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Microsoft's Strategy

I recently read Joel's latest book and I highly recommend it! It was both informative and fun.

Anyway, one of Joel's points was that MS has lots of money so they can compete for along time and reinvent themselves with little or no income. So I agree that MS is not going to disappear anytime soon.

However, I read that Linux has surpassed Mac on the desktop in terms of marketshare is is expected to garner 6% in the next couple of years. Linux along with OpenOffice represents a classic low-end disruption to the marketplace. Doesn't this mean that ultimately MS

1) Is going to lose market share on their main sources of revenue (OS and Office)
2) Has to continually drop OS and Office prices in an effort to "compete"

How does MS compete with free software in the low-end market? I think ultimately that MS will have to find other main sources of revenue because its near monopoly on OSs and Office is about to end.

What do you think?
Roger Jack Send private email
Friday, September 03, 2004
 
 
This is how MS competes with that - Linux isn't really free:

http://www.forbes.com/enterprisetech/2004/08/31/cz_dl_0831msft.html
Eric Kepes Send private email
Friday, September 03, 2004
 
 
To be quite frank - until OpenOffice is deemed good enough by most corporations there is no real need to compete on prices.

And for home users, OpenOffice is mostly competing with free (read : pirated) versions of MS Office, so no price pressure here either. I guess MS doesn't want to crack down on Office piracy at home since it basically gives free user training to potential corporate workers -- and my gut feeling is that there is obviously not that much money to make in the home market as compared to corporate.

The only way I see open source being a real competitor on this is if a Linux distribution becomes user friendly enough for people who are not into computers to install and use. When your potential secretaries and accountants use OpenOffice at home you will not need additionnal training cost in moving from MS Office.

As to whether this is likely to happen one day or not, I'll let this discussion to the religious fanatics and those with a working crystal ball.
Renaud Martinon Send private email
Friday, September 03, 2004
 
 
Hmmm...So I guess you think that Linux is not friendly enough for a typical home user. Maybe you think that all the desktop penetration is from Linux geeks.

However, Walmart is offering PCs with Linux and OpenOffice pre-installed for between $200 and $250. I don't think geeks are buying these machines - I think entry level, price conscious consumers are. Walmart is not stupid, they don't sell products that their customers don't buy.

Also, every study talks about TCO and how MS has lower TCO. The problem is that the salary used for TCO is a western salary. In China, India, and other lower salary countries, the results could be significantly different. Of course, this is where most of the future growth in PCs and software will come from.
Roger Jack Send private email
Friday, September 03, 2004
 
 
What % of those Wallmart PC's will have a pirate copy of XP Pro on them a few hours after they are unwrapped? I'm guessing >90%.
Just me (Sir to you) Send private email
Friday, September 03, 2004
 
 
Linux will be suitable for the home desktop when it reaches the "mom milestone". That is defined as the point at which I need not move into my Mothers house in order for her to write a letter.

Think of it this way, automobiles became successful when Ford put out an inexpensive car. But they didn't become wildly successful until the automatic transmission.

In the end, price is a factor but ease of use is a greater one.

Marc Send private email
Friday, September 03, 2004
 
 
A pirate copy going on is likely but by no means certain.  It rather relies on them being able to install it which in my experience is iffy. A fair number will switch it on and if it works leave well enough alone.
a cynic writes... Send private email
Friday, September 03, 2004
 
 
The Mom test is an interesting litmus test. Kind of presumes that your mom can already run standard Windows stuff without help.

I think you're right about the positive correlation between ease-of-use (fuzzy as that might be) and adoption rate though...
Jeff Kotula Send private email
Friday, September 03, 2004
 
 
How do you figure Linux has surpassed MacOS on the desktop? The numbers I see show the exact opposite.
Dutch Boyd
Friday, September 03, 2004
 
 
I got the information from MITs Technology Review magazine.

"Linux's market share has already surpassed Apple's, and every 1 percent gain for Linux sucks millions of dollars a year out of Microsoft's revenues."

