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Microsoft The Almighty Buck

OSS Officially On Microsoft's Financial Radar Screen 639

Posted by timothy from the preemptive-boilerplate-yammering dept.
seldo writes "More news from Microsoft's latest quarterly filing: according to eWeek, Microsoft says it may have to lower its prices in response to competition from open-source software. From the filing: "To the extent the open source model gains increasing market acceptance, sales of the company's products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline". This is a fairly major revelation from Microsoft, and if it happens, it may be one of the biggest wins yet for open-source software: what do you know -- competition works!"
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OSS Officially On Microsoft's Financial Radar Screen More

OSS Officially On Microsoft's Financial Radar Screen

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  • good news (Score:3, Interesting)

    by garglblaster ( 459708 ) on Tuesday February 04, 2003 @08:39AM (#5221968) Journal
    Most definitely: It is good to not have a monopoly controlling a market.

    • MS Office will be hit first (Score:5, Interesting)

      by rseuhs ( 322520 ) on Tuesday February 04, 2003 @08:50AM (#5222018)
      Definitely good news.

      Here's my scenario:

      First, MS Office revenues will be hit and hit hard. OpenOffice does almost anything MS Office can do and it is not more difficult to upgrade from Office97 to OpenOffice than it is to upgrade to OfficeXP. - But a lot cheaper.

      Only after an organization has successfully converted to OpenOffice, we will see full conversion to Linux.

      Now we'll all have to see what Microsoft does without the hefty MS Office sales... Maybe XBox-gamers will have to pay a lot more because Microsoft can no longer afford losing millions over millions on it?

      • > Microsoft can no longer afford losing millions
        > over millions on it?

        How many billions did they have on their account? They can afford it for many years to come. If it's smart, that's something else..
        • Okay, yes, technically, given the billions of dollars that MS has, yes, they could lose millions each year on a number of products. But guess what? They don't like doing so. All businesses are in the 'business' of making money. If they can find some way to increase their cash flow, or at least reduce the amount they are losing, it would be completely bone-headed of them not to take it.

          Kierthos
        • How many billions did they have on their account? They can afford it for many years to come.

          Well, if Microsoft starts taking heavly losses, Micorosft stock would evaporate and Bill Gates remaining stock would become worthless.

      • Here's my scenario: Microsoft reduce the price of windows by 60%. The 90% of linux users who use it only because they don't have to pay for it decide they may as well use windows. Sales of office increase
        • The 90% of linux users who use it only because they don't have to pay for it decide they may as well use windows.

          Ha! I never paid for Windows, but have already paid a couple of hundred $ for Linux distros in the last years.

          Also, if you have 90% marketshare and lower your price to 60% of it was before, even if you go to 100% (which will not happen - see above), you still lost money.

        • If a person is unwilling to pay $100 for an operating system what makes you think they'll be willing to pay $40 for the OS and $500 for Office? This scenario is unlikely at best.


        • > Here's my scenario: Microsoft reduce the price of windows by 60%. The 90% of linux users who use it only because they don't have to pay for it decide they may as well use windows. Sales of office increase

          Unless times have changed, the group of people you are describing run warez rather than Linux.

      • No... unfortunately. (Score:3, Interesting)

        by YinYang69 ( 560918 )
        M$ still has a stranglehold on the hearts and minds of the business public when it comes to Office applications. They have had years of power to "innovate their software" (ie: lock-in, screw-over) for their customers, over several iterations of office suites. None of the innovations are really huge, IMHO, mostly interface changes, no real, tangible improvements on the core itself.

        I say this because, like most of you, I'm the sole IT staffer in the office. People get scared as I smile and wink that everyone will run (Open|Star)office one day. They love their Windows products. They're used to them. In fact they're so cozied up to the Windows products that they second office application they've always mentioned is Lotus. As in, "Well, I have run the Lotus applications as well." I don't know what they are trying to prove to me, that they know more than once office application? I mean, come on, LOTUS? ;)

        The OS desktop war is, actually, an easier nut to crack, because of the buzz it generates. People know what Linux is. People are interested in things that do not crash. Its in the news a lot in our industry, almost like a miracle drug for your computer. Office people in our field know these things. They hear about these things. And by osmosis, they'd try it eventually.

        But the OS component of the OSS/FS thrust is easy. People hate Windows. Computers crash. And if we've put a man on the moon without a computer crash, then dammit, a home computer running Mp3s and pr0n shouldn't crash either. Home users will put up with a bit of pain to get things going.

        But office workers are interested in not seeing things break, even for a second while trying to figure new stuff out. They're also interested in their software not getting in their way, especially about productivity. M$'s office applications don't get in their way the way M$'s OS does. "I made this Excel spreadsheet, it was perfect, it did everything. I would have never needed to write another Excel spreadsheet again! But then the operating system crashed and I had to start practically all over again." True story, very illustrative, says I.

        And there's no real buzz, remotely like the Linux buzz, for any office suite. Not yet.

        So ladies and gentlemen, the conversion starts with you, all Jehovah-witness-like. If you're an IT staffer, running Linux, I hope you're pumping out a shitload of Word-compatible docs and Excel-compatible spreadsheets. (Whether needed or not.) If you can integrate well with your business administrators running (Open|Star)office, then you're showing them that there is a low-cost and quite effective alternative. And then you can talk about it and win converts. Buzz over the app and the conversion will have to follow.

      • and better yet you can for most office computers replace them with X terminals (or that old-nasty-horribly out of date P-III 866 with 1 gig of ram and only a 180Gig of hard drive space...my gawd, how people work with horribly outdated hardware!... ok ok sarcasim over)

        Running 3 linux servers as terminals servers and application servers reduces the IT overhead by almost 80% when coupled with a migration from Microsoft based products to Linux based. I have set up a 100 user system for a local charity that had the equipment and NO budged for IT staff. Now after getting it operational I maintain it in my spare time (2 hours a week) and can dial-in to remote maintain/upgrade.

        the users can't believe how much easier linux is than windows. Their entire desktop and profile roams with them (can be done but requires massive resources under windows) they never need to backup anything as it spools to the DLT tape library every night, and they CANT BREAK their computer.

