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Google is Microsoft's New Open Source

Zonk posted more than 8 years ago | from the fully-armed-and-operational-battle-station dept.

188

Robert writes "Steve Ballmer told investors recently that Microsoft's biggest challenge is embracing software-as-a-service business models, as embodied by rival Google Inc. Investing in software as a service and advertising-supported businesses is a challenge like that which the company faced at the dawn of the open-source movement. To paraphrase him heavily, the takeaway was: Yes, we're investing a lot, but it's riskier, long-term, not to do so. We have a lot of cool stuff coming up and, yes, we are also playing catch-up on a couple of fronts. His speech came a month after Microsoft revealed that its R&D budget for fiscal 2007, which ends mid-2007, would rise to $6.2bn." From the article: "We've got to make this transition, which our industry is making, from software as a product to software as a service ... If you want to be a leading software company, you've got to be a leading software-as-a-service company."

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188 comments

Nothin wrong with this... (4, Insightful)

IAmTheDave (746256) | more than 8 years ago | (#15445748)

Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

Re:Nothin wrong with this... (2, Insightful)

neonprimetime (528653) | more than 8 years ago | (#15445790)

Downside?

MSFT starts making better products. Customers become satisfied. MSFT destroys ever living competitor. We're back to square 1 again.

Re:Nothin wrong with this... (0)

AutopsyReport (856852) | more than 8 years ago | (#15445910)

Customers become satisfied. MSFT destroys ever living competitor.

If the market is supplied with a quality product that removes the desire for substitutes, then the customer will not care about those substitutes since their satisfaction has been met. The "destroying" of all competitors then becomes irrelevant to everyone except those being beaten.

Re:Nothin wrong with this... (3, Insightful)

wfeick (591200) | more than 8 years ago | (#15446319)

I think the point was that once competition has been squashed they would be able to slack off and not worry about customer satisfaction.

I think the market will tend to self correct, but it takes longer to correct if there is an effective monopoly with no viable competition. Having a competitor in the ring forces a business to respond to customer needs more quickly.

Re:Nothin wrong with this... (4, Funny)

ClosedSource (238333) | more than 8 years ago | (#15445955)

Truly a nightmare scenario for those who don't need a rational reason to hate MS.

Re:Nothin wrong with this... (4, Insightful)

MightyMartian (840721) | more than 8 years ago | (#15446567)

Except that MS is not fighting on their own turf now. I think the odds are a lot less in MS's favor this time. It has sorely neglected the Internet, and every attempt to get its Internet services to the fore have failed miserably. Between Google and Firefox eroding the browser base, MS is going to have to fight this one by rules it did not make up.

Re:Nothin wrong with this... (1, Funny)

Anonymous Coward | more than 8 years ago | (#15445827)

Children killed by flying chairs

Downside! (4, Insightful)

Alien54 (180860) | more than 8 years ago | (#15445850)

When I have to rent my word processor and spread sheet program.

This is vaguely similar to the RIAA, etc wanting us to merely rent music, or repurchase it in a new format every so often, instead of owning it outright.

Music as a service. Software as a service. What's the difference?

Re:Downside! (5, Insightful)

CaymanIslandCarpedie (868408) | more than 8 years ago | (#15445948)

No real difference and I think both are fine. You want to pay $x per song and own it forever, you can. You want to pay $x per month for unlimited use (but stops when you stop paying), you can. Choice is good.

That said I personally like the software as a service model less than the music model. At least with the music you are constantly getting new material for the monthly price where software is (more or less) just paying for the exact same thing again and again. But thats just me and even in those cases depending on the monthly cost to "rent" vs the cost to "buy" it could still be a good deal. Anyway, I'm always glad to see more choices even it I don't happen to like one of them. Someone else might really like the other choice for some reason and I'm glad its available to them.

Re:Downside! (5, Insightful)

Twiceblessedman (590621) | more than 8 years ago | (#15446081)

The problem will arise when the only choice left is the service model. It's not good for the customers.

Re:Downside! (2, Insightful)

Bing Tsher E (943915) | more than 8 years ago | (#15446394)

At least with the music you are constantly getting new material for the monthly price where software is (more or less) just paying for the exact same thing again and again.

Try to think of software-as-a-service similar to the way you think of electricity or water as a service. It's the same exact thing again and again, and you pay for it as you use it.

Re:Downside! (1)

CaymanIslandCarpedie (868408) | more than 8 years ago | (#15446519)

Agreed. I mean I understand the model, just I'd (as a rule) rather own the software. I understand the subscription model and am often annoyed by those who cry about "why do I have to keep playing". If you choose a product being served to you (like the softare as a service thing) then the company serving you that product has on-going costs associated with providing it. The ONLY equitable method to charge for this is some type of subscription model. I mean what are the other choices?

Anyway, I do understand and in fact even do use one "software as a service" service. Heck, they just make sense in some areas. I'm just not quite so sure about other areas like office apps, etc. But again, for some people I'm sure that model will be perfect. Personally, I'm not crazy about it in many cases (what happens in case of internet failure, etc, etc, etc) but think its gerat the options are out there.

Re:Downside! (2, Insightful)

Bill Dog (726542) | more than 8 years ago | (#15446831)

However:
1) Electricity and water are consumed in using it. The provider then has to make more, whereas with software this is not the case. With software as a service there isn't even costs of packaging, stamping CD's, buying shelf space at CompUSA, etc. IANAEconomist, but this takes a product that has a very high initial cost but then a very small cost per unit sold, and moves it into the realm of even tinier costs per unit sold. Utility companies have relatively high costs per unit sold.

2) Electricity and water generation equipment, that is, the means to buy something once and never have to purchase anything again to then consume all the electricity and water I want, is generally not feasible financially. Software is. We all stopped renting a telephone from Ma Bell when we could buy them.

Let's face it, if companies didn't think it would be overall more profitable, they wouldn't do it. Kind of like extended warranties. That alone makes me think I might not be getting such a great deal if we are switched to this delivery and pricing model.

Am I the only one that sees a red flag here? (2, Insightful)

Mateo_LeFou (859634) | more than 8 years ago | (#15446527)

"You want to pay $x per song and own it forever, you can. You want to pay $x per month for unlimited use (but stops when you stop paying), you can. Choice is good."