Maybe this referring to all systems and not just desktops, so I apologize if I screwed up. The article goes on to say that in 2003 Linux had 3% and by 2006 it will have 6% of the percentage of OSs shipped by commercial vendors.
Roger Jack Send private email
Saturday, September 04, 2004
 
 
Cars being wildly successful:

Before the automatic transmission, there was the self-starter. Without that, a significant degree of manual dexterity and strength was required to start the engine, with the constant danger of injury from the hand crank jumping due to failure to get the engine to compress.

In my opinion we are still on the "hand crank" of desktop usability.

Constant fuss, maybe not risks of broken bones but our data at risk from programs. Not to mention viruses.
.
Saturday, September 04, 2004
 
 
First, in many ways I do NOT think that MS has a monopoly on the desktop (as much as the DOJ says so…..but that is for another day).

I think that if a business can purchase 5 pc’s, read and write word and Excel documents, browse the web, and not have to purchase MS products, then I can’t see how MS is a monopoly. (you can do that now with a bunch of Linux boxes).

And, interesting, if we were to go back to the mid 1980’s when companies like apple where actually trying to copyright the use of a garbage can on the desktop, we are in a MUCH more open world today.

In fact, Open Office lets you use Word and Excel. These are arguably proprietary formats that at one time competitors for using these formats could be hauled into court. Today, this would be a disaster for MS from a PR point of view. Hence, the  counts might agree with MS going after companies that steal the word format, but politically wise this is an area with MS can’t even consider to go (so, the DOJ slap was likely a good thing in some ways!).

However, the point remains here as to how much of a threat products like Linux and Open office are?

I recall a few years ago that everyone was saying that the reason for the lack of popularly of Linux was that it did not have office. Well, Linux has an alternative to office now. Hence, I don’t think “just” office was ever the issue as many believed.

I think the main issue with Linux is the end user issue. Linux is doing VERY well in the server market. So, the server area is where MS is making some real strategic moves to stem Linux.

So, the main thing (and it is very intelligent on ms’s part) is they now tying the server products to the desktop.

So, now desktop management systems are becoming part of the servers they sell.

This means that if you have 20 windows desktops, then you likely will want to choose a windows sever to “serve” those desktops. The SBS from MS (small business server) is selling like crazy right now (it is super price point…and you get some desktop management stuff with it – not full SMS…but a good start). And, likely very soon all of the SMS stuff will be integrated into SBS. What this means is that even now a small business does NOT have to send some poor guy around to “each” pc, to installs or setup new software. Fact is, running the server is not the big cost for most companies, but it is those darn desktops that eat so much of a small business IT budget.

So, MS is tying their server products to the desktop. This move right away cuts out Linux ability to get a foot hold in small business for even the server based side of things (and, as I mentioned, Linux is a very serious threat on the server side). Why would a small business purchase a Linux box that can’t help manage all those desktops in the company?


I mean, once small business learns that they can manage each pc form the server, then a LOT of saving can be had. In fact, your network support company can actually now login to the server remotely, and then setup and install software updates to each pc.

So, in regards to Linux on the desktop, Linux is just not in the game yet. It is the server space where Linux is real serous threat.

I mean, a OEM copy of windows is about $50 to $60 us. Over 5 years, that is about $10 per year. With software updates, security updates and all kinds of stuff you get with windows, this really is a bargain. So cheap is this, that it explains much why companies stay with windows. And, to be fair, I think companies want to drop windows not so much due to cost, but lock in.

Further, the auto downloads and updates to windows are getting better and better. It remains to see what kind of “service” you get out of the box from Linux desktop vendors in this regards. For a few dollars a year…you get a lot from MS, and their main goal right now is to eliminate most, if not all of the need for someone physically support a desktop.  Linux now will have to start offering the same kinds of management systems for the desktop.


Albert D. Kallal
Edmonton, Alberta Canada
kallal@msn.com
http://www.attcanada.net/~kallal.msn
Albert D. Kallal Send private email
Saturday, September 04, 2004
 
 
Your point about vendor lock-in especially valid for (former?) third world contries like India and China. They are creating anti-proprietary policies that are going to be hard for MS to overcome. Of course, these countries will be where much of the future growth comes from since Western markest are relatively mature.
Roger Jack Send private email
Saturday, September 04, 2004
 
 
The scuttlebutt about MS policy in Asia is that MS tolerates piracy because it 1) is too difficult to police without active state cooperation 2) educates the population in MS at minimal cost and 3) reduces the likelihood of homegrown competition ever reaching acceptable maturity.