        (yes i've had windows users hose a NT4.0 and W2K system enough to need a wipe/re-install.

        Linux + terminal serving is the only smart solution for any business with a large number of office workers.. anything else is purely a waste of money and work-hours.

  • Lower Prices?! (Score:3, Funny)

    by Oculus Habent ( 562837 ) <oculus.habent@gm ... Nom minus author> on Tuesday February 04, 2003 @08:40AM (#5221975) Journal
    And lose its insane profit margin?!

    Tragic.

  • I don't believe it for a second. (Score:3, Funny)

    by x0n ( 120596 ) on Tuesday February 04, 2003 @08:41AM (#5221981) Homepage Journal
    They're up to something. I reckon he's finally managed to license English (tm) and this is a cruel prank on the OSS community.

    - Oisin

  • Success! (Score:3, Insightful)

    by gazbo ( 517111 ) on Tuesday February 04, 2003 @08:41AM (#5221983)
    It's about time we had this news. Really, OSS has no chance of competing with software backed by a large company, at least not when the price of the proprietary software are not unreasonable.

    By forcing Microsoft to release polished and well documented code at a reasonable price, OSS has pretty much achieved its goal.

    • Re:Success! (Score:3, Insightful)

      by hackstraw ( 262471 )
      By forcing Microsoft to release polished and well documented code at a reasonable price, OSS has pretty much achieved its goal.

      OSS has reached its goal? This seems to differ from the philosophy of the GNU project.

      Free software is a matter of freedom: people should be free to use software in all the ways that are socially useful. Software differs from material objects--such as chairs, sandwiches, and gasoline--in that it can be copied and changed much more easily. These possibilities make software as useful as it is; we believe software users should be able to make use of them.


      In fact, in their manifesto it states their goal as:

      Once GNU is written, everyone will be able to obtain good system software free, just like air.


      Now GNU is only one facet of OSS, but probably the biggest, and I don't see any victory here.

      I seriously doubt Sony was really happy when M$ dropped their prices to match the PS2, and were jumping up and down saying their goals were met.

      If anything, this is bad for free software, because it closes the gap between free and proprietary, so why wouldn't your average joe be more inclined to go with cheaper commercial closed source software?

  • Margin comparison... (Score:5, Insightful)

    by MosesJones ( 55544 ) on Tuesday February 04, 2003 @08:42AM (#5221987) Homepage

    Before the muppets start talking about products can't compete with free, remember support costs, staff costs etc etc.

    One element on margin is that it is estimated that Microsoft work around the 30% mark, while IBM work around 7% and are booking multi-millions in association with Linux. So this means that Microsoft will be reducing their margin, not becoming unprofitable.

    • Re:Margin comparison... (Score:4, Interesting)

      by Gadzinka ( 256729 ) <rrw@hell.pl> on Tuesday February 04, 2003 @09:32AM (#5222199) Journal
      I always wonder about this nonsense talk about product's price being only part of the TCO.

      I agree that price of the box with OS/DB/whatever is only part of the equation, but since when MS/Oracle/whoever started to give away product support for free?

      I mean, whatever software you are using, it usually requires some helpdesk/administration. And support that you've got in the price of the software package is good for nothing.

      I know because I tried to get several times support for NT, MSSQL etc. About the only advice is to reinstall system, database, or (sic!) decrease the size of database.

      And paid support for Oracle or MS SQL... Don't get me started. Prices of that software even in the highest version with unlimited users, processors etc are nothing compared to costs of those support contracts.

      Robert

  • I think this is mostly... (Score:5, Insightful)

    by Anonymous Coward on Tuesday February 04, 2003 @08:45AM (#5221999)
    PR... nothing more than PR...

    It's not that they're wholly unaffected by the advance of Linux, but this statement should be bundled with others they use to show that "We have brutal competition... really!"

    • Re:I think this is mostly... (Score:5, Insightful)

      by Iamnotalawyer ( 452226 ) on Tuesday February 04, 2003 @09:16AM (#5222137)
      You couldn't be closer to the truth. This kind of public statement is surely to be referred to in defence at some future MS anti-competition trial. MS may even point to an unrelated drop in prices (such as the end in lifetime of a version prior to the release of a new one) as a sign of competing market forces at work. Points scored here by MS's counsel and PR team for being proactive in their strategy and points should be deducted from the press for actually printing this blatant spindoctoring.

    • Re:I think this is mostly... (Score:5, Insightful)

      by MacAndrew ( 463832 ) on Tuesday February 04, 2003 @09:55AM (#5222352) Homepage
      Hey, their need for token competition may be the only reason Apple has survived. If they'd yanked Office for Mac, the Mac would have been in serious trouble. Scary that a suite of generic applications can have so much influence.

      Apple may be on its own legs securely now, as may Linux. It will be interesting when Microsoft has apples-to-apples competition, but because of Microsoft's efforts to shove everyone else off the store shelf it will be years before they can no longer manipulate "the competition."

      If Microsoft is smart -- how many sentences start with those words? -- it will begin to adapt, but also wring every last dime out of the legacy products. `They haven't done well in their efforts to dominate new markets where they don't benefit from the Windows foundation, such as the internet and little game boxes. Gates, despite his claims, has no vision.
    • This is not PR. This is CYA. (Otherwise called "Cover Your Posterior".)

      Companies have to disclose anything that might materially affect their business to both the SEC and investors.

      IMHO, it is high time that Microsoft started realistically stating how much of a threat Open Source is. It's not like Open Source is going to hurt Microsoft in the next couple of quarters. But it is a long term concern, which means something of interest to investors.

  • Time to OSS evolve to the next level (Score:5, Insightful)

    by Anonymous Coward on Tuesday February 04, 2003 @08:45AM (#5222000)
    It was about time.

    The thing that pushes ppl to Linux and Open Source is the price. Depending if MS lower its prices too much, it may cause a lot of ppl not to consider OSS software at all.

