Amidst piracy crackdown, has Windows jumped the shark?

Amidst piracy crackdown, has Windows jumped the shark?

Summary: After seeing Arthur "the Fonz" Fonzarelli jump over a threatening shark while water skiing in an episode of the classic television series Happy Days, Jon Hein knew that there was no better metaphor than "jumping the shark" to describe that absurd moment in a TV series' history when its producers officially put the show on life support. After reading today's news -- It's Windows vs.

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TOPICS: Windows
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After seeing Arthur "the Fonz" Fonzarelli jump over a threatening shark while water skiing in an episode of the classic television series Happy Days, Jon Hein knew that there was no better metaphor than "jumping the shark" to describe that absurd moment in a TV series' history when its producers officially put the show on life support. After reading today's news -- It's Windows vs. Windows as Microsoft battles piracy -- I can't help but wonder if Windows has finally jumped the shark. After all, you know you're business has a problem when one of your best opportunities for growth is to crack down on the people who are robbing you -- in Microsoft's case, those who are using pirated versions of Windows.

According to the report by News.com's Ina Fried, "In a presentation to financial analysts last summer, Will Poole, head of the Windows client unit, identified a reduction in unauthorized use of Windows as a key growth opportunity for the business." Without the freely available Linux scampering about, that opportunity might have some legs. But imagine if you were an executive at a big retail chain whose biggest competitor was giving merchandise away for free, and, during a presentation to financial analysts, you explained how beefing up in-store security in order to prevent theft was going to be one of your key revenue initiatives. Undoubtedly, the financial natives would get a little restless.

After reading this and looking back over the past year, there's no question in my mind that Microsoft is scraping the bottom of the barrel, looking for ways to resurrect its cash cow. In 2004, for example, Microsoft rolled out a cavalcade of new security updates and features for Windows, many of which were made available only to users of Windows XP. The move gave birth to rampant speculation that Microsoft was looking for ways to force the nearly 60 percent of Windows users who were on pre-XP releases of Windows to upgrade.

Under the auspices of overall Internet security, Microsoft also said that it was making the update available to all users of XP regardless of whether those systems were legitimately licensed or pirated copies. The best quote I could find that captures Microsoft's position at the time comes from The Computer Times, which quotes Microsoft's Windows group product manager Barry Goffe as saying:

"We haven't explicitly done anything to SP2 to exclude it from pirated copies....It was a tough choice, but we finally decided that even if someone has a pirated copy of Windows, it is more important to keep him safe than it is to be concerned about the revenue issue.....Having these unsecured users means bigger worm and virus outbreaks - which also impacts the Internet and consequently, our legitimate users as well."

Given the impact that a bad malware attack can have on the Internet, the Redmond-based company also needed to do everything it could to protect the reputation of both Windows and Microsoft. Pirated or not, Windows machines that get turned into Typhoid Marys aren't doing either brand much good.

But now, approximately a half year later, it appears as though Microsoft is having a change of heart when it comes to forgoing revenue for the benefit of its legitimate customers as well as that of the entire Internet. Making good on Poole's characterization of the opportunity, the company has decided to cut off unregistered users of Windows from its Windows Update service through which critical security updates are delivered. Though the move has reopened a discussion of the trade-offs between revenue and overall Internet security, some analysts, according to a story in eWeek(see Is Mandatory Windows Validation a Security Risk), agree that Microsoft can't be expected to give software pirates a free ride. They also see other software providers following suit. According to the story, Yankee Group lead analyst Laura Didio said, "Too much money is being lost. In the past four years, the percentage of revenues from new software licenses was down across the board. The vendors really have no choice but to get tough." But the same story also quotes Digital Defense Inc. CTO Rick Fleming as saying that "any move to limit the application of critical security fixes will 'create bigger headaches' for everyone."

