Linux and Open Source

Dana Blankenhorn & Paula Rooney
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Microsoft admits the obvious but not the truth

By Dana Blankenhorn | August 5, 2009, 5:44am PDT

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?

Topics

Microsoft Corp., Open Source, Dana Blankenhorn

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Dana Blankenhorn

Biography

Dana Blankenhorn

Dana Blankenhorn

Dana Blankenhorn has been a business journalist for nearly 25 years and has covered the online world professionally since 1985. He founded the Interactive Age Daily for CMP Media, and has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement, and dozens of other publications over the years.

Paula Rooney

Biography

Paula Rooney

Paula Rooney

Paula Rooney has covered the technology industry for more than 15 years, starting with semiconductor design and mini-computer systems at EDN News and later focused on PC software companies including Microsoft, Lotus, Oracle, Red Hat, Novell and other open source and commercial software companies for CRN and PCWeek. She received a silver award from the American Society of Business Publication Editors in 2005 for her profile on Linus Torvalds and edited and co-authored "Partnering With Microsoft," a book about Microsoft's channel published by CMP Publishing in 2004. Rooney graduated from the Columbia University Graduate School of Journalism in 1997. In her off time, she enjoys scuba diving, sailing, sun worshipping, running and reading. She resides on the shores of Scituate, Massachusetts.

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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.

Dana Blankenhorn has been a business journalist for 30 years, a tech freelancer since 1983.

Disclosure

Dana Blankenhorn

Dana Blankenhorn has been a journalist, writer and part-time futurist for over 30 years.

At the present moment I run only a personal blog in addition to my ZDNet open source blog.

DanaBlankenhorn.Com has the subtitle The War Against Oil. In the past I have used it to write about political history, e-commerce, personal matters, some ideas related to open source, and The World of Always On, which is the idea of using sensors, motes and RFID to turn WiFi links into platforms for applications which live in the air.

My IRA account at Schwab holds a few tech shares, most notably some Intel and Applied Materials, but there are no open source companies in it. I don’t even own any CBS stock.

Biography

Dana Blankenhorn

Dana Blankenhorn has been a business journalist for nearly 25 years and has covered the online world professionally since 1985. He founded the Interactive Age Daily for CMP Media, and has written for the Chicago Tribune, Advertising Age's "NetMarketing" supplement, and dozens of other publications over the years.

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Talkback Most Recent of 131 Talkback(s)

  • 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.
    ZDNet Gravatar
    gertruded
    (Edited: 08/05/2009 06:09 AM)
  • 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 .....
    ZDNet Gravatar
    fr0thy2
    08/05/2009 08:50 AM
  • Control freaks like Apple are doing just fine, ain't they?
    And open source model? Yeah, check where Sun landed w/ such model.
    ZDNet Gravatar
    LBiege
    08/05/2009 09:26 AM
  • 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.
    ZDNet Gravatar
    fr0thy2
    08/05/2009 09:32 AM
  • 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.
    ZDNet Gravatar
    LBiege
    08/05/2009 09:45 AM
  • 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 ...
    ZDNet Gravatar
    fr0thy2
    08/05/2009 09:49 AM
  • 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.
    ZDNet Gravatar
    Rama.NET
    08/05/2009 11:26 AM
  • SAP and...
    But then you could argue that the entire WWW came out of CERN which is in the EC zone of sorts.
    ZDNet Gravatar
    zkiwi
    08/05/2009 10:02 AM
  • 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...
    ZDNet Gravatar
    i8thecat
    08/05/2009 01:25 PM
  • Really?
    http://info.cern.ch/www20/
    ZDNet Gravatar
    zkiwi
    08/05/2009 01:59 PM
  • 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.
    ZDNet Gravatar
    RationalGuy
    08/05/2009 02:53 PM
  • 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...? >:)
    ZDNet Gravatar
    drprodny
    08/06/2009 01:17 PM
  • Re; one IT product comes out you EU socialist wasteland that actually . . .
    Skype springs to mind.
    ZDNet Gravatar
    hkommedal
    08/09/2009 07:45 PM
  • 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....
    ZDNet Gravatar
    drprodny
    08/06/2009 01:14 PM
  • 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.
    ZDNet Gravatar
    IKE:)
    08/06/2009 11:17 PM
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