    Who would want use and a disgruntled OS if they may get nice box, nice gradient buttons, stylish consistent GUI for a reasonable price?

    Maybe it forces OSS software to evolve from merely copying proprietary functionalities to actually improve users' life in order to make a differentiation. A reason for ppl to use it. For now, it's price.

    • Re:Time to OSS evolve to the next level (Score:4, Funny)

      by Xpilot ( 117961 ) on Tuesday February 04, 2003 @09:05AM (#5222084) Homepage
      stylish consistent GUI for a reasonable price?

      Stylish? Stylish? You mean the big, colorful plastic looking WinXP buttons? You call that stylish? To quote a reviewer on the web (I forget where from):

      The Windows XP interface looks like some kid ate a box of crayons and threw up on the screen.

      Is it stylish because Microsoft made it?

    • Price is my least concern (Score:5, Insightful)

      by YeeHaW_Jelte ( 451855 ) on Tuesday February 04, 2003 @09:31AM (#5222193) Homepage
      I couldn't care less about the price, and I think the majority of OSS users isn't motivated by the low price. Hell, I can get windows for free just as well, just talk to my l33t h4ck0r neighbour kid and ask him to burn me a copy. The price argument is old & tired: get off it!

      Even companies don't or shouldn't use OSS for it's price; dozens of researches have shown that the TCO (total cost of ownership) for windows and e.g. linux don't differ that much. They should use, as should individuals, OSS because they believe in the OSS philosophy and because the OSS style fits their own style of computer usage.

      For me, it's about these things:
      - From kernel to application, I can see exactly what it's doing and why
      - If it doesn't work the way I like it, I can change it or try to find someone who already has
      - I'm not a newbie, I know computers and I don't want to be treated as such
      - If the configuration changes, I want to be the one who does it, not the OS itself

      All these things add up to a package microsoft can't compete with, even if it would cost me more, not less that propriety software. And I wish everyone would stop hoping every last computer user starts using OSS, because it's just not going to happen, and it's just not necessary. Some people want ease-of-use, and others want power. Just so.

      • Re:Price is my least concern (Score:4, Insightful)

        by AftanGustur ( 7715 ) on Tuesday February 04, 2003 @10:54AM (#5222725) Homepage


        Even companies don't or shouldn't use OSS for it's price; dozens of researches have shown that the TCO (total cost of ownership) for windows and e.g. linux don't differ that much. They should use, as should individuals, OSS because they believe in the OSS philosophy and because the OSS style fits their own style of computer usage.

        After the XP license extortion, companies should begin to realise that they have been had..

        Companies paid tens if not hundreds of thousands of dollars in license fees to Microsoft and their gangs of henchmen (resellers) just to "extend" their software contracts.

        The company where I work paid about 230,000 Euros for the contract "Extension". And what did the company get in return ? Some upgrade called "XP" ??
        The tough question is, how is management going to justify this expensive payment if the company doesn't use this thing called XP ??

        And surely we installed XP. And what did it cost us ?? About 6-8-man years in preparation, testing and roll-out. And what did we get that we didn't have already in NT4 ?? Nothing !!

        Being in charge of your upgrade cycle is priceless..

        Hmmm, priceless...

        1 copy of Linux = 20$
        external consulting and training = 30,000$
        The feeling you get when the year report comes out that shows you saved the company hundreds of thousands in licensing fees .... Priceless..

      • - From kernel to application, I can see exactly what it's doing and why
        - If it doesn't work the way I like it, I can change it or try to find someone who already has

        OSS has advantages, but let's be realistic: the above two items are myths. Do you really understand the source to your kernel and every application you use? All ten million lines of it?

        Just because the source is available doesn't mean that someone can just pop in and understand the architecture of a large program. I've worked on many large projects in the same office as the other developers. And quite frequently someone pops into my office--or I pop into theirs--with a short question that requires a lot of digging and scribbling on a white board to answer. Frequently someone says "I want to change the way X works," and after a lot of asking around it turns out that X would be a bad idea because of various low-level interactions between features (for example). With most OSS, you don't have such easy access to the developers; they can't explain their code to everyone who comes along. You end up with people who blindly make pet changes that they don't understand.

        In short, access to the source is good. Being able to recompile the source is good. But understanding the source and being able to correctly modify it is not one of the reasons OSS is popular.

  • It's really not that big a deal (Score:5, Insightful)

    by signe ( 64498 ) on Tuesday February 04, 2003 @08:47AM (#5222007) Homepage
    Microsoft has to put everything they could possibly think of that might conceivably cause the stock to go down even slightly in there, otherwise they could be held liable by their stockholders.

    So while it's certainly nice that they finally have to publically announce this as a possibility, it really doesn't mean anything. I've seen some wild things in quarterly and annual reports.

    -Todd
    • Yet the fact remains that OSS is now officially deemed a competitive threat to the MS empire. Combine that with a few other facts: 1) that MS still doesn't know how to combat that threat and while the wet-noodle-slap legal ruling was a travesty of justice it'll still deter MS from using their most underhanded arsenal of tactics, and 2) Microsoft's financial pyramid scheme depends on ever-increasing profits and a reversal will result in all kinds of additional expenses compared to their past mode of operation.

      However the OSS community, despite being the ideal builders of level playing fields, are still far from having significant (let alone equal or over-riding) influence in the areas where MS holds their most valuable monopolies. Giving Microsoft's obscene profits ever so slightly bigger squeeze is just a minor symptom stemming from the battle over the control (or freedom) of crucially important standards, protocols and file formats. If competition is to work, that's where it really happens, not on Microsoft's product price tags.

      The dotNET thingy is where MS plans to create their next complete set of standards to obsolete those caught up by the OSS community so expect some semi-serious revamping of their Licensing 6.0 in the months ahead. But don't expect to see OSS mentioned anywhere in those announcements; it'll all be due to this great innovating company gracefully catering for their valued customers' needs and wishes and "giving them what they ask for"...

