Linux's Role In Microsoft's Decline

nerdyH writes "As early as last quarter, Microsoft admitted that Linux and netbooks were eating into its fat profits. Recently, it came home, with the software giant announcing its first-ever layoffs. LinuxDevices interviewed Linux Foundation Director Jim Zemlin on Linux's role in Microsoft's misfortunes. Zemlin sums it up pretty well: 'Companies can offer their own branded software platform based on Linux. If Microsoft is getting 75 percent margins, you would like some of that high-margin business, too.'"

Comments

Oh, Dear

[hardburn]

As early as last quarter, Microsoft admitted that Linux and netbooks were eating into its fat profits. Recently, it came home, with the software giant announcing its first-ever layoffs.

Yeah, it couldn't be because there is a massive economic crisis going on. It's all Linux.

Re:Oh, Dear

[Penguinisto]

Windows sales (or at least revenue) shrank by 8% (CNN blames Vista sales in particular). Since PC/Server sales in the industry overall didn't drop (let alone by that much), and netbooks only count for 5% of the whole market (with Windows + Linux netbooks combined in that figure), it stands to reason that there are other factors besides economic malaise that contributed to the losses.

Re:Oh, Dear

[fuzzyfuzzyfungus]

I suspect, both from the statement, and from the fact that this is a Linux Devices interview, that the "own branded software platform[s]" in question are more likely to be replacing WinCE or WinNT/XP Embedded(which does, indeed, seem to be happening a fair amount). To a lesser extent(though still a notable one) netbooks have been doing some of the same.

Re:Oh, Dear

[Anonymous Coward]

..Or most people being perfectly content with XP

Re:Oh, Dear

[UnknowingFool]

It's not just the more enterprise market share that Linux can get. It's also the threat of more market share as a negotiation tactic. Before companies didn't have much choice. Windows or higher priced Unix servers. Now they can negotiate with MS. MS lowers their pricing or they threaten to migrate to Linux.

Also the Linux threat in the interview is not just in the Enterprise Server market. Embedded devices and netbooks are going with Linux due to its ability to run lean. Vista is not currently lean enough for these applications. XP is lean enough though but not as customizable as Linux.

Redhat and Novell/SuSe offer their Linux solutions. IBM and HP will support these distros and others. That's 4 major players right there. Also this doesn't just apply to companies. China has their own brand and Russia is exploring one as well.

Re:Oh, Dear

[Jason Earl]

The current crop of netbooks are powerful enough to run Vista. They don't run Vista because Microsoft has special netbook pricing for Windows XP. A reduced-price version of XP is a good move for Microsoft in that it stemmed the tide of Linux adoption, but it has signaled lower margins for Microsoft.

If the netbook version of Windows 7 doesn't come with a reduced price then Linux is likely to make up some ground on these devices. If the netbook version of Windows 7 does come with a reduced price, then Microsoft will still continue to see lower revenue. Either way competition from Linux hurts Microsoft. As the extreme low end of the spectrum becomes more and more powerful (and useful) Microsoft is going to be under increased pressure to sell Windows for less.

Of course, Windows 7 could make up some ground on the high end. I suppose it is possible that Windows 7 will be so cool that the release of Windows 7 will reverse the trend on the high end towards Apple's products, but I don't see that happening.

Re:Oh, Dear

[hairyfeet]

And I think that can be directly traced to them losing their way and ignoring their core markets. One of MSFT's biggest customers have always been business. From the littlest SOHO to the largest enterprise MSFT has been right there making boring as hell backwards compatible low resource business OSes. But then with Vista they suddenly take a giant turn into left field and completely blow off their core market to get into a multimedia pissing contest with Apple.

I mean it is no wonder you have so many sites like this and this showing step by step how to turn Win2k8 server into a desktop. It is because MSFT has abandoned their business users to try to compete with Apple in the multimedia space. Which frankly is insane as Apple has this little thing called the iPod that pretty much gives them the lock on the multimedia space, not to mention the hip factor, and the amount of money they make off of business licenses and support contracts is worth FAR more than the niche they are trying to muscle their way into.

Mark my words, and the MSFT shills can mod me down all you want, but the biggest threat to MSFT is MSFT. They are neglecting their core markets, they are flailing around from one idea to another like the company has ADHD, and by trying to stuff everyone on the planet into this giant bling bling multimedia OS they are screwing over one of their biggest customers, the business users. I mean, is there anyone here with a straight face that can say Vista was made for business? The thing practically screams HTPC! It is like they fired all their business and accounting guys and put some marketing drone in charge of the whole company. And worse, the drone wants to be as cool as Apple so bad it hurts.