I'm 100% in favor of people selling what they have to sell on their own terms. And if no one wants to take those terms, they sell nothing or change models. But I get suspicious when people say "let the consumers decide if they want X or Y" and Y is blatantly inferior to X.

When millions of people seem to be choosing crippled, severely restrictive products over comparable ones that are unrestricted and cost less, you have a prima facie case for some sort of market failure, or anti-competitive activity. It could well turn out that the products are not actually a good substitute and the case is dropped.

But no one would choose to have a broadcast flag limiting how & whether they can time/space/format shift the entertainments they purchase. Why do we all just assume the market is working fine, and this is one of those valuable things being put up for sale. The latest rms-bashing piece [slashdot.org] suffers from this lack of common sense. Your post doesn't necessarily suffer (but you could have made things clear by say '$x' and '$y'. The prices for the two options would vary -- greatly, if the market's working right).

Re:Downside! (3, Interesting)

StrawberryFrog (67065) | more than 8 years ago | (#15446263)

When I have to rent my word processor and spread sheet program.

Software as a service plainly doesn't make sense for word processing or spreadsheets.

But it does for search [google.com] , or buying books [amazon.com] , or news [slashot.org] .

The only problem (if you can call it that) is that the users are so not-locked in that it's hard to charge for the service (ok, you can charge for the books, but the users can still go to another online stop at the drop of a hat)

Re:Downside! (1)

QRDeNameland (873957) | more than 8 years ago | (#15446642)

Software as a service plainly doesn't make sense for word processing or spreadsheets.

Even if "Office-as-a-service" made sense from the users' perspective (and I'd agree that it doesn't), I think it would be disaster for Microsoft.

How many rarely or never used $300+ Office suite licenses has Microsoft sold over the years? If Office becomes subscription based and "pay as you use", they lose the the lion's share of that revenue.

Re:Downside! (1)

penguinbrat (711309) | more than 8 years ago | (#15446511)

When I have to rent my word processor and spread sheet program.

What about renting the OS itself - I wouldn't put it past M$ to try this...

Re:Nothin wrong with this... (5, Insightful)

El Cubano (631386) | more than 8 years ago | (#15445860)

Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

The downside for Microsoft is that they are their own worst enemy. People already pay Microsoft for their software (either embedded in the cost of a PC or at the store for things like Office) . Now Microsoft is in the tough position of getting people to transition from paying for software upfront to paying for it as a service without people realizing they are getting the short end of the stick. This will be much easier with things like office and other products you typically buy in the store. For things like windows, it will be hard to convince people that they need to pay monthly to use their PCs after they have already paid up front for the hardware and OS. Of Microsoft makes it too painless, they shoot themselves in the foot by not making as much as they could. If they make it too painful, they stand to lose marketshare, especially if companies like Novell and IBM come out and really pump the idea that you don't have to pay to keep your Linux machines running.

Re:Nothin wrong with this... (2, Funny)

ClosedSource (238333) | more than 8 years ago | (#15445974)

I don't see MS turning Windows into a web service. How are you going to access it from your PC, boot into Linux?

Re:Nothin wrong with this... (2, Insightful)

binkzz (779594) | more than 8 years ago | (#15446274)

"I don't see MS turning Windows into a web service. How are you going to access it from your PC, boot into Linux?"

Where did you get 'web' from?

Re:Nothin wrong with this... (1)

Roduku (950552) | more than 8 years ago | (#15446771)

Then how else would software be a service?

You certainly wouldn't go to the local video store and rent windows to install on your computer.

Re:Nothin wrong with this... (1)

just_another_sean (919159) | more than 8 years ago | (#15446448)

I know you're kidding but I can see them pulling something like this. After a short period of use after purchase (say 3 months) the system boots into a form asking you to pay to continue using Windows. Failure to pay makes the OS inoperable.

And they'll sell it by telling people all the wonderful things they get by subscribing, like security fixes. Of course they won't call them security fixes, they'll call them "Enhancements" or something.

A lot of people who are clueless about this sort of thing will imagine all their pictures, documents and recipes all locked away in their PC and go digging for their wallets.

Actually the more I think about it the more I like it. If they did pull something like this then I can't imagine a better incentive to switch to a different OS.

Re:Nothin wrong with this... (1)

ClosedSource (238333) | more than 8 years ago | (#15446520)

"If they did pull something like this then I can't imagine a better incentive to switch to a different OS."

Which is exactly why it will never happen.

Re:Nothin wrong with this... (2, Insightful)

iluvcapra (782887) | more than 8 years ago | (#15446027)

Microsoft has real competition,

From who in what market? MS makes money selling software, Google sells advertising. Everything else either company does is a loss leader/R&D project.

Re:Nothin wrong with this... (5, Insightful)

kfg (145172) | more than 8 years ago | (#15446074)

Downside?

The competition is an illusion.

Google exists in an entirely different sphere of influence than Microsoft. Microsoft is not protecting its base against competition so much as it is doing what it has always done:

Found out that someone else is making money and trying to muscle in on it.

Microsoft is in the software business. Google is not in the software as service business. They are in the advertising business, just as a billboard company is not in the real estate business, even though they must interact with the real estate market in order to sell their advertising product.

And the only people demanding "software as a service" are the advertising buyers/sellers.

KFG

Re:Nothin wrong with this... (2, Informative)

camcorder (759720) | more than 8 years ago | (#15446434)

Microsoft is in the software business.
They are also in advertising bussiness [msn.com] as well. Same way as Google is in.

Re:Nothin wrong with this... (1)

lawpoop (604919) | more than 8 years ago | (#15446437)

"Google is not in the software as service business. They are in the advertising business, just as a billboard company is not in the real estate business, even though they must interact with the real estate market in order to sell their advertising product."

I disagree. Google is in the software business, they just finance it through advertising. They employ more programmers and developers than advertisers and marketers, and produce far more data than they do ads. They must interact with the advertising market, but far and away, their product is data.

What you're saying is that radio stations are not in the radio business, they are in the advertising business because they finance their operation by ads rather than charging their consumers directly.

Re:Nothin wrong with this... (2, Insightful)

kfg (145172) | more than 8 years ago | (#15446656)

Google is in the software business, they just finance it through advertising . . .

