The real threat to Microsoft in open source

The real threat to Microsoft in open source

Summary: For a consumer with a PC or two, the costs of Windows now includes some management services, and support. Even for a small network manager there are education and training costs to be paid up-front, plus the possibility of big-ticket service calls down the line.

TOPICS: Open Source

Bill Gatus of BorgThere's always talk about how Microsoft is threatened by open source. (I was with Boardwatch when the original Billgatus of Borg cover came out, in the late 1990s. That's a detail of it to the left.)

Techies talk a lot about Moore's Law, but there's another economic law which Microsoft solutions also violate, and which open source threatens.

It's the law of mass production.

When any good goes into mass production its cost goes down. Microsoft has flouted this law for decades. In fact, today's Microsoft Office costs as much, or more, than it did 20 years ago, despite the fact that the number of users has grown exponentially.

Open source projects pass these savings on to the consumers of software. It's not just free to get. It's free to upgrade. And you only pay for open source when you need someone's help, for training, for implementation, for fixes. Then, you pay only for the cost of the labor you need.

For a scaled user this makes open source a real bargain. The labor costs exist anyway, even in Windows IT shops. The costs of transitioning to open source are manageable, and the later savings go straight to the bottom line.

This is not as true for individual users. For a consumer with a PC or two, the costs of Windows now includes some management services, and support. Even for a small network manager (and this includes many homeowners) there are education and training costs to be paid up-front, plus the possibility of big-ticket service calls down the line.

The natural answer is to capitalize these costs and pay them out over time. Automate the courseware, automate the delivery of updates and patches. Sounds great, doesn't it? Sounds like a business, right?

Sounds like Windows to me.

Topic: Open Source

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  • And the other side...

    Considering that the only real way to profit from selling Open Source is through selling product support, there's certainly an incentive to make that support a necessity.
    • Partially True

      No. You can profit from selling distros and selling open source with proprietary additions. For instance, Fedora (Redhat's free version) does not come with MP3 support. Why? Because mp3 is a proprietary format. The 'for sale' distro DOES come with those features.

      Though it's fairly easy to add mp3 support yourself, some people don't want to do it. So in a sense, this is also support but in another sense, it is convenience.

      But you are right. Open source is going to make money through support so it is going to want to focus on that model. Books, training, etc are all great ways to grab onto this revenue stream and for those who don't wish to pay, they can always do all the forum searching themselves (I know I do).

      Still I'm on the verge of purchasing a distro just so I won't have to deal with these problems anymore.
      • Purchasing a distro

        Me too. After months of wading through Apache docs that make Sanskrit look easy, I'm buying a ISP onna disk distro.
        Too Old For IT
        • Buy Suse 10 from Novell its great!

          I am by no means a Linux Noob since I have been using Linux for about 6 years now and frankly when I hear that someone has had trouble setting up Apache I am in complete amazement yet I suppose if you have never done it before then I guess it could be confusing especially if you are compiling from source and maybe compiling with unusual support for other protocols or something. (Just use Xammp)

          However, commenting on Apache wasn't really why I jumped in here.

          I have used all the Linuxes out there and I had finally stopped searching when I discovered Yoper Linux.(side note Andreas the original developer now works for Novell/Suse) It is simple, super fast and is built to do from install everything that I want. Infact I have been working with the developers for over a year now. However, I recently installed Suse 9.3 and was blown away by the advancements Novell has built into it and since I was recommending a Linux for starters to a friend I installed Suse on his machine. Well I was impressed so much so that just minutes ago for the first time in my life purchased Linux, Suse Linux 10 from the Novell web site. (right here)-->

          Why would I buy something that normally I just download and burn to disk and install? Well 2 reasons. 1. If its as good as Suse 9.3 than its goning to be really awesome and I will be happy with the results of my purchase. 2. I'm glad to help a company that helps me. By purchasing the Linux product from Novell I know that I am supporting a company that has a social responsibility to society not just to stock holders, and also a company that was smart enough to listen to what consumers want also.

          Novell you guys rock!! Keep up the great work and keep improving Linux.
    • Well, with open source, if one person trys to limit features, there is

      always someone elese to add it. Or, there is another project that will offer it. So, somebody trying to limit the features that make it easy to install and use won't have much long term success. It will also cost them a lot more to support customers, allowing competitors to undercut them.
    • and the other side of the other side....

      that's sort of like saying you don't think a competitive market would correct that.
    • Support and Training

      There are few, if any enterprise systems out there that don't require training and support.

      I would certainly agree that there is little incentive to "perfect" an open-source offering, but it, at least, has to be good enough and perform well enough that it can gain an initial following or user community. Think Apache, MySQL, Samba... all excellent programs, all require knowledgeable administrators that have to have skill and training (even if it is self-taught, there is a large time investment in that).

      Any company is going to pay for training and support either through in-house experts or third-party consultants for proprietary as well as open-source systems.
  • And why can Microsoft get away with it?

    I offer the same answer as the one to that age old question: why does a dog lick his genitalia?
  • As 20 years ago ... long before it existed

    First of all, there was no Microsoft Office in 1985. Secondly, at least in the overseas market I was in when we first bought the single apps, Word or Excel would have been 450 euros each about 12 years ago. Office 2003 Pro today retails for 599 euros on If you only count the four major apps in it, then you're getting 4 times as many apps (not counting all the additional features since then) for less than 50% more of the price - not four times the price. I.e., it's significantly cheaper. Also, last time I recall, cars were mass-produced. I don't find that they're getting cheaper, though I don't have many hard numbers on cars. Assuming they're not, I guess there are a lot of companies breaking this economic law?!?

