Microsoft admits the obvious but not the truth

Summary: The big sea change over the last years, the force Microsoft can't keep up with, is the cheap client. A Netbook may sell with a $3 copy of Windows XP, but how much software will the owner of a $300 product buy?

In its latest 10-K report Microsoft admits what we already knew. Open source has run away with its lunch money. (Picture from MeallDubh.org, the blog of John McCreesh.)

A whole bunch of companies are identified as villains. Springsource. Canonical. RedHat. Google.

What Microsoft does not admit here is the truth. Look at that list of "competitors" again. Other than Google -- which gets is money from ads -- are any of them more than a a bug heading for the Microsoft windshield?

What threatens Microsoft is not an open source company, or a collection of open source companies, but the open source model.

Microsoft can maintain its share only by offering subsidized software as an alternative to free. But it can't maintain its margins. It's going to have a tough time maintaining profitability.

But Microsoft has an even bigger problem than the open source business model.

The big sea change over the last years, the force Microsoft can't keep up with, is the cheap client. A Netbook may sell with a $3 copy of Windows XP, but how much software will the owner of a $300 product buy?

Fact is, even when the support is online, Windows costs money to support. It costs money to create patches and updates, money for servers to push those patches out. It's money that has to be spent, because without it Microsoft clients get infected with malware and become useless.

By contrast Linux is modular. A Linux client, whether a netbook or an Android phone, needs to run only those modules necessary to the function it is performing at that moment. Over time open source is just cheaper to support. And by linking clients to the cloud you centralize that support load, even monetize it.

So you have competitors who can live on less food than you need, hardware evolving toward forms that must find a lower-cost form of support, and a possible breakthrough in business models that you can't seem to touch.

The truth is that Microsoft Windows, and Microsoft itself, have become dinosaurs in a mammalian world. To compete Microsoft must evolve.

Topics: Microsoft, Open Source

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  • Obvious

    Microsoft reminds me is so many ways of General Motors of the 1970's. I
    suspect that the end result will be much the same. Companies, like
    countries and people have life cycles.
    gertruded
    • Will there ever be such misguided control freakery

      in the IT industry (or any industry for that matter) again?

      Microsoft are just proof that lies, hype and filthy tactics cannot fool the hapless consumer, nor keep the computer industry on its knees, forever.

      Next stop is to prevent illegal pre-installs (effectively forcing people to play the part for botnets).

      The day that Microsoft crashes will be worldwide party day .....
      fr0thy2
      • Control freaks like Apple are doing just fine, ain't they?

        And open source model? Yeah, check where Sun landed w/ such model.
        LBiege
        • Small effervescent economics is the future ...

          ... not the cumbersome, me, me, me-ist top heavy bullsiht that the American psyche seems hell bent on.

          People will always pay a bit of a premium for a big brand name, at least with Apple they get a reliable experience.

          Microsoft will always be cheating liars whilst that pig ugly bloke is their front man.
          fr0thy2
          • Talking about cheating pigs

            That's dense coming from a European. Name me one IT product comes out you EU socialist wasteland that actually competes.

            NONE.

            Look at that pathetic Opera: It cannot beat IE, Chrome, FireFox, Safari, nothing, zidda, nil, zero. All it can do is to b1tch to the protectionist EC to stay afloat on the market. Talking about cheating pigs.
            LBiege
          • Talking about pigs ....

            ... I saw a documentary about a country that is eating itself to death ... and it wants to pass that thinking onto other countries.

            The good news is that the other countries are way too clever to eat themselves to death. They're just watching, laughing and trying not to listen to you ...
            fr0thy2
          • You tell me about it.

            EC/EU is the biggest monopoly. Eurpoean nations always want to loot others, think about European Colonies. What did they do in the name of those colonies, nothing eating others' like pigs and screw cultures and impose problems. Their jealousy only brought two world wars.

            Now they are lost with modern world honor that is more advanced and reaping in profits even after Europe screwed them big time.

            Now they are jealous about the money US corporations bringing in, so they invented EU/EC and biting US corporations. This will not go for a long time.


            Europe invents problems and US rescues them.
            Ram U
          • SAP and...

            But then you could argue that the entire WWW came out of CERN which is in the EC zone of sorts.
            zkiwi
          • CERN???

            It was a US military / Department of Defense
            project that went mainstream... See Vint Cerf

            http://en.wikipedia.org/wiki/Vint_Cerf

            CERN.... LOL... Yeah.. Right.. CERN...
            i8thecat
          • Really?

            http://info.cern.ch/www20/
            zkiwi
          • Yeah, the Internet is not the World Wide Web ...

            The Web (started at CERN) is but one feature of the Internet (started at DARPA). They are not synonymous.
            RationalGuy
          • BUZZ! LBiege, You Just Violated the Revised Godwin's Law!