      It'll be interesting to see whether that can slow the adoption of OSS by any noticeable degree. I'm afraid (read: convinced) that Microsoft's hardballs are finally heading back home to roost.

  • Hence, No Bathroom. (Score:5, Funny)

    by EvilDrew ( 523879 ) on Tuesday February 04, 2003 @08:48AM (#5222010) Homepage
    So this is why the Microsoft Home Of The Future has no bathroom. They can't afford it anymore. Sweet.

  • Free (libre) vs. free (beer) (Score:5, Insightful)

    by Koos Baster ( 625091 ) <ghostbustersNO@SPAMxs4all.nl> on Tuesday February 04, 2003 @08:51AM (#5222023)
    This is a fairly major revelation from Microsoft, and if it happens, it may be one of the biggest wins yet for open-source software: what do you know -- competition works!"

    Sigh. Since when was lowering Microsoft's prices a major objective of OSS?

    This is *not* a big win. Contrary: it reduces the perceived difference between OSS and MS from a consumer's perspective and may even force Linux vendors to lower their prices and thus reduce their revenues.

    ...Now if Microsoft interpreted the OSS threat the way they should and decided to counter it by open sourcing their stuff... THAT would be a major win for the OSS (by definition)!

  • This has happened before (Score:5, Insightful)

    by kahei ( 466208 ) on Tuesday February 04, 2003 @08:53AM (#5222028) Homepage
    This is really quite analogous with what happned when MS's cheaper solutions began to eat the Unix market from the workstation up.

    At first, MS's main advantage was price, but gradually they innovated(*) and re-engineered so that their product was always high enough quality to attack the next layer up -- from word processing platform up through file/print server to heavy-duty servers and workstations.

    Now MS are being eaten from below by a new generation of even cheaper systems. Like early MS systems, these open source offerings are both derivative and weak except for their price advantage. However, a price advantage is enough to secure a foothold, and over time open source systems will be strengthened and will begin to innovate and will be able to take over better and better MS-held markets.

    In about 10-15 years, the cycle will probably start again, taking us another step further from the days of monolithic systems and proprietry hardware/os/support lock-in (which is where we were at before the Attack of the Killer Micros, young'uns). It's all good.

    (*)Rather than freaking out and writing posts about 'M$' and so on, why not go outside and get some fresh air?
    • This is really quite analogous with what happned when MS's cheaper solutions began to eat the Unix market from the workstation up.

      Except it's not because Microsoft is being eaten from the server down.

  • Waiting and watching (Score:3, Funny)

    by FungiSpunk ( 628460 ) on Tuesday February 04, 2003 @08:54AM (#5222033)
    I love OSS, but just think...

    OSS wins and almost all the servers and desktops are OSS. Then the companies that "bought" into the OSS, get annoyed that Linus is not releasing the fixes quick enough. Forks start appearing left right and center and suddenly every company has its own sponsered Linux distro.

    Mr Gates waits patriently in the wings waiting for chaos to reach its peak before finally saying..."Well there is a reasonable, inexpensive option for your OS problems, you know?"....(thinks to himself "once more the wheel of fate turns in Bill's direction...mwhahahahaha!")

  • Failing economy is just irrelevent (Score:5, Interesting)

    by Uninvited Guest ( 237316 ) on Tuesday February 04, 2003 @08:57AM (#5222045)
    I suppose the continuing sluggish growth in the US economy has nothing at all to do with it either. Isn't this the same sort of argument that the RIAA used to explain the drop in CD sales? "The competition from free sources is reducing our sales!" In fact, slow growth in the economy impacts all kinds of sales, including Microsoft's products.

  • Quick Translation (Score:5, Funny)

    by cluge ( 114877 ) on Tuesday February 04, 2003 @08:59AM (#5222055) Homepage
    A translation for those not fiscally inclined.

    *large puffs of smoke appear, and a talking face begs you*

    "Gosh darn it! Open Source is digging into our revenue. Lord knows that Open Source will be the down fall of all things good, look whats happening to our profits! **Ignore present world wide economic conditions they have no bearing here** I mean, we weren't really price gouging before, we were just looking out for our stock holders. Now our profits are going to go down because we have to lower our already, really, really, really fair prices or else we won't keep market share. It's unfair competition! **Ignore present world wide economic conditions they have no bearing here**"

    ***second translation***
    "G*d d*mn this sucks, we have to compete now, we just can't buy Linus out. So much for our past competitive strategy"

    • Re:Quick Translation (Score:3, Informative)

      by NineNine ( 235196 )
      Um, no. It's a release to the SEC. It's to notify their owners (shareholders) why the share price may go down. It's a financially and publically responsible thing to do.
      • It's to notify their owners (shareholders) why the share price may go down.

        Yes.


        It's a financially and publically responsible thing to do.

        I think you could have worded this better. Is this statement meant to somehow imply one or more of the following...
        • Microsoft is publicly responsible?
        • Microsoft has a social conscience?
        • Microsoft actually cares about investors? (or anyone else?)
        This is required by the SEC. Pure and simple. If they didn't have to disclose this, they wouldn't. This is nothing but CYA. (CYA is a legal term that means Cover Your Posterior) This way when some investor comes back later to sue because the stock takes a dive and doesn't recover, Microsoft can say "we warned you", and "we warned the SEC".

        Do you suppose that Microsoft is happy about having to (publicly) admit to the SEC that Open Source (a) threatens their business model and (b) might force them to lower their prices?

        Okay, I can see one way to interpret it the way you said. It is publicly responsible of Microsoft to disclose this information. After all, the alternative would be to try and hide it, bury it deep somewhere, and deny it. As Open Source takes hold more and more, keep the stock price up by licensing the newly patented Creative Accounting techniques. (Thus behavior would reinforce my points above.) Given that they are disclosing rather than hiding, then, I suppose I must agree with your second point; in some sense, it is publicly responsible of them. It is better than this paragraph's alternative behavior. So you're right. I agree.