This is the fundamental conceptual mistake of business.

. . .they are in the advertising business because they finance their operation by ads rather than charging their consumers directly.

A business is defined by what provides it with profit. The source of the profit is the "consumer."

The source of Google's profit is advertising. The advertisers are the "consumer" of Google's product. You, as a user of Google's services are the "product" being marketed, not the software used to do the marketing. A carpenter is not in the hammer business, even if he makes his own hammers.

Why do you think commercial television sucks so badly? Why do you think there are so many infomercials on cable?

It's because you are not the "consumer" of the product. You are the resource being exploited. Ya ever see what a mountain looks like after it has been exploited for coal?

Until you get this into your head properly you are not really a "consumer." You are what is known as a "mark."

KFG

Re:Nothin wrong with this... (1)

Billosaur (927319) | more than 8 years ago | (#15446212)

Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

Downside: Microsoft will not try to "compete", per se, but attempt to bully, cajole, and acquire others to do most of their dirty work, while spreading their cantankerous software as a service as well as POS, thereby increasing its complexity and opening up all sorts of new security holes.

Of course, if you want to call that a downside...

Re:Nothin wrong with this... (0)

Anonymous Coward | more than 8 years ago | (#15446257)

Downside?
  1. MS Software suckiness = 85% of our means of advancing our FLOSS ideology.
  2. MS is the only "choice" we have besides the US Government -- imagine a world where a single US election -- the next one -- has reversed the trend and completely set us back to before we were a police state or needed a Politics slashdot section. Now imagine that in this world, Microsoft has started to compete on service, which pretty much means abandoning gEvil: in the nightmare world I have just described, who is left for us to bash???
  3. Competition means tighter margins for Google, meaning we get fewer groundbreaking new Beta products. (Remember, we're not the one's paying for anything Google does.)
  4. Believe it or not, a lot of the stagnation in software over the last twenty some-odd years has been a direct result of Gates' desire to overflow 32 bits on his taxes. He succeeeded. (They needed to create a "special" computer just to compute his taxes). However, the industry is now at 64 bits. [cue ominous music.]

Re:Nothin wrong with this... (1)

Abu Hurayrah (953237) | more than 8 years ago | (#15446278)

Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

The same disappointment we always feel whenever MSFT finally exceeds their competition - stagnation, insecurity, & lack of motivation for improvement (e.g., IE). MSFT is always seeking to just barely exceed their competition for a market advantage, and then they have little to no impetus to improve after that.

No doubt that competition benefits open-source projects as well as proprietary, commercial products; however, open-source projects tend to have more motivation to improve themselves when there is no money to be made in doing so. Proprietary, commercial shops have no motivation to improve a product if it is not going to translate into increased revenue.

Please, think of the stockholders!

Re:Nothin wrong with this... (2, Insightful)

suv4x4 (956391) | more than 8 years ago | (#15446316)

Microsoft has real competition, forcing them to develop better, more competitive software. Downside?

What makes you think software-as-a-service is actually better?

The key advantages to software as a service is not for the customers, it's for the software companies.

There are three major reasons Microsoft wants to embrace software as a service so fast:

1. the vendor stays in control of usage;
2. there's no possibility to pirate a service;
3. A product you sell as a license that lasts forever (too many people happy with old Windows and Office?), a service you bill periodically (well here's a solution!)

Of course if you provide a free service there's no point in pirating it, but it'll be a choice between getting spied upon your activites (constant connection with the mothership for anything you do) and being served ads; or paying monthly/yearly for service, in the end paying a lot more than you're willing to.

You can be sure they'll make you depend on Windows Updates and online connectivity and promptly start cutting "service" support for older versions of their products to make people move on.

I'm not an MS hater, and this is not a MS hate post. It's just how the entire business is moving: the DRM, the dependency of network connectivity and so on. Businesses will always want more money and more control, it's just a part of the business.

Re:Nothin wrong with this... (0)

Anonymous Coward | more than 8 years ago | (#15446584)

This is like Hitler saying, "OK...I guess we'll have to put up with some Jews. Hey, anyone wanna buy a bagel?"

Microsoft has already displayed time and again that they are bad for business and society...let's say good riddance to them forever.

OK. Turn off slashdot. (5, Funny)

gowen (141411) | more than 8 years ago | (#15445800)

We have now found the perfect slashdot headline.
All the key memes are there.
We need continue no longer.

Re:OK. Turn off slashdot. (0)

Anonymous Coward | more than 8 years ago | (#15445925)

We need continue no longer.


We'll just need a confirmation from Netcraft, but then that's it.

Re:OK. Turn off slashdot. (2, Funny)

delahappy (920330) | more than 8 years ago | (#15446129)

No we still need "AT&T looks to charge Microsoft for , the rival to Google's developed by former Sun and Apple employees, using too much bandwidth while microsoft's counter suite attacks AT&T for allowing the NSA to spy on their employees."

Re:OK. Turn off slashdot. (4, Funny)

Fizzl (209397) | more than 8 years ago | (#15446292)

It's still missing a speculative question mark and the word 'killer'.

Ah, Microsoft's perpetual state... (3, Insightful)

ZSpade (812879) | more than 8 years ago | (#15445819)

Ever the follower, never the innovator.

Re:Ah, Microsoft's perpetual state... (1)

TerenceRSN (938882) | more than 8 years ago | (#15446712)

Ah, Microsoft's perpetual state...
Filthy rich.

I'd gladly give up any attempts at innovation and start following if I could get the money those guys at MS have.

The real perpetual state isn't Microsoft's, it's the IT world which is so dependent on Microsoft. That's why Microsoft is so successful/entrenched, consumers, developers, administrators, managers, they all have strong and hard to break ties with Microsoft.

Not challenging enough (3, Insightful)

neuroPuff (923273) | more than 8 years ago | (#15445828)

Microsoft will gladly embody software as a service. Infact, it might as well be their idea, as they are going to be generating much more revenue by doing this, effectively screwing the customer who has to pay more for the same poorly written MS code, and the customer will be more along the lines 'renting' the code since the eons of service renewals will never relent.

