I still think they could sell Zunes if third-party firmware was more feasible. A 30GB Zune with Rockbox that actually uses the wifi would be a really nice gadget. I realise this will never happen.

The same goes for the Web, which Google — powered by Free software for the most part — gives Microsoft a good lesson in.

Just recently: Microsoft’s business model is done

“From one side, Microsoft has to take a bigger piece of their margin every quarter just to stay afloat. From the other side, the price of hardware is falling. If your total system price is $2500 US, it makes sense to pay the $80-$100 Microsoft tax. When your total system price is down around $600, the margin pressure becomes unsustainable. This implies that there is a price level in the PC and appliance market below which you can’t make any money dealing with Microsoft. The key point is that this price level is not fixed over time.

Doc: Where does it stand now?

Eric: In appliance territory. Which is why you see companies like Nokia and GTE Sylvania defecting from the Windows CE alliance. They’ve figured out they can’t make any money at that price point, given the license price of Windows CE. Over time, because the price of hardware is dropping, the functional point represented by that price point is going to rise into low-end consumer PC territory. When the price point at which you can’t make any money dealing with Microsoft passes the average price point of a consumer desktop PC, the game is over. And I think this is going to happen before the justice department gets its final verdict.”

He thought that Microsoft not being able to keep their stock price rising would doom them quickly, and it’s actually taken nine years. But it describes the present netbook woes quite well.

(Given the failure of most predictions of Microsoft’s inevitable doom, I predict they’ll decline very slowly indeed, and turn into a services company if they’re lucky.)