Had there been no alternatives, I might not be looking at this from a jump the shark perspective. But, between the free versions of desktop Linux that are getting better and better, companies like Sun and Novell who are offering complete desktop productivity solutions (operating system, applications, etc.) for $50 per year, Microsoft offering dirt cheap versions of Windows in other parts of the world, a significant delay to the future and very different generation of Windows, and what appears to be a lot of upgrade resistance (suggesting no signficant increase in utility from one version to the next), you can't help but wonder if the Windows dynasty has finally run out of gas (and, if--by scraping the bottom of the barrell--Microsoft knows it).

And by the way, fans of Happy Days won't want to miss ABC's celebration of the show's 30th Anniversary tonight at 8pm ET/7pm CT.

Topic: Windows

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112 comments
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  • Monopoly gives little room for growth

    Just like Ma Bell in the old days, you already had all the market; the only revenue increase was selling more add-on services. There's only one way for Microsoft's market share to go - DOWN. :)
    NotMSUser
    • This would be true except that much of the world lacks saturation.

      I'm the biggest MS basher here, but until the rest of the world
      gets the saturation of computers that we do here, there will still
      be room for growth. Marketshare means little. Profitability
      means everything. If Microsoft suddenly went from 90%+
      marketshare to 80% and the China market suddenly grew at a
      breakneck pace, Microsoft could still see real growth. Microsoft
      is the most ruthless corporation in the world with the possible
      exception of Haliburton. NEVER count them out of anything!
      MacGeek2121
      • yes but beyond a point this is physically impossible

        30,000 people are bying per day in africa of a
        lack of food.
        If the PC generates efficiencies (which is very
        disputable), then by the time the africans get
        them in volume, they will just be trying to keep
        up with the rest of the world, who already have
        these efficiencies.

        We cannot sustain our current impact on the
        climate let along multiply it by double by
        doubling the number of PCs across the globe.

        Something big is going to break soon. We might
        have to toss all the PCs we've got already. I've
        already stopped driving my car (for 3 weeks no)
        due to various extreme trends in weather and
        climate, plus two major underestimations by the
        scientific community (global change simulation).
        hipparchus2001
  • That, plus cutting R&D and claiming profits!

    And Halo 2 was the only reason XBox made a profit..

    Microsoft is in denial.. and are trying to fool the public in yet ANOTHER way..

    Now that the software patents are blown (for now) in Europe, what are they gonna do?

    When evil is recognized for what it is, it changes everything!
    Xunil_Sierutuf
    • Evil indeed

      Amen. It will be interesting to see what happens in the wake of a giant collapsing.
      cubmiester
    • Do you know how to read a financial statement?

      You must be seriously joking. MS made a huge profit only part of which was attributable to Halo. Windows and Office each made well over 1B in profit.

      This is on top of almost 5B in annual R&D spending.

      Your comments are completely ignorant of how much money/cash flow/spending is occuring in Redmond.
      rg807
      • Yes, cut 1.4B from R&D.. claim 1.4B more in profit

        It's simple..
        Xunil_Sierutuf
      • the profit was actually pretty miniscule

        Shell oil UK alone just exceeded microsoft's
        global sales, and their profit level is 5 times
        as high AFAIK.
        hipparchus2001
    • Point?

      So what is your point? MS never counted on software patents. What evil?
      RichRuge
  • Legal users shouldn't subsidize pirates

    Microsoft has every right to restrict updates to legal licensees of their products. The point is that Windows is not free. I paid for every copy I use. Why should I subsidize the development of updates for those that steal?
    kwknox
    • I'm curious

      Do you think that the prices you pay would go down if MS could guarantee that nobody could run their software without having paid MS for it?
      Yagotta B. Kidding
      • Well...

        microsoft's bandwidth costs would drop enormously if they cut off anyone without a valid liscense.

        the price I pay would remain the same of course... ;)
        maxo_z
    • Why? Self interest

      You don't want to pay for the updates of illegitimate users, which is completely understandable.

