.org brand, or the StarOffice brand, or the AbiWord brand (or whatever). They will go into a supermarket and see 'Microsoft Office: £200, Tesco Value Office: £20.' They will know that most other Tesco Value products are similar quality (sometimes slightly lower, but not too much) than their branded equivalents, and decide that it's not worth paying an extra £180 for a branded office suite to go with their £200 computer.
The Tesco Value brand used to just be for food, but it's increased a lot recently. I own a Tesco Value toaster; it was a sixth of the price of the one it replaced, and has lasted longer. They also make most other home appliances (washing machines, etc). Typically, they fall into the no-frills-but-functional category.
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Dunno, but if these guys are a Wal-Mart UK equivelant, then I wouldn't want their software anywhere NEAR my computer.
I'd be agreeing with you if not for two things.
1) Most users use the office suite that was bundled with their computer. Since most users buy their computers pre-configured, they already have their office suite needs fulfilled.
2) Most users who aren't savvy enough to download AV software are quite happy to run without it. They have no incentive to blow 10 quid on some fancy program.
I'm not saying that Tesco should be stocking OO and AVG and reaping the increased margins. I'm just saying that anyone who would be interested in a Microsoft alternative is already savvy enough to get OO and AVG on their own. Everyone else will stick with their bundled MS Works suite.
Because the UK media have been telling people "careful about what you click on when go online, there are bad people out there". People don't trust little weird geeky sites which assume knowledgeable users.
...). Hey I don't mind. Internal combustion engines confuse the hell out of me and don't even get me started on different washing cycles on the washing machines... technology eh?!
It's way confusing out there for non-geeks. It took me a long time to explain to my dad the difference between "being online" and "the web" (...the blue E button isn't the internet, dad, it's a program you can see some of the internet with, yes I know it's weird it's called Internet Explorer but it's not exploring all the internet
Lots of people trust the biggest supermarket in the country, it sells them food they trust, clothes they trust, and they sell computers these days. So they'll trust "Tesco software".
They're people who buy TVs, clothes, insurance (house, car and pet), credit cards, furniture, DVD players, internet access, mobile phones (Tesco are also an MVNO) and pretty much everything under the sun from a supermarket such as Tesco.
I'm actually quite happy to see this happen. For Windows users, there's a triumvirate of Microsoft (OS, apps), Symantec ('security') and PC World (for the purchases). For the layman computer user, It's always the same product, bought from the same places.
This model has existed (as far as I know, commenting just on the UK, since that's where I live) since the beginning of the current era of computer use. The potential for Tesco to disrupt this most certainly exists. Tesco have a good track record - profit has risen from £1bn/year to £2.2bn/year in just a few years on top of well-executed moves into offering diverse ranges and expanding abroad. This will raise some eyebrows at Redmond and Wherever-the-hell-Symantec-are-based. As I noted above, every 'walk-in' PC store here offers the same old stuff no matter what. Tesco will be exposing competing products in a way that the retail PC sector hasn't yet seen (over here, at least).
Sure, it's not Open Source, and the software may not even be all that good. But I can see it selling in large numbers.
What's the frequency, Kenneth?
They only found out that they had to buy Office as an additional component when they were unable to find it on their new PC and asked someone else for help. A friend probably installed a copy of Office 97 for them 5 years ago, and they haven't thought about it since. When the cost of a computer is a week's wages you're unlikely to want to spend another 2/3 as much again "just for some software", and Tesco have priced these offerings perfectly.
Stroller.
Wal-Mart has made their money in the grocery business in part by offering a purposely limited selection in order to drive down their costs. The last time I was in one I tried to find a mango and was met with both the absence of any mangos and widespread disbelief among the staff that such a thing as a mango even existed, which is probably part of the ploy to get people to accept the hobbled selection.
"Sacrifice for the good of The State" - The State
On a related note just how good/bad is Ability Office that Tesco are repackaging? Panda AV is ok, but does Ability (for example) read Microsoft Office files?
For the average non-business user, who cares? Provided you can write a letter to aunt flo then it's good enough.
But for food, walmart has the highest quality produce and the largest selection of packaged goods of any store within 20 miles, and it's the closest non-gas-station food source to where I live.