  • Servers? (Score:5, Insightful)

    by Mr_Silver ( 213637 ) on Tuesday February 04, 2003 @09:07AM (#5222089)
    Given that I've seen Linux make inroads into Microsoft's server market it wouldn't surprise me that, if they do reduce their prices, it's only for the "server editions" of things.

    Despite all the comments on here about Slashdot readers, their Mum, Dad, Grandmother, Aunt, Uncle and kids using Linux on the desktop - I don't think the desktop users are making any significant decreases to sales of Windows XP just yet.

    A year down the line though, who knows ...?

  • Upgrade cycle slowing (Score:5, Interesting)

    by PinglePongle ( 8734 ) on Tuesday February 04, 2003 @09:09AM (#5222102) Homepage
    I don't think OSS is making a big dent in MS revenues - it's still virtually impossible to buy a new PC without windows pre-installed (and pre-licensed).

    Instead, I think MS is suffering from a lack of innovation. There is simply no compelling reason for corporates to upgrade their software anymore - Windows 2K is fine for business use, they don't get anything in XP other than support problems. You might upgrade Office to be able to read other people's files, but there are precious few "must-have" features to differentiate the current offering from Office 97.

    The most significant reason for users to upgrade in the recent past has been MS's change in licensing policy - signing up before the deadline gives "free" access to upgrades for a limited period. I know that many corporates bitterly resented this pressure. However, the next version of "Windows for Servers" keeps getting pushed back, and many corporates are only now upgrading their servers from NT4 to W2K - not to take advantage of new features, but because support is being withdrawn.

    So, while OSS is undoubtedly snapping at MS's heels, providing a much-needed alternative and nibbling away at the revenues, the bigger problem is that historically, Microsoft have taken ideas developed elsewhere and "embraced and extended" them. Right now, there are precious few radically new ideas to embrace, and the only way for MS to continue to grow their revenue is to find new must-have features. In short, they need to innovate under their own power.

    Welcome to the real world, Bill....

  • MS Price Drop Not Good...(TM) (Score:3, Insightful)

    by Jace of Fuse! ( 72042 ) on Tuesday February 04, 2003 @09:12AM (#5222114) Homepage
    Really, I don't see how Microsoft lowering their prices could be good for anybody but them.

    Well, it would save a whole lot of people a whole lot of money, so I guess that IS good, I guess. But really I see Microsoft just strengthening their foothold, which is bad for everyone in the long wrong.

    Imagine if Windows cost $25? Instead of Joe-Blow doing cartwheels to get around XP Activation, they'd just buy 3 copies, one for each machine.

    Imagine if Windows cost $9.99? People would buy copies for their mothers, friends, families, etc, just to "free them of those stupid problems they have with Windows 98/ME".

    The fact is, Microsoft could probably still make some changes internally that would allow them to profit off of Windows if it sold for almost nothing, and THEN what would open source have to bank on? Moral righteousness? HAH. That'll sell.

    • price drop irrelevant (Score:4, Interesting)

      by g4dget ( 579145 ) on Tuesday February 04, 2003 @10:13AM (#5222452)
      The fact is, Microsoft could probably still make some changes internally that would allow them to profit off of Windows if it sold for almost nothing, and THEN what would open source have to bank on? Moral righteousness? HAH. That'll sell.

      Most people already pay for Windows for each of their machines, whether they want to or not. I certainly have a Windows license for each of the dozen PCs that I have, and only one of them actually runs Windows.

      So, your notion that people use open source because they have to pay for Windows flies in the face of reality. People use open source software because it simply works better for them.

      Depressing for Microsoft, isn't it, that people throw Windows away even though it is pre-installed and they have actually been forced to pay for it and wouldn't incur any additional costs by just using it.

  • Finance speak (Score:3, Insightful)

    by sql*kitten ( 1359 ) on Tuesday February 04, 2003 @09:15AM (#5222133)
    This is a fairly major revelation from Microsoft

    No it isn't, it's just financial boilerplate text that the lawyers bolted on. It's to cover their asses in case anyone tries to file a class-action suit against them if their profits fall. I used to work for a NASDAQ-traded company, and we had this crap in our quarterlies all the time. You have to enumerate every possible risk to your business, even stuff like we operate in country X and there is a risk of an earthquake, which may materially affect our revenue in that market, blah blah.

    Nothing to see here, move along...

  • Micorsoft announce they are no longer a monopoly.. (Score:4, Funny)

    by clickety6 ( 141178 ) on Tuesday February 04, 2003 @09:19AM (#5222142)
    and so they no longer need to act like one!

    Or am I just getting cynical in my old age?

  • and the propaganda mill cranks on.. (Score:4, Insightful)

    by new death barbie ( 240326 ) on Tuesday February 04, 2003 @09:19AM (#5222145)

    Now every Microsoft shareholder has become the enemy of OSS

    Now Wall Street analysts will be announcing to the world that Microsoft profits will be impacted by OSS --

    And if Microsoft is 'hurting', who else in this sensitive economy could be feeling the pinch from the free software terrorists?

  • Officially on their RADAR? (Score:5, Funny)

    by hype7 ( 239530 ) <u3295110.anu@edu@au> on Tuesday February 04, 2003 @09:20AM (#5222146) Journal
    You gotta be kidding me! This reminds me of the old joke... a US Navy Carrier sees a big blip on the radar, and sends out of the radio:
    "This is the USS Big Ship to unidentified target, please change course." The response comes back:
    "That's a negative, Big Ship".
    "We are a Aircraft Carrier from the US Navy. Now please change course!"
    "That's a negative, Big Ship. We're a lighthouse"

    For chrissakes, OSS has got to be the biggest stack of rocks sitting on MS's radar that they've had in a long, long time.

    -- james

  • If Windows drops to $100 ... (Score:3, Interesting)

    by fygment ( 444210 ) on Tuesday February 04, 2003 @09:21AM (#5222154)
    ... or less then OSS is dead (unless it really starts embracing the making of Win apps). It's a lesson the music industry may learn as well if they want to truly end the Napster Clone Wars.