      However, do you like your internet connection and e-mail? Those become useless as the number of compromised machines increases.
      rpmyers1
    • Here's why

      kwknox: " paid for every copy I use. Why should I subsidize the development of updates for those that steal?"

      The answer: because unsecured copies of Windows are a threat to *you* as well as to the clown with the unsecured copy. Every unpatched Windows installation is a target of opportunity for net.scum looking to create spambots, DDOS zombies, and re-distribution points for worms and viruses.

      Locking those unlicensed copies out of the patch process just guarantees that spam, worms and viruses will become more prevalent.
      the_doge
      • Yes to no license, no update.

        Maybe if the people stealing from Microsoft and every licensed user found that their computer died with a horrible virus, they would realize what a bargain it is to not be a crook. Let's call it like it is. If you don't have a license, you are as much a crook as the guy with the gun at the convenience store.

        Why is it acceptable to steal software, get free upgrades to make your software better, but not acceptable to rob the store and have them tell you to come back and just help yourself anytime?

        Don't youunderstand that it does not matter what business it is, theft raises costs which raises selling price? What happened to "thou shalt not steal"? People, who would not walk into a store and steal a software package off the shelf, will "borrow" a copy from a friend or download from the net to load unlicensed software. There is no difference - stealing is stealing.

        No one, not even Microsoft, should make life easy for a thief.
        ssoliphant47@...
        • I see your point

          I see your point and agree fully. Theft is wrong now matter who the victim is. I also have paid for every last stinking copy of windows I use and hate the idea that theives are costing me money. BUT, I am equally tired of spam and virus attacks.
          cubmiester
        • Excuses....

          There are a few reasons people do this:
          1. Nothing is actually stolen. Microsoft still has their master disks, stores still have their copies, they can still sell their product, etc.
          2. It used to be that you could install a single copy on as many machines as you wanted, assuming that you would only use it on one machine at a time. Since then, software companies have changed it to one copy per machine.
          3. Ease. It is very easy to copy software, or any digital media for that matter.

          Not that any of these excuse the practice, just giving you some of the rationale.

          And even if Microsoft stopped ALL piracy, do you really think the price would go down.
          Patrick Jones
        • Not obviously

          [i]Don't youunderstand that it does not matter what business it is, theft raises costs which raises selling price?[/i]

          It's not at all obvious that Microsoft's selling prices are in any way related to their costs. In a classic monopoly pricing model (and in MS' case, with near-zero marginal costs) price is set to maximize revenue. In other words, they can't raise it any more without reducing sales to the point that actual revenues drop.

          Some observers have suggested that since Microsoft's main competition is the combination of older or pirated copies of their own software, a reduction in piracy would actually result in an increase in their prices.

          Whether you accept this analysis or not, it is at least not clear that piracy raises Microsoft's prices.
          Yagotta B. Kidding
        • But it's not that easy...

          Yes, stealing is wrong. No.. if nobody stole anything, prices wouldn't go down. The executives, the board, management and shareholders would still LOVE those juicy bonuses, which keep prices high. Welome to Capitalism. We're just too much like lemmings to tell them to go tke a flying leap and they know it.
          The biggest point here is that most viruses these days DO NOT DAMAGE THE HOST MACHINE. If they did, then I would be all for limitation. But since THEY DON'T, I'd rather give them the patches free then be bombarded by another 400 spams a day generated by zombie machines remotely controlled by self serving greedy piles of *@!#. As criminals and organized crime become more tech-savvy, we will see more and more of this happening unless we secure our systems. I'd rather see them hung out by their privates in public to be pecked on by buzzards, but for the time being, internet criminals are too hard to find. So my only defense right now to to put up as many walls between them and me as I can.
          Zorched
        • I pay for the pirates

          I have an extra machine that filters spam, and I get net slowdowns.

          I don't run Windows at home, yet all of these costs (monetary and time) are imposed on me by those running Windows. Why should their theft of something I don't use raise my costs?
          rpmyers1