The 'software as a service' structure could be one of the worst ideas ever. Google offers actuall services, to mix it up, Microsoft on the same terms would be taking the whole idea out of proportion. You don't want to have to, essentially, RENT Microsoft Exchange Server, for example, would you? As compared to Google, the software they do distribute is completly free.

Funny you should mention (1)

packetmon (977047) | more than 8 years ago | (#15445935)

... Renting... Recently a former company where I worked wanted MS Exchange so off I went to get a quote and submit a proposal, etc. After speaking with an MS rep I found myself laughing at him on the phone and he too realizing what he was telling me... According to him I would need to buy Exchange Server and seats for my user. For 40 users total the price was over 4000.00 not a big deal until he mentioned I would only be able to use 5gigs of my 400gig drive. 5gigs? I said... "Yes if you need more space you have to buy another license..." Humorous...

Re:Not challenging enough (0)

Anonymous Coward | more than 8 years ago | (#15445944)

Without the source code, the crazy EULA and nutso copyright laws, what exactly DO you buy?

Re:Not challenging enough (1)

jchoyt (729301) | more than 8 years ago | (#15445958)

Uh, you essentially rent software anyway. You don't actually BUY proprietary software. You acquire a license to run it. They can take that license away at any time, usually for any reason. The software always belongs to them, though. Software as a service is just the same thing, but the license has a expiration date.

But you're right, it is a horrid idea.

Re:Not challenging enough (1)

neuroPuff (923273) | more than 8 years ago | (#15445982)

Its not like the legalities ever got into anyone's way. If the rarity of a license removal were to be done, this may stop your average soccer mom, but most people may find a friend's copy or download their own copy of MS software and find the correct serial number/keygen. Idealogically, I think most people, at least, feel like they own the software they purchase. SaaS would make sure they don't even get the satisfaction of that.

Um...their new? (1, Redundant)

GweeDo (127172) | more than 8 years ago | (#15445837)

So, their new challenger? Would it be more accurate to say their "additional" challenger? They haven't even destroyed open source yet.

Re:Um...their new? (4, Interesting)

grammar fascist (239789) | more than 8 years ago | (#15446062)

So, their new challenger? Would it be more accurate to say their "additional" challenger?

Nah. Microsoft can't concentrate on more than one opponent at a time.

The funny thing is, I can't tell whether I'm being facetious, either.

Re:Um...their new? (0)

Anonymous Coward | more than 8 years ago | (#15446108)

The funny thing is, I can't tell whether I'm being facetious, either.

You were!

Cross analysis of Ballmer's comments (1)

packetmon (977047) | more than 8 years ago | (#15445853)

"If anyone gets in our way... We simply buy them and liquidate them. There are no questions about being on top our war chest poops money like scatamania video." ... After realizing what he had just said Mr. Ballmer ordered journalists to make necessary changes... "If you look at it competitively... the issue really isn't any one company, Google or anyone else," he said. "The question is, how do we get on top of and really drive business model transformations."

Microsoft's business model will be the hurdle (1)

WinEveryGame (978424) | more than 8 years ago | (#15445867)

Microsoft may see it on the wall, their executives may say that the world is moving to SaaS (Software as a Service), but it will be impossible for Microsoft to take a leadership position in this area.

When you have a tens of billions of dollars coming in per year from one of your franchises (shrink wrapped applications), it is almost impossible to take even 5% hurt on that business to build a competing business which results in lesser revenue. (classic innvoator's dilemma).

Microsoft will probably do a lot better in a network/subscription based business model in the gaming world though (because they didn't have significant stream of $$ coming in from their classic shrink wrapped gaming software business).

Re:Microsoft's business model will be the hurdle (1)

Cadallin (863437) | more than 8 years ago | (#15446137)

Problem: There is, comparativly no money in network game subscriptions. Even if they added Blizzard's WoW revenue, that might just offset what they're spending every month pimping the Xbox 360, and put MSFT Games Division barely into the black.

Re:Microsoft's business model will be the hurdle (1, Insightful)

Anonymous Coward | more than 8 years ago | (#15446309)

You make an interesting point. The customer isn't going to accept SaaS unless there is a price incentive to do so. Otherwise, the customer keeps what they already have (Office 97 in some cases).

SaaS comes at the expense of traditional shrink-wrapped products. I doubt MS would never allow itself to fully commit to SaaS. I suspect their involvement is to limit the ambitions of others. They want to do just enough to discourage would-be competitors. Otherwise, they cannibalize their own revenue stream.

In theory, satellite TV should kill cable. Yet the plans and pricing are such that cable lives on, despite the high cost of all that copper and fiber. They try very hard to avoid competing with each other. Maybe the MS SaaS strategy is along the same line -- exist as an alternative, but not such a good one as to hurt the shrink-wrap cash cow.

Or maybe it's a way to deal with open source. Find a way to sell something that open source can't give away. As we all know, it is quite possible to give away software, but giving away SaaS is not going to be scalable like OSS.

Mod Parent Up... (1)

anomalous cohort (704239) | more than 8 years ago | (#15446323)

Right. The success of their office productivity suite will make it very hard for Microsoft to transition to SaaS as a company wide business model. They can certainly create new revenue streams in a SaaS model but they have too much investment in software for the client's machine to ever truly embrace the thin-client approach that makes sense for SaaS.

Software-as-a-service (1)

Opportunist (166417) | more than 8 years ago | (#15445870)

I'm aware that MS has been trying to sell its software as service instead of as a product (read: pay every time you use instead of paying just once) for ages, but where does that tie into them again trying to jump a train they missed?

Re:Software-as-a-service (2, Insightful)

FudRucker (866063) | more than 8 years ago | (#15445928)

RE:"In Soviet Russia, the government controls the commerce."

In Capitalistic society commerce controls the government :p

Re:Software-as-a-service (1)

Opportunist (166417) | more than 8 years ago | (#15446219)

We have a winner of the "duh of the day" award.

'tween you'n me, that's the punch of the "In Soviet Russia" jokes, that it's the other way 'round in the "free" world.

Re:Software-as-a-service (0)

Anonymous Coward | more than 8 years ago | (#15446397)

Microsoft: Look at the success of google! SaaS is working for them! It's what the people really want!

Software CEO's Everywhere: HUZZAH!

Me: As a google fan, you guys know I wouldn't pay a dime for any of their stuff (excepting stock), right?