Mark my words, if they do not get some common sense and make another business OS then companies like Red Hat will be more than happy to take a shot at those customers. If they want a single codebase, fine and dandy. Make a "Win2k10 Pro" out of Win2K8 server and leave Win7 for the home users. But I truly believe that Win7 will bomb, just as hard if not harder than Vista. And when it does all those corporations that have been ignored for two OS releases will start to look for alternatives.

Would be Nice for Independant View

[geoffrobinson]

Of course the Linux guy will say Linux. And the Apple guy Apple. So on and so forth. And there is probably a mixture of truth to all that.

But it would be interesting to get that internal memo.

Re:I dunno

[houstonbofh]

I think most of their lost profits are from people negotiating lower prices because of the Linux alternative, not so much that people are actually choosing Linux.

From TFA... Actually the first question in TFA.

Q1 -- Jim, thank you for your support in talking with LinuxDevices today. Do you think it was really Linux that hurt Microsoft? Or was it the emergence of netbooks? XP seems to ship on most, but Microsoft isn't making much money selling XP for low-cost PCs [story], are they?

A1 -- When an OEM negotiates a price agreement with Microsoft, they now have a viable alternative. It changes the negotiating relationship. It's a combination of Linux, missteps by Microsoft, and not enabling Vista for a low-power, long battery-life device.

I wonder if you can be modded insightfull for "insights" from the article? No one reads them anyway...

What about MS's role in it's own decline

[jhfry]

Microsoft isn't losing because of Linux, it's losing because of Microsoft.

Essentially, if MS dominated the industry by creating the BEST product, then they wouldn't have a problem. Their problem is simply that their target customer isn't willing to be abused any longer. That and the of years of abuse have pushed millions of victims to contribute to the creation and improvement of alternatives to Microsoft.

Re:What about MS's role in it's own decline

[ciaohound]

Exactly. They are reaping what they've sown with their Windows-for-everything strategy. That worked against Lotus, Borland, Netscape, etc... ten years ago. But where is the Windows iPod? The Windows iPhone? The Windows Android? Innovations are sidestepping Windows.

Of course, Microsoft has the technical ability to do so as well, but organizationally, that's like asking Detroit to make a small car.

Re:Missing factors

[jedidiah]

Linux doesn't need any marketshare in order to do damage to Microsoft.

Just the fact that it's out there as a bogeyman is enough.

The ressurection of XP on netbooks is a good enough demonstration of this effect.

Re:Linux renaissance by Laid-off MS employees

[Lumpy]

THANK YOU....

Most large corporate layoffs are for greed reasons only. to make the books look a little better for next quarter. It's trendy right now and you wont be questioned if you do.. Look GM is dying! we can too!!!

There is a crapload of shady things going on right now in the business world. Look at every bit of it with a heavy dose of skepticism and never ever trust a company as far as you can physically throw it.

netbook argument is nonsense

[cinnamon colbert]

i have been looking a lot at netbooks online, at best buy and at staples and microcneter, and it is hard to even find a linux netbook - I seriously doubt this has caused any significant harm to MS
But, be glad to see some actual sales data
Anyway, the whole idea that linux is better or cheaper then MS is not true for the avg user,

Re:Missing factors

[Jason Earl]

Linux's mere existence has always had a competitive influence on Microsoft. However, it wasn't until recently that Linux was truly a competitive threat as a desktop for end users. Heck, I've been using Linux on my desktop since 1995, but I haven't really believed it was a viable replacement for Windows for normal folk until fairly recently (and then only in fairly specific situations).

It's hard to argue that Linux doesn't represent a threat now, however. After all, Microsoft resurrected Windows XP and sold it at a steep discount as a specific reaction to Linux adoption on the low end. If Linux didn't Asus and the other netbook vendors wouldn't really have had any choice but to either spec out their netbooks to fit Vista, and sell them at a price point where Vista makes sense.

On a much broader scale Linux and Free Software have been limiting how much Microsoft can charge for software since its inception. This is most visible on the server end, where Linux has a great deal of traction, but it is also visible in areas like development tools, embedded software, etc. As Free Software becomes more visible as competitors to Windows and MS Office Microsoft is going to find it increasingly difficult to defend it's ridiculously high profit margins on these items. At which point Microsoft is likely to become just another software development company instead of the 800 pound gorilla that we all know and love.