    • Re:If Windows drops to $100 ... (Score:3, Insightful)

      by Anonymous Coward
      Absolute rubbish!

      OSS isn't *just* about cost, it's about having the power to fully control what software you install and run, the ability to freely modify that
      software to your liking and to use software that uses open standards, not proprietary ones.

      Sure, if the price of Windows drops, many organisations and individuals will be less inclined to migrate to OSS but I doubt very much that those people already using OSS will migrate to Windows because it's cheaper!

      Why do the majority of web sites run on Apache when Microsoft IIS is free??? (Okay, you need a license for the underlying Windows OS, admittedly.) OSS is not *just* about cost, it's about stability, security and customisability...
    • First of all, OSS can't "die" as you put it. The vast majority of OS/free software is developed because people want to develop it. OS developers are not competing with windows; they're just developing SW because they want to. The majority of them don't care about getting money for their SW.

      What you're referring to is companies like SuSE and RedHat, which sell Linux distributions. These might be more vulnerable, but I believe that this step is "too little, too late". Many people simply don't trust MS. Windows' abominable record on security really doesn't sit well with responsible administration of PCs, even on the desktop. Non-geeks seem to "get" this in a way that even 12 months ago they did not.

      There's also the fact that Windows isn't the only cost. I bought my copy of WinXP for £120 (~$200) in the UK. For that I got Windows XP and not much else. My copy of SuSE 8.1 cost me £60, for which I got the OS on DVD. The rest of the DVD is occupied by thousands of SW packages. Even if Windows had cost £60, the SUSE would still be an outrageous bargain in comparison. The point is that it would cost a LOT to replicate that other SW under Windows. Even if I just use the Office-alike packages, I'd still need to pay £250 for the real thing. I do a lot of development work, so I'd also have to shell out for Visual Studio, or whatever it's called as well. The cost quickly mounts up.

      Obviously I'm just an individual, and £400 or whatever it would be doesn't really matter either way. But if I'm buying 100 PCs for an office somewhere and I need to pay even £150 for each copy of Office, that's still FIFTEEN THOUSAND POUNDS. That's a lot of money for software which still seems to crash rather a lot, and which seems to act as a magnet for viruses and worms.

  • WinXP (Score:3, Insightful)

    by LiquidAsphalt ( 627915 ) on Tuesday February 04, 2003 @09:29AM (#5222189) Homepage
    I have been a good user of Linux for quiet some time. As an avid geek a computer hobbyist, Linux is the best platform for me to play with. While MS does have the applications, support, and user base that Linux does not, its the shady practices that are going to make people go to Linux.

    Back in the day, computer users like me were power users. You can compare us to the car afficionado, but to Joe Blow, a computer is a tool that helps him browse websites, instant message, MP3s, porn, whatever. Back in the day I enjoyed BBSing and posting in forums thru my 9600 baud modem, back then Joe Blow didn't have a computer.

    What I have noticed throughout all this is people use certain things as tools, once they can't do what they want to do, they will find another way. With the advent of XP, windows hasn't become easier to use. I have a hard time figuring out how to do what. Desktop sharing? WHat a joke that is. What about Media PLayer 9, all that drm crap is going to make things HARDER on people. MS is not making the computer experience any friendlier, they are siding with the corprorations that are against the people anyways. THIS is what will lead people to Linux, software that people want, not corporations.

    MS is becoming desperate because they KNOW they made bad choices and OSS is going to bite em back. Not today, not tomorrow, but SOMEDAY. THem lowering the price make no difference, ultimatly its going to be what the people decide they want and not be told what they have to have.

  • wait wait wait wait wait wait wait... (Score:3, Funny)

    by msouth ( 10321 ) on Tuesday February 04, 2003 @09:31AM (#5222198) Homepage Journal
    I was sure that I read somewhere that the price of the software isn't an important factor in the total package, and thus the free-ness of Linux was irrelevant. Let's see, what company was it that was saying that over and over?

  • How can we know if this is good? (Score:4, Insightful)

    by gorjusborg ( 603799 ) on Tuesday February 04, 2003 @09:35AM (#5222221) Journal
    I am unsure that this is a good thing. I think you all should be a little skeptical too.

    Why does anyone want to see Microsoft go down the tubes?

    Sure, they have been overcharging us for their OS and office software for years, but it isn't like the money didn't go to good use. After all, most of the features that we see in OpenOffice and other useful apps for Linux came from ideas that were original or at least perfected (I use the term loosely here) in MS apps.

    Sure, I love the GNU project, Linux, and OSS in general, but would we even have a target to hit with our free software if we didn't have a company like Microsoft to chase after?

    I hate to see the mob mentality take over with this 'Linux vs. Windows' stuff rather than contemplate what a collapse of Microsoft would really mean to us (as developers, users, etc.)

  • The real problem isn't OSS... (Score:5, Insightful)

    by dinotrac ( 18304 ) on Tuesday February 04, 2003 @09:37AM (#5222236) Journal
    Sure, OSS is a competitive force to reckon with, but the big problem for MS was a little further down in the story:


    Microsoft also alienated many of its largest customers with its controversial new Licensing 6 and Software Assurance program, which took effect last year.


    Businesses are willing to pay for value delivered. They are not, however, willing to be raked over the coals, especially by someone who is making the profit margins that Microsoft makes in an economy that has everyone else scrambling to make a buck.

    Add in the costs of continual upgrades -- required by Software Assurance, BTW -- and the hardware to support them, and the lost productivity due to bugs and security flaws, and we have some unhappy campers out there.

    OSS alternatives mean that Microsoft will have to lower prices, probably to a level lower than pre Software Assurance days. Customer anger and memories mean that it may not be enough to keep some of those customers from going away for good.

  • OSS out of focus? (Score:3, Insightful)

    by Sonicboom ( 141577 ) on Tuesday February 04, 2003 @09:48AM (#5222306) Journal
    it may be one of the biggest wins yet for open-source software

    So - is the OSS movement about crushing Microsoft now?