            By using "socialist", "collectivist" and/or "communist" as a pejorative, you have proven to be a brain-dead Right-Wing Nazi, and thus everything you say is henceforth Null and Void.

            Thank you for playing - and don't the door hit you on the ass as you leave....

            See how cleverly I turned Godwin's Law on its ear there, and got to call you a "Nazi" in the process...? >:)
            drprodny
          • Re; one IT product comes out you EU socialist wasteland that actually . . .

            Skype springs to mind.
            hkommedal
        • Actually - Apple Is NOW Where M$FT Was in the Nineties

          Or the Republican Party after the 2004 elections. Like these two deservedly much-hated organizations - you always look like King of Big Rock Candy Mountain RIGHT before you fall off it!

          Thanks to Steve Jobs's autocratic, "Nothing to see here!", increasingly paranoid way of doing business, Apple is starting to stumble with controversial decisions like how customer service is handling overheating/exploding iPod Touches, the opaque Apps Store rejection/removal process, or how easy it is to remotely install keyloggers and other malware on Mac keyboards. For now Apple is too dominant in the "Cool and Just Works" Department for these to be more than The Complaints of a Few Malcontents - but now is ALSO when Apple desperately needs to start making their processes more transparent, and be more willing to admit, and FIX, mistakes. Otherwise, The Few Malcontents will swell in numbers as more goes wrong and stays unfixed - and Jobs will discover just how far his eye for industrial design gets him when nothing underneath works right anymore, and everybody has moved to the Android platform, or WebOS, or even ChromeOS!

          I say this as somebody who owns a MacBook Pro and an iPod Touch - which work great now and which I'd hate to give up. But...the second part of that clause is contingent on the first staying constant - which as M$FT and the Bush Republicans discovered, won't be the case if you don't fix what's wrong underneath....
          drprodny
      • Reality

        Thanks, and yes, I agree! Microsoft and all other Multi-Nationals have become very arrogant! The predominant thinking in the ivory towers of power seems to be that customers need them/MS.
        Ballmer is one of those arrogant CEO's. The truth is, that companies like MS actually slow down progress by writing sloppy programs. This policy of greed is outdated.
        Without the customer base any company is NOTHING.
        I will have a party when MS goes down.
        IKE:)
    • RE: Microsoft admits the obvious but not the truth

      The truth is that Microsoft Windows, and Microsoft itself, have become dinosaurs in a mammalian world. To compete Microsoft must evolve.
      zakkiromi
  • Still not convinced about open source

    As a consultant dealing with open source and proprietary software, every place I have been, the open source software is far more costly to manage and maintain requiring as much or more ongoing attention, changes, including updates etc...

    What I see happening these days is a return to the IT days of 15 years ago when there were scripts and command lines and configuration files and all kinds of crap to constantly maintain. The collection of 'crap' just makes everything complex, complicated and a nightmare to manage. This in turn creates significant overhead in personnel, documentation, additional processes, and so on and so on.

    For any business I would still recommend Microsoft solutions over any other ones. People resources are always far more problematic and costly and herein lies the problem with open source software. When you factor in the people, documentation, processes, etc...to manage open source, there is no comparison, Microsoft wins hands down.
    GeiselS@...
    • Not a very good consultant

      "When you factor in the people, documentation, processes, etc...to manage open source, there is no comparison, Microsoft wins hands down."

      Are you trying to say that those resources are not required for the windows platform. As a matter of fact, as an engineer that work with both OS's I find that it cost more. Than, you have to factor in patch management, license management, and security. I predict MS will make the same move Apple did. They will dump their legacy software and build on top of an open platform, and manage users through the user interface. It only make sense to allow the community to maintain, update, and secure the OS and MS control the UI, API's, and Web Interface, which could placed on top of any OS they wanted OSX,linux,FreedBSD,OpenSolaris and even UNIX. They really need to hire me, I would take them to that next evolutionary stage.

      By the way, as a technology consultant you are doing your customers and injustice with a bias attitude.

      Remember the Technology Creed: The Best technology for the solution for the best results.











      sadmglw
      • I am in agreement.

        Most people that dismiss Open Source completely either don't have the skills to implement it or aren't willing to learn. I find the former to be the case most of the time.

        There is no doubt a learning curve when Windows is all a person has supported. But it has definitely been worth it for me anyway.
        bjbrock
      • He's not a proper consultant, more a bridge dweller.

        We will see, over the next few years, more and more Microsoft "open source experts" whose sole job is to spread rubbish like the original poster.

        Bottom line is, if a consultant is pushing Microsoft, he doesn't have your best interests at heart, nor a proper grasp of technology.
        fr0thy2