And that's what MS doesn't really get (1)

Opportunist (166417) | more than 8 years ago | (#15446722)

They're used to making money with companies, not the "average user". Sure, we all have our Windows and we all dished out 300something to Redmond (needn't comment if you didn't, the one or the other way). But compare that to even a small company and face that this is peanuts compared to what you have to dish out to only give 10 people a server, a database and the ability to access it.

Google works by the "give a little, get a little, do it often, get a f..ing lot!" principle. You can of course buy their services, too, and get some better service that way. If you're satisfied with the "basic" service, just as fine. I guess they'll consider it advertising. And behold, it works.

MS works akin to the creed "get a little, get a little more, get a f...ing lot!" Anything you want, no matter how small, you have to pay for it unless MS can immediately see a benefit in you having it for free, be it a bigger market share or locking you more tightly to their systems. Unfortunately, as a "normal" user, you don't care about 100% compatibility with your peers or that you might have to spend a few hours configuring everything to make it tick right. There's a free alternative? See ya, Redmond, I'm going with that free schtuff.

Service, software or anything. Companies will buy, they need compatibility and an hour spent is more expensive than the product. Normal users will more likely go for the free alternative. Spare time is still considered free.

In both senses.

Is this something new... (1)

creimer (824291) | more than 8 years ago | (#15445875)

I been reading about software-as-a-service for months now in the trade magazines. So this isn't new. Is Micrsoft admitting that they dropped the ball on this one like the Internet in 1995?

Re:Is this something new... (1)

grammar fascist (239789) | more than 8 years ago | (#15446083)

I been reading about software-as-a-service for months now in the trade magazines.

So have I, and I haven't yet seen any software-as-a-service that I'd be willing to pay for.

Why is everyone chasing this if nobody but the software businesses really want it?

Re:Is this something new... (1)

creimer (824291) | more than 8 years ago | (#15446225)

Probably because it's the "next big thing" and the vulture capitalists are whipping companies into that the direction. (As one of my college instructors told me, the "next big thing" is usually something that's been around for at least ten years before some notices it (i.e., the Internet is usually a prime example).) Also, subscription fees are a guaranteed revenue producer for the lucky company that dominates the market. Whatever that might be.

Re:Is this something new... (1)

kfg (145172) | more than 8 years ago | (#15446408)

Is Micrsoft admitting that they dropped the ball on this one like the Internet in 1995?

No. Microsoft is admitting that their proposed model of charging a per use fee for a word processor was stillborn.

The problem is that they don't seem to realize that quite yet. The "software as service" market is in areas entirely independant of traditional, standalone applications, which continue to work just fine standalone. A standalone search engine is just as stupid an idea as an "as service" word processor.

Basically they're still dropping the ball on the Internet. They don't "get it," because they only understand centralized control. The very structure of the Internet is outside the realm of the corporate meme, so they don't even know how to think about it properly.

KFG

I'm not renting software (5, Interesting)

blueZ3 (744446) | more than 8 years ago | (#15445876)

from Microsoft or anyone else. I will either use OpenSource software that's free (as in beer) or in cases where I must have some functionality that's only offered in a proprietary package, I'll buy software outright. If the only way to get a particular bit of software is to rent it, I'll go without.

Lots of the software that I use on a daily basis hasn't been updated in years. This is especially true of expensive packages like FrameMaker (5.5.6), Illustrator (v 10) and other software I purchased for consulting work back in the day. I'm not dropping another $600 on FrameMaker for the minimal feature updates (although I hear 7.0 has multiple levels of undo :-> ) though I needed it enough in 2000 that I dropped the cash. (I don't do warez, so that's not an option)

I run Office 2000 (it came "free" with a PC) on my one Windows box, and don't see a compelling reason to upgrade. I certainly won't be paying Redmond a monthly rental fee to run an office suite. I allow Google to display ads, but I'm not paying Google any actual cash and I've pretty much trained myself so that I don't even see the ads anymore. Ballmer & company still don't get it.

Re:I'm not renting software (0)

UnknownSoldier (67820) | more than 8 years ago | (#15446149)

I agree. I'm switching over to OS (when I can) because I refuse to have my data held hostage.

Are there open source versions of InDesign / FrameMaker? This is one of the main reasons Windows is still around for me, because I don't see it on the list [gnu.org]

The other MS/Adobe products are covered:

* Photoshop -> Gimp. Yeah GIMP still sucks for PS users, but at least it is functional, and extendable. (i.e. It _badly_ needs a default PhotoShop keyboard theme/config and better CYMK support, before it replaces PS.)

* Illustrator -> Inkscape or Sodipodi

* OpenOffice -- Toss up if excel / calc is better, but at least we have functional choices.

Cheers

Re:I'm not renting software (1)

UnknownSoldier (67820) | more than 8 years ago | (#15446210)

Sorry for the bad netiquitte

Hey Blue, we might be in luck...

Anyone tried Scribus [scribus.net] ?

What's funny is MS not seeing that (3, Insightful)

Weaselmancer (533834) | more than 8 years ago | (#15446729)

MS sells primarily Windows and Office. As I understand it, that's where their primary revenue comes from.

Windows 2000 or XP should be good for a long, long time. Remember Ballmer's famous "developers developers developers"? What's implied in that is that the developers want to reach as wide of a target as they can - that's why they're writing for Windows in the first place. The wider the target, the more software the developers sell. In short, to be operable on all flavors of Windows. Just last year I worked on a product and as part of QA we had to verify that it ran on Win95! Versions A and B!

So IMHO, that pretty much makes Vista optional - and it's going to be for a long, long time. Unless MS figures out some amazing way to get the developers to aim for a smaller locked-in target. I mean, think about how many machines are out there running XP today. How is MS going to tell all of those people to stop it, upgrade, and start paying MS rent?

And as for Office, if it's on a pay-as-you-go model, no business will stand for that for the same reasons. Again, they're competing against earlier releases of Office. And OpenOffice. Soon as a halfway competent accountant runs the numbers, the pay-as-you-go model will be avoided.

I'll betcha Vista and pay-as-you-go winds up being Microsoft's next Windows ME. Nobody will touch either with a ten foot pole.