    I didn't realize that the OSS community was at war with Microsoft. I thought it was about making good software, and keeping the source open...

    • Re:OSS out of focus? (Score:3, Interesting)

      by miffo.swe ( 547642 )
      I cant agree with you more on that. While i hate them (obviously) i dont want them dead. What i do want is a nicer kinder Microsoft who could behave like a sincerer nicer company without world domination no1 on their agenda.

      Sadly though this is probably going to make Microsoft starting to fight and stomp all over linux, my favourite thing in life (wife, bah! she doesnt vim!). If they start to mess with linux and tries to destroy it with the slightest shoddy practices instead of cooperation i will hate them furiously. Compete is ok but most of us oldies knows that MS has mixed up compete and nuking a competitor to the stoneage.

      If we just ignore them and let them have their way while we code chances are we arent able to use the internet once they are finished up at Redmond. Some of us will have to fight the legal side of things to.

  • What could this mean? (Score:3, Interesting)

    by erroneus ( 253617 ) on Tuesday February 04, 2003 @09:49AM (#5222311) Homepage
    As shown in previous reports, Microsoft's only profitable areas are the products directly threatened by OSS. The other Microsoft activities are currently losing money and are being propped up by profits from Microsoft's OS and Office products. If those products are going to achieve lower margins, then will the ventures losing money be cut? And if so, any predictions on which ones they will close first?

  • Feeling like a target now... (Score:4, Insightful)

    by miffo.swe ( 547642 ) <daniel@hedblom.gmail@com> on Tuesday February 04, 2003 @09:59AM (#5222374) Homepage Journal
    Altough it is nice and warming to see that MS may have to lower their insane prices i dont feel that happy. If this is true then Linux is really in the line of fire from Redmond. The ones who have proven time and time again that nothing is too evil or shoddy if it helps remove competition.

    I think we linux users should brace for an attack like nothing before from MS. They will use any meens avaliable to sustain their high revenues. A slight fall of the revenues and MS stocks will likely fall like a ton of brick. Considering how much stocks is owned by staff in all levels i presume there is an enormous internal incentive to thwart linux in its cradle.

    We should have a central site documenting every shoddy move and backdoor mudshot contest from Redmond HQ. I assume that would be some horrific reading on a site like that pretty soon now.

  • Government (Score:3, Informative)

    by BigBir3d ( 454486 ) on Tuesday February 04, 2003 @10:02AM (#5222398) Journal
    This has nothing to do with what the common citizen is thinking.

    This is because of governments such as Germany's opting to mandate open source instead of mandating using the best available package, regardless of what that is*

    * = Could be OSS, could be MicroSoft, could be a proprietary UNIX, could be Mac, etc.

  • Comment removed (Score:3, Insightful)

    by account_deleted ( 4530225 ) on Tuesday February 04, 2003 @10:33AM (#5222578)
    Comment removed based on user account deletion

    • Re:Open Source Software For (Microsoft) Dummies... (Score:4, Funny)

      by josh crawley ( 537561 ) on Tuesday February 04, 2003 @11:54AM (#5223072)
      ---1) Go read a history of UNIX / M.I.T / Stephen Levy's "Hackers" book. Then you'll understand people were giving away software long before they had any ideas before making money out of it. Selling software is a newer idea...

      What you talk about is the original Unix Way. If every program is a simple single minded program, and somebodt else would like to borrow a snippet of code, why not? And no, selling software is NOT a new idea. It's just another way to pay the programmers on code. And of course, if they open that code up, why buy their product (enter vicious circle)

      ---2) OSS/FSF/GPL exist purely to protect the rights of those who *choose* to distribute software freely to continue to do that, to allow them (and anyone else) the ability to use and modify that software and to ensure that nothing is hidden behind proprietary standards.

      I think you misunderstand standards documents. Standards can be wrote in plain language that describe how something happens. Code is just an implementation of that standard.

      ---3) Microsoft *sell* software. They are not innovaters, just damn good at repackaging the ideas of others and marketing it - or just buying the company that innovated it in the first place. They can, and have, used Open Source software ideas in their own products but, then, that's what it's designed for. (Yes, when you Windows people venture to the command line on your Windows boxes, whenever you "ping" something, you're using software that originated from the dirty, disgusting free software movement.)

      Oh fun. Yet another "I hate MS" person. Get this straight. They are a business. They are in the software business to make money. They arent in there to evangelize, bemoan, or any other religious war that MANY linux users get suckered into. Even the FreeBSD people are worse in that regard. Does "My shit does not smell" make sense to you?

      ---4) OSS does not give a damn about Microsoft "competition". OSS/Linux/FreeBSD users, who probably have experience with Windows, might hate Microsoft (yes, I'm one of them) because of their business methods, rubbish software or simply because it's "cool". But OSS was there long before Microsoft as a defence against predatory practices from UNIX vendors and will be there long after.

      There's plenty of reasons why you would use Linux, rather than Microsoft stuff that would not be "I hate MS" topic.

      First, Linux on the servers makes sense because MS has a bad tendancy to break stuff/leave servers unpatched.

      Secondly, Linux is coming up to common recognition. I'm just riding the wave so I'll have an edge on the new Linux users.

      Third, I cant afford a Legit copy of MS programming suite, so I use GCC. That pisses me off more than anything, cause I remember the days where MS gave away compiliers (Quick Basic) so you could do basic programming stuff. Now, you have to fork over 300$ to get a copy. With Linux, GCC is free, along with all the libs, and additional compilers. And I get multiple CPU compiles ;-) The compiler is probably the biggest reason for me to 'switch'. If I could develop Windows stuff (and see basic windows programming like seeing the source for notepad and calc), I'd probably wouldnt have went to Linux.

      ---5) Microsoft reducing the cost of their products / turning Windows into an operating system / sticking Gates' head on a pole outside 1 Microsoft Way might slow down the migration from Windows to OSS but it probably won't do anything whatsoever to those already using / developing OSS software.

      What? So you wanna stick Gates' head to a pole which will speed up Open source?