    "When any good goes into mass production its cost goes down." If that's your measure, and you argue afterwards that open source, and its upgrades are "free" - "It's not just free to get. It's free to upgrade" - your argument seems rather illogical to me. If it's free, how is it going to adhere to a law of diminishing cost? Then again, you're not claiming that open source adheres to the law, though you do seem to imply that with "another economic law" further up.

    "The labor costs exist anyway, even in Windows IT shops." Yes, they do. But are they the same? You could also say, "whether you buy a Ford Focus or a Lexus, you'll have to cough up some money." Yes, you do, but you're paying a different amount of money, and you get a different level of comfort.

    There's a place for open source, but faulty logic and incorrect facts are not the way to promote it.

    Note: interesting, when I first tried to submit this I got an error message

    Duplicate key or integrity constraint violation, message from server: "Duplicate entry '1-open_source_471-24' for key 1"
    • Your not looking at it properly

      To do an Apples to Apples comparison, the cost for Word 2003 on its own is $229.00 on and in 1985 MS Word wasn't any chaper..though it might have been more expensive.
      • Now adjust for inflation

        • 725.52

          Is the price that Office 2003 Pro should cost based on the article's statement that MS charges more over time for their product.

          That number is based on the MSRP for Office 97 Pro - at $599 in 1997 dollars. Those same dollars today would be worth $725.52. Office 2003 Pro MSRP is $499 in 2005 dollars - a discount no matter how you look at it.
          • While I think inflation is BS..

            I do agree that Office costs less. Even just buying Word costs less. I think Word was like $500 when it was first released for Windows. Now it is $229.

            The question is, what would it cost if there was a truely competitive market? If there was a viable competitor would Office only cost $200, $75 or whatever.
            Patrick Jones
          • $120 for the "educational" version at Staples.

            Price dropped again.

            Beginning to crowd the full version of "Works" No_Axe likes to talk about, at $80.

            I think the next version of Office is going to have a large range of prices for a wide range of functionality.
            Anton Philidor
          • Key word is educational

            Most times you are required to produce a student ID or a Faculty ID. Without it the possibility of obtaining becomes rather difficult.

            And for the low price of some download time... people can obtain a perfectly usuable Office Suite with OpenOffice. For what the majority of users, not power users, do OpenOffice is a perfect fit.

            Not everyone wants or even uses a database so that argument is rather ludicrous. As for function and feature, OpenOffice has what the average user needs at a price many cash strapped citizen can afford.
            Linux Advocate
          • Viable Alternative

            There is a viable alternative to Word and it is WordPerfect. It is better than Word and costs less.

            Excel is a different story. It is superior to Quattro Pro. Paradox is a standoff to Access. MySQL may be better than both.

            The downside to MicroSoft is that they keep using their monopoly in Windows to force upgrades of Windows and then application upgrades. It takes 5-7 years to absorb and take advantage of "new features", but the upgrades roll in every 3-5 years. An each new OS upgrade forces App upgrades.

            Stop the spinning wheel and let me get off!

            Mountain Man
          • Inflation

            What inflation do we measure.
            Salaries maybe.
            I doubt wether most working peoples salaries have risen at all in the last ten years
            How do we arrive at inflation numbers.
            Is it the cost of health benifits which have skyrocketed.
            Is it the Price of oil which has also been going through the roof.
            OR is it cost of manufacture of the product.
            I would suggest that the cost of manufacture is substantially lower than ten years ago and as Office 2003 is only updates of a product ten years old that the cost should be lower than it is
            Of course I could be wrong and am open to be corrected by some body more knowledgeable about the real inflation costs of a piece of ten year old software.
            although my gut feeling is that we are being overcharged.
  • The price issue

    [i]"In fact, today's Microsoft Office costs as much, or more, than it did 20 years ago, despite the fact that the number of users has grown exponentially"[/i]

    Okay. Besides office not existing 20 years ago, what was the price of Office when it first came out and what is it now? Did you adjust for inflation, or take into account the myriad of extra features todays office programs have over their ancestors?
    • Answer

      > what was the price of Office when it first came out and what is it now?
      A lot more than Open Office or Star Office.

      >Did you adjust for inflation, or take into account the myriad of extra features todays office programs have over their ancestors?

      Are you kidding? They say the standard Office (which itself is expensive) has features - but it doesn't have a decent webpage creator. That should be standard in any "Office" environment. It should also include a powerful drawing / illustrator program that does raster and vector graphics that are portable to other formats. All Office has is "paint" or the lame drawing tools in Word/Excel. In short, the programs within Office may have capabilities that exceed their predecessor, but todays office should include more versatality. Not just word processing, database, and spreadsheet capabilities.
  • No wonder open source has problems....

    This is a simple one. Lessee - Office 97 is the oldest flavor of Office I could find pricing in a quick search on the MS site.

    Office 97 Pro - full MSRP was $599. Take that amount and multiply by 1.21121 - the factor given by the American Institute for Economic Research as the way to convert 1997 dollars to 2005 dollars and Office 2003 Pro should cost $725.52. Except it doesn't - it costs $499. More capability for lower price. Exactly the opposite of the 'rule' you suggested MS breaks.

    By the way, the AIER conversion is based on the Consumper Price Index - it's not something they invented out of whole cloth - kind of the opposite of your article, huh?