Finally (1)

Swizec (978239) | more than 8 years ago | (#15445891)

Nice to see Microsoft trying to change in order to fit the market and stop trying to change the market in order for it to fit them.

Re:Finally (0)

Anonymous Coward | more than 8 years ago | (#15446484)

That's a joke, right?

When it happens (1)

ericdano (113424) | more than 8 years ago | (#15445899)

When Microsoft finally falls apart, it will be interesting to piece together the strings. And where the money went.

Microsoft really needs to focus on it's core product, Windows. Get it out. Get it working well. All funds should be directed towards that.

Re:When it happens (0)

Anonymous Coward | more than 8 years ago | (#15446421)

"When Microsoft finally falls apart, it will be interesting to piece together the strings."

Too bad it won't happen in your lifetime.

Re:When it happens (0)

Anonymous Coward | more than 8 years ago | (#15446483)

Hmm...when Microsoft "Falls Apart" as you say, we'll probably be so old and senile that we won't care, ot we'll be long ago in a grave.

Sorry to blow your "MS is gona' fail!...day", but, get used to it...MS isn't going anywhere for a very long time.

BTW...how's that impeachment coming?

Mark me as a Troll if you are so compelled...but at least you've heard the truth.

Standard Microsoft technique, throw money at it (1)

99luftballon (838486) | more than 8 years ago | (#15445903)

Don't think it will save them this time however. Microsoft faces real structural problems in moving to software as a service, as well as a complete reengineering of the financial model that has given them such deep pockets. One thing is certain, the standard procedure of putting stuff out for free and trying to dominate won't work in the service model, at least not in the long term.

What about the orphans? (1, Troll)

Rendo (918276) | more than 8 years ago | (#15445932)

Sure they're going to spend 6.2bn but that money could probably save a lot of poverty strickens kids in the 3rd world. Let's face it, it's a waste of money and Microsoft may make a few "good" products, and I mean a very few, but I think good PR would get more business.

Microsoft, the new Linux provider (3, Insightful)

Britz (170620) | more than 8 years ago | (#15445933)

Maybe they will throw a couple hundred millions at wine, make their own distro and then offer services around it? I doubt they will do that soon, since that would hurt their bottom line for the moment. But as soon as the other business model promises more profit they could be able to make the switch if they are prepared. As far as I understand they are getting ready.

So maybe it is not time to dump your MS stock just yet.

Like with the Xbox they would enter a competitive market. Maybe then they will make better products. At least they should be able to, considering all the brain power they are sucking up every year.

Re:Microsoft, the new Linux provider (1)

jchoyt (729301) | more than 8 years ago | (#15446015)

No, the time to dump MSFT would have been 5 years ago when it went flat [yahoo.com]

Re:Microsoft, the new Linux provider (1)

slashflood (697891) | more than 8 years ago | (#15446204)

Microsoft, the new Linux provider

*shudder* - That was gross!

MS *and* open source (2, Informative)

aoporto (964515) | more than 8 years ago | (#15445941)

Anytime I hear people talk about MS and open source, they speak of it as one vs the other, when in fact there is a lot of good open source written for MS platforms. Two of my favorites (both are BSD licensed) are:

http://dotnetnuke.com/ [dotnetnuke.com]

http://listring.com/ [listring.com]

Re:MS *and* open source (1)

vidarlo (134906) | more than 8 years ago | (#15446414)

Anytime I hear people talk about MS and open source, they speak of it as one vs the other, when in fact there is a lot of good open source written for MS platforms. Two of my favorites (both are BSD licensed) are:

You forget one thing: This piece of software depends on non-free software, which means you have a vendor-tie-in. I can not use this product without MS software. That means the software is useless in a free-software world. Read RMS' thoughts on java, Free But Shackled - The Java Trap [gnu.org] for more thoughts on this. I agree with Stallman on this topic; a free software world requires all software to be free, and producing fsf-stuff designed to only run on windows harms the over all progress. Portable software is ok, but software dependent on properitary software is IMHO evil.

Wow. (1)

argStyopa (232550) | more than 8 years ago | (#15445945)

Talk about begging the question. Or staggering disingenuity.

"We've got to make this transition, which our industry is making, from software as a product to software as a service ... If you want to be a leading software company, you've got to be a leading software-as-a-service company."

Software-as-service (ie charge me every time I use it) instead of Software-as-product (ie I buy it and OWN it forever). Sound vaguely familiar?

Mr Ballmer, see, it's not that the industry is making this mystical transition. YOU'RE DRIVING IT, DUMBASS.

How ridiculous is it to be desperately trying to catch up to your own policy?

That would be like the RIAA complaining that it's trying to keep up with "...all this complicated DRM technology..."

Microsoft's new slogan (1)

flobberchops (971724) | more than 8 years ago | (#15445973)

Microsoft "Because we also ran"

The Day Microsoft Makes Something the DOESN'T Suck (1)

eno2001 (527078) | more than 8 years ago | (#15445992)

...is the day they make a vaccuum cleaner. ;P

OK, all kidding aside I'm pretty sure Microsoft will stay afloat in the software as a service industry. After all it's only web stuff. While the web is a lot more complex than it was at the dawn of HTML/HTTP, it's also very limited. The most that web apps can achieve are consumer level apps that lots of Joe and Jane Averages use. ie. they aren't targetting REAL users yet. They're only going for the majority of users, so... ho hum. More of the same. Where Google offers a search engine, MS will offer a search engine with tail fins and chrome bumpers that gets less mileage per gallon and only refuels at MS stations (OS/browser lock-in). Hmmm... come to think of it, maybe that's why they're splitting the browser out of the OS now? They plan to make their web services more OS independent and perhaps will port the browser again?

Anyway, where was I? Oh yeah. People like us who want REAL software that does REAL work (coders, media production, graphics, etc...) will never want software as a service in it's present and web limited way. The web needs to vastly change in the areas of bandwidth (at least 100 megabits/s at home as a start) and standard 'in browser' graphical functionality (being able to do realtime graphical rendering in 2D and 3D fo UI elements). Could you imagine some numbnut AJAX developer writing a video editor to work in a browser? Or worse yet as a Java or .Net (or even Mono) app? It would suck. The bottom line is that the web is not ready (and may possibly never be ready) to be a software platform for people like us. But Microsoft doesn't cater to people like us. They cater to Joe and Jane Average. So... in other words "Nothing to see here. Move along".