What is interesting is that Walmart thrives on knocking down less competitive stores and becoming the only one in a twenty mile radius. They completely avoid more urban ares because they can't compete. I've been to the nearest Walmart. If their produce is of the same quality as the one near you, and that is your best option, I truly pity you. I'm partial to whole foods whose quality is leaps and bounds beyond Walmart, for a miniscule amount more.
Their lawn chairs (and such) are the highest quality I can buy within around 50 miles, excepting the high-end places I can't afford where they would cost more than ten times as much.
The Walmart business model is to partner with or buy people with medium quality products, or a well respected brand name. They order as much from that company as all their other customers combined, forcing that company to build or buy new production facilities, often overseas. Then, once that company has loans to pay off on those facilities, they demand they lower their prices, every year running. At this point manufacturers are trapped. They can take a huge loss and try to get rid of their new facilities, or lower quality. Almost all of them lower their quality and cut corners. Fire the guys who write the instructions, we can just ship instructions for a model we made 5 years ago. Buy cheaper parts and forget about quality assurance. In some cases Walmart has recommended to companies with profitable, respected brands that they should just slap their name on really cheap, low quality imports. In any case, the result is quality that drops constantly for each product until it is cheap crap.
I know. I had a summer job assembling lawn mowers and the like for them. It was not unusual to need three sets of parts for a single machine, simply to get enough parts properly machined enough to actually hold together. For the most part, everything they sell is junk, not just clothes. I don't shop their out of pure self-interest. Luckily, I now live somewhere where I have a number of reasonable alternatives
Every little bit helps. Sentences need a subject and a verb. This one pisses me off almost as much as Apple's "Think Different". Different is an adverb! It modifies Think and therefore, should be differently!
Gah!
Aaaaaaaaaugh!
Khaaaaaaaan!
I drank what? -- Socrates
To be fair the tax treatment of dividends in the US was quite poor and encourage companies to avoid providing dividends.
Bingo. The tax structure in the U.S. favors gains in the share price over dividends, so as an investor, I would prefer that a company reinvest its profits (thereby hopefully raising the share price later) than give me the profit as a dividend, so that the government can come and screw me for most of it. Prior to 2003, there were situations you could get into where the tax rate on dividends could be twice that of capital gains. It's been ameliorated somewhat by the Tax Act of '03, but I think it's still somewhat more advantageous to have a capital gain than a dividend in the same dollar amount. (And even if it's not, many investors think that it is, which has the same effect.)
If you treated dividends the same way as capital gains are now -- or better yet, if you just treated all of them like simple income -- you would probably see investors demand different things from the companies that they hold, and the companies would respond eventually.
The real question is how do you want to encourage companies to be? Do you want to encourage reinvestment (and large-scale infrastructure development), or do you want to favor leaner "cash cow" corporations, which make a profit and turn it over to the investors more directly? I don't think that either route is clearly superior universally.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
Really, I know this sounds silly, but justify three choices. If you're going to offer people choices, and you want them to go to your site/ shop and pick one of them, then make it clear what differentiates the three. Otherwise people will choose the first one. Many people just want to type a letter, check the football scores on the web and buy something on ebay, email their friend. They don't give a damn that there are a 100 word processors/web browsers/mail clients out there.
Tesco DO have a rosier image than Wal-Mart in this country, but if anything they are in a more powerful position ; they hold a whopping 31% of the grocery market, something that Wal-Mart can only consider a wet dream, even in it's home country where it commands a "mere" 19% of the market. It is commonly said that of every £7 spent in the UK, one of them is spent in Tesco.
As great as OOo is, I can't see an organization that commercially powerful choosing to put it on their shelves as a product, as the competition can undercut them every time (download the same software for zero marginal cost).
Ability must be thanking their lucky stars though.
I hope so.
Their are using their strong market position in order to become a monopoly.
I will be redundant here, but I think it is necessary.
In the US there are places where you can drive for a couple of hours (hello Texas) and you will not find much constructed along the way.
In the UK you can drive for the same period and 95% of the time you are in view of fully populated areas.
That is why this shameless monopolical speculation is worng, ammoral and pehaprs even illegal.
IANAL but write like a drunk one.