      --6) Microsoft cannot buy OSS because there's nothing tangible to own, they can't stamp on OSS because it's too widespread, they can just continue to spread FUD as they've always done. End of OSS lesson...

      !THUMP! What was that? Oh, just the dead horse getting beat.

  • The SEC works...not competition... (Score:3, Informative)

    by Spoing ( 152917 ) on Tuesday February 04, 2003 @11:00AM (#5222747) Homepage
    The Securities and Exchange Commision's rules on filing reports on public companies has changed and old rules are being more strictly enforced. Because of that, compounded by the scandals of the last few years that have lead to shareholder lawsuits and other government actions, companies are acting in a more above-board and sane manner.

    In Microsoft's case, they are following the SEC's guidelines like many other companies. This is a change for many companies. In Microsoft's situation, we have seen these very recient changes;

    Years ago, they should have issued dividends...now they plan to.

    Decades ago, they should have broken out each division of the company and discussed profits and losses in each...now they do.

    Decades ago, they should have discussed all reasonable impacts on thier profits for each division...now they acknowledge open source.

    Don't think this is a new thing for them. Open source has been a potential impact on MS's profits for a couple years. The only thing that has changed is that MS must acknowledge it as a possibility. If they have suffered an actual loss due to open source, the SEC will pressure and eventually require MS to report the loss after it has happened. As of now, no loss is obvious. Microsoft is speculating and has not acknowledged a loss due to open source -- yet. f they did not point this out, it could be the basis for a future lawsuit if a loss occurs.

    Thank the SEC, though late themselves, for doing things now that force transparency...that forces some information into the open so we have a better chance to judge on merit not PR.

  • Do not read too much into 10-Q filings! (Score:3, Informative)

    by FallLine ( 12211 ) on Tuesday February 04, 2003 @11:19AM (#5222841)
    Slashdot is reading way too much into this. It is common knowledge in the financial industry that 10-Qs are little more than a way of management teams protecting themselves from shareholder lawsuits. It is common practice to state virtually every conceivable risk, no matter how unlikely it is, no matter how far beyond control of management it is to minimize that risk, no matter how unlikely a different investment is to minimize that risk, etc..., so that management cannot be so easily sued if, god forbid, that event actually occurs. Unfortunately in our overly litigious society managements teams have been destroyed financially by frivilous lawsuits like that. In any event, as a result of all of this, it is really a mistake to read anything into 10-Qs. The shear volume of all the disclaimers and the generalities that they must make prevent management from being able to make an honest assesment of the far more likely threats; they get lost in the clutter and in the generalities. They are practically pointless to read these days. In other words, this is not proof that MS takes OSS seriously.

  • nice excuse but just spin (Score:3, Insightful)

    by geoff lane ( 93738 ) on Tuesday February 04, 2003 @11:41AM (#5222977)
    The real reason they may have to drop prices is all those people who see no reason to upgrade.

    Despite MS, the modern PC + pre-installed s/w covers almost everybodies needs and the home market is very conservative and just will not re-buy the same s/w every 3 years just to maintain the MS share price.

  • Stop throwing the word "competition" around (Score:4, Insightful)

    by flacco ( 324089 ) on Tuesday February 04, 2003 @12:29PM (#5223350)
    OSS does NOT "compete" with MS in the traditional, economic sense - it rewrites the rules completely. Classic economic competition does NOT work against Microsoft. In that arena, they have several key markets totally sewn up, and competition simply does not exist because of their dominance.

    OSS is only making inroads because it plays outside the rules. There is no profit center, there is no company organization, there is no ownership...

    It's unhelpful to give credence to the fallacy that Microsoft has "competition".

  • Within 10 years... (Score:3, Insightful)

    by Some Bitch ( 645438 ) on Tuesday February 04, 2003 @01:07PM (#5223779)
    ...I firmly believe we'll see the first release of MSlinux. No-one can deny they have some of the world's most talented programmers working for them, their main problem is simply the code base they're working from.

    If the wind of change starts to blow 'due linux' then MS aren't going to sit quietly and die, they'll put together the biggest team ever applied to a linux project and release a distro that will blow RH/MDK/etc out of the water (assuming they survive till then of course). The geeks will still want debian/slackware/etc but MS will create a linux desktop as easy as XP/Win2k for the rest of the world.

    Once they're in the OSS game they won't be able to trample all over standards in their usual haphazard fashion because their distro won't be compatible then.

    Make no mistake, if linux starts to be where the money is then MS will go there.

  • First you win... (Score:3, Insightful)

    by Tony ( 765 ) on Tuesday February 04, 2003 @02:32PM (#5224550) Journal
    ...what do you know -- competition works!

    Uhm....

    Competition hardly works. So far, Microsoft has been able to kill everything that would present true commercial competition. Linux had to completely re-write the rules (from Microsoft's perspective) by providing not only binaries, but source, for Free.

    Linux is not "competing" with Microsoft. Most Linux folks I know hardly give a damn about Microsoft. In fact, the way this whole affair has gone with me (since 1993) is (from Microsoft's perspective):


    First you [Microsoft] win
    Then they fight you
    Then they laugh at you
    Then they ignore you

    I think we are in the "Then they laugh at you" phase, in which we realize the fight is over, and that really, there was no fight; it was just us, writing code and letting people know we have something worth looking into.

  • Operating Systems should be Free (as in beer) (Score:3, Interesting)

    by lildogie ( 54998 ) on Tuesday February 04, 2003 @04:09PM (#5225567)
    Paraphrasing a quote (by whom, I forget): an Operating System, by definition, does nothing.

    The point being, an OS is a platform for applications, which do the work.

    MSWindows notoriously bundles lots of applications into the platform, so it doesn't really count as a bare-bones OS.

    Ideally, there would be one OS as a middleware between applications and hardware. Then applications could be platform-neutral. Linux is the closest thing we have to such a definition. Unix tried to be that, but it fragmented into vendor-specific releases. It's yet to be seen whether Linux does the same thing.

    See also: difference between a Linux and a Distro.

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