Re:The Day Microsoft Makes Something the DOESN'T S (1)

hal2814 (725639) | more than 8 years ago | (#15446179)

Then I guess they made one vacuum cleaner back in 1991 and called it MS-DOS 5.0. In an impressive feat for Microsoft, they managed to get it right the first time around. It did what it was supposed to do and did it well.

Re:The Day Microsoft Makes Something the DOESN'T S (0)

Anonymous Coward | more than 8 years ago | (#15446557)

Read it again... it's a JOKE moron. Vaccuum cleaners are SUPPOSED to suck. Idiot.

Missing the Point? (1)

MaxPower2 (976000) | more than 8 years ago | (#15446053)

I am not sure that the pay-every-time-you-use model is what Ballmer was talking about. I am scared that Microsoft might release their products for free, but cram them full of so many ads that you want to puke. I am sure that GoDaddy would love to have a video with dancing girls with HUGE breasts played as Word starts. I hate ads and I hate application that are free and make you view their advertisements. Personally, I would rather buy some software with no ads, than get the same software for free with loads of ads.

Re:Missing the Point? (1)

thrillseeker (518224) | more than 8 years ago | (#15446283)

I am sure that GoDaddy would love to have a video with dancing girls with HUGE breasts played as Word starts.

Oh yeah? Well, I'm gonna go build my own software! With blackjack! And hookers! In fact, forget the software!

Personal use is not the only revenue stream (4, Interesting)

bec1948 (845104) | more than 8 years ago | (#15446121)

Our personal thoughts about Microsoft, Pro or Con, are not that relevant in the larger scheme of things. If we look at Microsoft's total suite of products as a fairly well integrated (and improving) stack of platforms, tools and user interfaces for collaborative work, then the move to Software as a Service is both logical and perhaps ultimately the way everyone will go.

There are some many possible threads here that it's not possible to give a coherent discussion when I'm here at work, but here are some of the ideas that come to mind as an advantage of the concept from a somewhat Microsoft centric perspective:

  • Use the same applications on all devices (PCs, Macs, Phones, Game consoles, TVs, IPods, Things that haven't been invented yet)
  • For corporations only pay for software that's actually used, non a mass volume license that often includes wasted licenses.
  • Access to work from anywhere - Writerly and some of the competitors already offer a form of this
  • Smooth integration of multiple data types from almost anywhere into a document. Consider how complex linking content can be when you're doing it relative to your computer and its local (or LAN) storage. Now consider those links in a UDDI/XML/HTML Web

Shortness of time limits clarity on these ideas. Resolving them in our discussions here can be fun, but I think Microsoft should pay us for the privlege. Don't you?

These are all areas where Microsoft can bring a very rich user experience that will drive the competitors to greatly improve their offerings. It will also force Microsoft to be more open and accessible to other vendor's products, solutions and open standards. Resolving all the issues involved will take a long time. I've been involved with these discussions for over a dozen years now. I expect it will take another dozen for these things to work as well as we imagine them to.

There's another point that's been made by others too. Moving from a license per box to a license per use and even mostly free stuff business model will be painful. Look at Novell. One of their biggest revenue problems is that the move to FOSS has occurred more quickly than they expected driving revenues down faster than they'd planned and could adjust for.

Microsoft will feel similar pain, but is learning from all the pioneers how not to get shot in the back. It is what they are best at

Transitioning to Irrelevance (5, Insightful)

ewhac (5844) | more than 8 years ago | (#15446124)

Fine, Microsoft, go right ahead. Transition your business to, "software as a service." And when you get there, you'll realize there's no "there" there, and will implode to a business of relative insignificance.

A hammer is not a "service." A paintbrush is not a "service." A car is not a "service." They are tools. And, unless people use them very infrequently, people don't rent their tools. They buy them so that they may own them. Software follows this analogy to a very high degree. Software is a tool and, as such, the market for "rented" tools is way way smaller than the pundits are predicting. This will become even more true as Open Source solutions continue to make inroads and force aside overpriced proprietary solutions that are buggier and offer almost no extra compelling functionality.

Microsoft does know how to Pwnz0r and expand existing markets but, so far, they have largely failed to create new ones. Software-as-a-service is a dead end, especially for a company the size of Microsoft.

Schwab

Short Summary (1)

Kesch (943326) | more than 8 years ago | (#15446183)

For some reason, the text in the article makes my head hurt maybe cause they like to use really-long-hyphenated-words.

For the headache prone:

Google scares us. We are putting more money into R&D while also copying Google's succesful business model. We want to be the best. Oh yeah, China should provide a juicy source of income, but we aren't seeing much revenue because of piracy.

Oh yeah, the article notes that Microsoft has $35 Billion in cash.

By estimations you could completely fill 16.5 olympic sized swimming pools with all that cash in $100 bills. It'd been even more volume if you wanted to be able to swim in it like Scrooge McDuck. (But think of the paper cuts)

Microsoft Has been pushing this for a while now (2, Insightful)

BinarySearchTree (978523) | more than 8 years ago | (#15446201)

It seems microsoft has been pushing this for the last couple years.

A monthly subscription software as a service model won't work that well, especially if microsoft is dumb enough to actually charge their monthly(or yearly, whatever) fee for windows itself. I don't think microsft would ever be that stupid but, things can change. Either way I don't think it would fly well with consumers who already pay an arm and a leg for M$ Software(which is mostly crap anyway) to pay for it again and again. Anybody who does the math will disagree with this software as a service idea, unless they have cash lying around that they are willing to waste.

Do the math:
$250(this can be higher of course) now OR $20/Month (really low estimate)

$20 * 12 Months = 2*10 * 12 = $240 / year !!


if they charge $50/Month: 5*12*10 = $600/year !!


I think many will see this as a bad idea, and there will also be some willing to pay that much but as a model I think it will fail.

Re:Microsoft Has been pushing this for a while now (0)

Anonymous Coward | more than 8 years ago | (#15446687)

A monthly subscription software as a service model won't work that well, especially if microsoft is dumb enough to actually charge their monthly(or yearly, whatever) fee for windows itself. I don't think microsft would ever be that stupid but, things can change.
No, they'd never be that stupid [microsoft.com] . Optional today, mandatory tomorrow? You^H^H^H They decide.

