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How Microsoft Beat Linux In China
kripkenstein notes an analysis up on TechRepublic detailing how Microsoft beat Linux in China, and the consequences of that victory: "With the soon-to-be largest economy standardized on Windows desktops, desktop Linux does seem to have an uphill battle ahead of it." "Linux has turned out to be little more than a key bargaining chip in a high stakes game of commerce between the Chinese government and the world's largest software maker... The fact that... Linux failed to gain a major foothold in China is yet another blow to desktop Linux. After nearly eight years of being on the verge of a breakthrough, Linux seems more destined than ever to be a force in the server room but little more than a narrow niche and an anomaly on the desktop."
(Of course there are many assumptions and guesses here - I don't think this is a serious economic prediction. But it does show the general idea.)
Two conclusions:
From TFA: Microsoft has made it easy for Chinese users to purchase legal copies by offering a $3 Windows/Office bundle to Chinese students.
I wouldn't be surprised if they still make a profit even at that low price.
-- Cheers!
Give the man a cigar!
I have gone through the Microsoft era, Unix era, Open Source era, Java era, and so on. YES I am a gray beard like the original grand parent poster. And if there is one thing that Microsoft has learned and keeps on propagating is that you can make money with Microsoft. This is not something to treat lightly.
I will give you another example; AutoCad. They are essentially the last standing CAD software. Yes there are others, but none as popular as AutoCad. Why? Well one reason is that you could copy it. BUT another bigger reason was that from day 1 AutoCad could be extended so that you could add value to AutoCad. AutoCad created an environment where people could prosper and thus secured their place in history.
Open Source did get one thing right in that they solved problems that people were having. Open Source did not focus on features. What Open Source got wrong is making money for people. The environment around Open Source is a cheapskate environment. Redhat offered Fedora because people stopped buying Redhat Linux. People did not buy software, and to this day still don't buy software. You have more people using for free than adding to the ecosystem, and that hurts!
Yes there are big companies using and supporting Linux. BUT add together the economies around Microsoft and I would not hesitate to use trillions of dollars. First you have Microsoft, then you have people selling software for Windows, then you have consultancies supporting Windows, then you have custom coders for Microsoft, then you have conferences, then you have trainers, etc, etc. It is an incredibly HUGE ecosystem that is profitable for everybody involved.
If you look at the latest incomes of the Open Source vendors it is down right disappointing after a decade of potential. For crying out loud Ubuntu is the result of a guy who made his money with something else and is supporting Ubuntu because he wants to have fun!
If Linux and Open Source REALLY want to beat Microsoft, then Open Source folks should STOP BEING DAMM CHEAPSKATES! I am sure everybody is capable of forking over 50 USD per year. If we use a conservative number of 1 million users world wide that would mean 50 million dollars income and that would mean a heck of a lot programmers could be hired to solve those darn user interface problems!
Do I buy and support software? Absolutely, as a matter of principle because I earn my money from software.
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
Except this year, they changed how they book those sales. In the past, they would spread 1/3 of the profits out over 3yrs. This year, they changed that to booking 100% of the profit at the time of the sale. Time will tell how this pans out, but it does not look like the moves of a strong company that is comfortable in its profit potential.
Microsoft attempted a strategy of lowering prices for Windows/Office while pushing for anti-piracy action from the Chinese government. These efforts failed, repeatedly, and the end result according to this article is that Microsoft will sell Windows AND Office, combined for a price of $3.
If that if a victory I can't imagine what a defeat would look like. If they are going to get $3 per copy of Windows+Office Microsoft would be lucky to break even on the raw materials, packaging, and shipping. The thing is Microsoft can't afford to just break even, they have tens of thousands of employees, including many lawyers and accountants and sales people involved in pushing their products, plus the support staff for all of those employees. And for those that would say "well Microsoft is sitting on a huge war chest" this is correct, they aren't going to go out of business any time soon, but they also can't bleed money indefinitely and watch potential revenue streams dry up without their stock tanking.
It looks like their game plan in China is to sell their software at break even or a loss just to get people used to the idea of paying for it and hopefully maintain market share. I guess they could make a profit in 5-10 years assuming:
people in china get used to the idea of paying for their software AND they have the money to pay more in the future AND they are willing to do so AND a suitable alternative (desktop Linux) hasn't risen in popularity. Which to me sounds more like a pipe-dream than a game plan.
I wish Microsoft many more of these sorts of "victories" in the future. Though their shareholders may feel differently.
Yeah MS is in such deep trouble they made record profits this year.
In an inflationary economy, every year is a record. Vista and Office 2007 should have made a difference but did not. Imagine a flat line, your brain and your balls are dying but non free CPR takes six years. The game is over - without money, they can't attract the programmers and vendor "support" they need to make product, and without product they will run out of money.
Friends don't help friends install M$ junk.
And let me say, first, that MS obviously has a very strong position in the desktop market here. Windows is at least as ubiquitous here as it is in the States. But why would it ever be any other way? MS has millions of dollars to play with, cozy/exploitative relationships with most makers of PC's here, and a huge base of GAMES to draw Chinese users in. Chinese people love their video games, and 70% of internet users here are online for games (I got that from Harper's, I think...).
Not to mention the fact that business in China is a cultural obsession here, like movies in LA or food in France. This makes Bill Gates, Richest Man on Earth, everyone's Cowboy/Doctor/Rockstar/Boyfriend, and creates a lot of goodwill towards MS products.
Anyway, Linux was never going to emerge as a majority operating system in China for the same reason that it's had problems in the US- it's not coming pre-installed on most people's systems. MS cut a deal with the PRC and, in return for givin' up the code, got broad market access. They probably had to grease wheels, too, but again, they've got the money to do it.
Chinese nerds I talk to like Linux because it (potentially) can be hardened against government intrusion, but the average Ah Q takes intrusion for granted and would rather play WOW. All the issues that get American FOSS advocates' thongs in a twist are in operation over here- pervasive censorship, domestic spying, code piracy, plutocratic monopolists upsetting markets by fiat.
What's hopeful about Linux and the OSS movement over here is the potential for the technology to circumvent all the meddling. I mean, plain ol' HTML has been incredibly disruptive to the government's media control, and technologies like Tor potentially allow any Chinese citizen to read any Taiwanese newspaper. It's had a huge impact on issues like environmental awareness, minority and gay and lesbian rights, local corruption, and development issues.
So what I'm saying is, there's actually a huge demand for Linux in China, but the technical hurdles are probably too great, and the awareness too small, for it to be more than a niche technology right now. This is coupled with the very poor state of technical education in China. While it does have first-class technical universities, many, many more schools offering computer-science degrees are simply cookbook factories, teaching students how to operate specific pieces of MS software. If desktop Linux isn't catching on in the US, it's not catching on in China for the same reasons.
The breakthrough will be a secure Ubuntu-like OS with excellent/perfect Chinese character support in the style of ABC, that's "underground" enough to convince the average guy that it's not somehow corrupted by the government. (In Beijing, many people prefer wonky-looking newspapers over slick ones, because it's a sign that they aren't controlled/funded/corrupted by the government, rightly or wrongly.)
Who knows if this combination is even possible? If it is, it will need an excellent team of designers to tune the user experience, and some serious guerrilla marketing.