There is no necessity to charge first world licence prices once market penetration is effective. A small licence fee, even zero,leads to big bikkies indeed. Think how Mr Gillette went about marketing. Once the market HAS to be on the net because the opsys demands it, HAS to go through the Great Firewall of China because the state demands it, and WANTS to do so to get access to (initially) cheap, excellent content, MS and the state can start the harvest, each ensuring the other's continuing health as is the nature of all successful enduring partnerships. There's no barriers if you gain state support and antitrust cases are difficult to mount without it.

OTOH India could run towards opensource but access to content may again be the winning factor.

Star TV (News Ltd) is very active throughout Asia and has satellite broadcasting rights throughout the region. A nexus between Rupert and Bill if it ever arose would be something to respect.

.
trollop
Sunday, September 05, 2004
 
 
> And, interesting, if we were to go back to the mid 1980’s when companies like apple where actually trying to copyright the use of a garbage can on the desktop, we are in a MUCH more open world today.

I disagree.  Nowadays Apple would *patent* the garbage can.

Sunday, September 05, 2004
 
 
Protecting the Garbage can?

Actually, my reference to the computing industry in the mid 1980’s was in regards to things like file formats (dbaseII), and stuff like the apple garbage can were consider to be intellectual property rights. In other words, no one could use the garbage can, or no one could use the dbase file format.

Today, the idea that dbaseII, or Excel or word file formats are enforceable in courts is a “strange” concept. And, as I mentioned particularly also because the DOJ has removed many fangs from Microsoft. So, while it would have been perfectly normal for a company like Microsoft to haul Open Office into court for using the word and excel file format in the 1980’s, it just not imaginable today. So, I am just pointing out what was common in the 1980’s from a IP point of view is not even considered to day.

For a good number of years, MS was VERY cautious with windows 3.1 and the UI (since in the late 80’s and early 90’s Apple was VERY aggressive on use of lawsuits to protect their “look and feel”).

Today, I don’t think look and feel lawsuits even exist (the Linux copies of the windows desktop “look” is a good example).

So, sure, I do accept that we are currently seeing some real weird kind of lawsuits today (like the one-click patient stuff). However, much of this patient silliness’ is the result of crappy law, and crappy count systems. So, sure today we see a lot more silly stuff trying to be patented, but back then, companies actually BELIVED that it was the right thing to do, and the courts would back them up.

Today, look and feel stuff type lawsuits don’t even seem to exist!


Albert D. Kallal
Edmonton, Alberta Canada
kallal@msn.com
http://www.attcanada.net/~kallal.msn
Albert D. Kallal Send private email
Sunday, September 05, 2004
 
 
I got started in this business when the Hot OS was CPM86, so I have a little longer view than some here.

Microsoft became MICROSOFT by a combination of factors: great software. relentless marketing. smart people. making strategic alliances and partnerships the way starving wolves partner with innocent fawns. great software.

Mainly, great software. With the exception of version 1 of Excel for the Mac 512, I don't know of any Microsoft application/OS that was not either initially acquired or slavishly copied. But, that one app was enough to doom their OS competitors because real people would shell out the money, put up with the arcaneness of it all because they could solve problems they needed to solve.

The rest of the story is good business sense, proactive paranoia and margins you wouldn't believe.

Linux to beat Microsoft just has to do one simple thing: be the OS of choice for a whole lot of hungry software designers who create apps people will sell their firstborn for. Simple, but not easy. Until and unless that happens, Linux is going to go nowhere fast on the desktop.
Bob Walsh Send private email
Tuesday, September 07, 2004
 
 
<Insert post that would only be interpreted as a Microsoft fan boy post here>

Don't underestimate the number of users that make use of MS Office functionality not found in Open Office, or any other alternative.
I'm Jack's functional requirements
Tuesday, September 07, 2004
 
 

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