Software as a Service (1)

vux984 (928602) | more than 8 years ago | (#15446232)

Figures,

Just when Windows becomes bearably funtional and stable, and the Office suite is mature enough that the average user could run WinXP + Office XP for 10 years without having any reason to upgrade, then they decide that "software-as-a-product" is dead, time to make you start paying monthly for software-as-a-service.

I'm surprised the furniture industry hasn't gotten in on this. Why do they sell chairs, tables, and sofas that last upwards of 10 - 20 years. Clearly the industry should get out of the "furniture as a product" business and move to a subscription or ad-supported "furniture as a service" model.

And for all google's services, I use very few of them because I don't want ads all the time, in everything I do. Even if they don't flash or bounce. Even if they are "relevant". Sometimes I just don't want ads!!

What's the problem? (4, Insightful)

i am kman (972584) | more than 8 years ago | (#15446236)

What's with all the rants about renting software. That's hardly the point of the article or service-based software.

Service based software has many revenue streams and powerful advantages. First, it'd be great to have a virtual desktop that followed me whereever I logged into. Not only do my files follow, but I can login to a kiosk and actually edit my Powerpoint before a presentation (without the danger of locally saving it). This is a great model (with enough bandwidth) that facilitates collaboration and mobility.

Second, many companies are already paying through the nose for a similar model. We pay hundreds of dollars/year/user for PC service support with software. Many folks only occassionally use the MS apps, but we have to buy licenses for each PC. It would be FAR cheaper if we could centrally host the applications and pay by usage. And this would also enable us to automatically backup files and allow users to access programs from home. Users often lose data when their desktop crashes. No more with service-based software!

Third, look at the Turbo-Tax model. It's $70 for the desktop version (PLUS electronic filing fees) and $20 online with FREE electronic filing. The service based model would be similar. Pay $500 for MS Office or $40/year to use/access the same thing. It's likely to be MUCH cheaper.

Fourth, they'll also license it to folks like Google who will then provide it to us for free (or VERY cheaply as a premier member) as a service and part of their total desktop management.

Just wanted to point out that there's many good things about this. Dismissing anything MS does simply because it's MS totally misses the point. Sure, it could (and might) suck, but it could also be a great thing.

Re:What's the problem? (1)

monoqlith (610041) | more than 8 years ago | (#15446517)

I agree. The kneejerk reaction to software as a service is striking from Slashdot members, since typically the slashdot mentality is pro-availability as opposed to pro-(intellectual, private property) ownership. I think the service model benefits users as well as developers. It provides developers with a steady, reliable \ revenueand the users only have to be subscribed when they need to use the software.

Let's examine the implications of the two models for the consumer:

1) You spend several hundred dollars on an office or graphics suite so you can do word processing from home for your company. But, a couple of months later, you lose or switch your job or find another one, where you rarely need to use Office to complete assignments. Suddenly, you don't need the software anymore, and a lot of the value that the software originally had for you has been lost, along with a hundred or so dollars. And if you don't switch your job, you have to pay $100 or so every time a new upgrade comes out, so that you can remain compatible with all your co-workers.

Or

2) You pay $20 to rent a piece of software online so you can complete your assignment. A month later you realize you don't really need the software anymore, so you cancel your subscription. You've just saved yourself a couple hundred dollars, and the upgrades are installed automatically every time there's a new release.

Of course, for people who need the software forever, $20/month is a lot easier to come up with than $300 at one time. And the cost pays itself back because the program is useful enough for you to keep renewing your subscription.

No one loses. IMHO, software in the age of the internet more naturally fits a service model than a product model.

$6.2bn R&D budget? (1)

JPriest (547211) | more than 8 years ago | (#15446258)

Did I read that right or does MS really have a $6.2bn anual R&D budget? For that kind of money they could provide all the software I use with Windows for free.

In Other Words (0)

Anonymous Coward | more than 8 years ago | (#15446351)

"the biggest challenge facing microsoft today is how to part more fools from more money. to make more money, you have to do that."

ladies and gentleman, watch your wallets on the way out.

If you want to be a leading software company (0)

Anonymous Coward | more than 8 years ago | (#15446432)


make software that doesn't suck and have a million things wrong with it [microsoft.com]

Microsoft can't deliver quality software (1)

monsterzero2002 (522937) | more than 8 years ago | (#15446507)

A service business model demands much lower cost per purchase but lots of repeat business. In order for customers to become repeat customers they have to be satisfied with the transaction. If not satisfied, no repeat business.
So how can Microsoft dream of being "big time" in the service business when they historically do such a poor job of of keeping their customers happy?

Google/MS (0)

Anonymous Coward | more than 8 years ago | (#15446632)

"...transition....not software, but.....software as a service..."

Please dear g*d not this again. This has got to be the longest "transition" in history.

Software as a service will stop piracy (0)

Anonymous Coward | more than 8 years ago | (#15446780)

Once software as a service is definitely widespread piracy will dissapear. The main problem is that you make software and you cannot take control of it when a user installs or modifies it. He just disconnects from the net and is by his own. On the other hand, if you want to use a service you have to pay for it or you cant use it. The example is the xbox live for xbox360. Maybe you buy a chip for the console or use pirated games, but no one on earth will save you from paying the 5$ that costs. That is the way to go. If you use good software, pay for it. If you do not care support, you can use software for free. This is how canonical works.

6.2 bn? how many researchers is that? (1)

fxj (267709) | more than 8 years ago | (#15446806)

let's say one researcher costs $100,000 then they can pay for 62,000 people doing R&D? This is ridiculous!!! I don't believe a word!

Comp Sci Grads rejoyce -- Stockholders weep (1)

rssrss (686344) | more than 8 years ago | (#15446841)

"Microsoft revealed that its R&D budget for fiscal 2007, which ends mid-2007, would rise to $6.2bn."

They will be employing an enormous number of computer scientists, which should cheer up students in that field. OTOH, does M$ have anything to show for the expenditure? I haven't heard of it. The stockholders (and I am one) are getting restless.

Come on Monkey-boy. Show us the money.
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