01.24.09

Microsoft Death Watch — GNU/Linux to Blame

Posted in Finance, GNU/Linux, Microsoft, SUN, Windows at 9:48 am by Dr. Roy Schestowitz

“Client software felt the slump in PC sales, and was further harmed by the shift to netbooks; many of these run Linux, which helps Microsoft not at all.”

Ars Technica

“Microsoft, like much of the IT industry, was caught off-guard by the rapid rise of the netbook category, but moved quickly to offer a netbook-specific version of XP Home to stem the tide of Linux on netbooks. When one considers that getting some revenue is better than getting none, that was a wise move.”

CRN

“Search engines be da**ed, it’s the OS that generates money – if the world switches to linux, it will switch to OpenOffice too.”

Motley Fool (heavily Microsoft-influenced)

“Microsoft can’t charge $80 or $100 when there’s Linux for free on netbooks,” Rosoff said. On regular PC sales, Microsoft’s profit margins are typically about 70 percent to 80 percent, he explained.”

Microsoft Press

WE WROTE ABOUT Microsoft’s latest defeat several days ago [1, 2] and will continue to do so later. Apart from the new quotes above, worth paying attention to is the following article, which predicts that “There may not be much left [of Microsoft] in two years time.”

Here is the prediction I’m hesitant about. Always in the past when software with substantial installed base has finally been supplanted the fall has not been gradual: Lotus and Wordperfect went from world-beaters to also rans in just a few years. I think Microsoft may surprise us by falling equally fast. There may not be much left in two years time.

Could Microsoft be heading towards $4? Everything is possible. Just witness how quickly giants like Sun Microsystems have fallen; none of this is linear, much like the network effect. Proprietary software loses its margin advantage very rapidly and a panicky shift to Free software is in some situations a case of “too little, too late.” Novell understands this too.

GNU and Linux

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9 Comments

  1. Needs Sunlight said,

    January 24, 2009 at 1:01 pm

    Gravatar

    When nearly all 50 states in the republic were suing M$ for price gouging, the damage came to the surface: It’s important to point out that 70% – 80% profit margins mean that between 4 to 5 times the fair price is being extracted.

    When things are that bad, especially in consideration of the pathetic quality, then it may be time to bring in racketeering charges for Gates and his cohort.

  2. Roy Schestowitz said,

    January 24, 2009 at 3:15 pm

    Gravatar

    It’s important to point out that 70% – 80% profit margins mean that between 4 to 5 times the fair price is being extracted.

    From a national perspective it’s seen differently (despite abominable tax breaks). That’s why Europe and Asia must respond more effectively. The US is too lax.

  3. twitter said,

    January 25, 2009 at 8:32 pm

    Gravatar

    Another important shift that even Steve Ballmer has recognized is the demise of Office as a cash cow. The easy availability of Open Office has taken a bite out of that software’s profitability for years. Recently, Steve Ballmer admitted Google Docs were eating into mindshare because it’s so much easier to share and collaborate. So goes the other foundation of their little clerical empire. Free software and web services have run around their monopoly impediments and M$ finds itself both surrounded and ignored.

    The end is probably nearer than we think. I’m keeping a little log of Microsoft’s failure that is much like my Vista failure and Windows 7 failure logs. Vista failed the way Windows should have failed long ago, but the speed and totality of that failure took me by surprise. M$’s propaganda machine is so strong that even I’m surprised by how bad field conditions usually are. For example, a relative spent three weeks exchanging email with M$ “support” before that advice reduced their Vista machine to a single line of blinking, unbootable error message. An analogous condition probably exists with their murky finances – they are liars and reality is always worse than you think it is after talking to them.

  4. ram said,

    January 25, 2009 at 9:19 pm

    Gravatar

    An investigation into racketeering would be worthwhile – especially in Australia. Last I checked threatening people with goons and bribing them with illegal drugs and prostitutes was itself illegal, yet that is how the ‘marketing’ arms of several foreign companies do ‘business’ here.
    (And Americans wonder why the rest of the world is coming to hate them!)

  5. Roy Schestowitz said,

    January 26, 2009 at 3:26 am

    Gravatar

    Stallman compared it to “Colonialism” last month.

    `Do not fall prey to software monopolies’

    The extensive use of proprietary software will lead to digital colonisation, as it forbids people from sharing knowledge, founder of GNU Project and Free Software Foundation, Richard Stallman has said.

    [...]

    Stallman said that companies such as Microsoft were trying to create colonies by not sharing the knowledge behind the software. ‘’Just like colonialism, they are following the divide and rule policy. After making some softwares, they are asking us to use it or to think like that. Here, people become slaves of this monopoly,’’ he said.

  6. Jim Lee said,

    January 26, 2009 at 7:44 pm

    Gravatar

    “An investigation into racketeering would be worthwhile – especially in Australia. Last I checked threatening people with goons and bribing them with illegal drugs and prostitutes was itself illegal, yet that is how the ‘marketing’ arms of several foreign companies do ‘business’ here.
    (And Americans wonder why the rest of the world is coming to hate them!)”

    Ram, I must take offense at that last sentence. Steve Ballmer is not representative of all Americans, nor do all Yanks suck at the teat of M$ (it might surprise you to know this Yank is posting this message on a Debian laptop – will wonders never cease?)

  7. ram said,

    January 27, 2009 at 12:06 am

    Gravatar

    My apologies Mr. Lee. Of course America has many good people, unfortunately what most of the world sees (and feels) are the actions of its most agressive organizations. America (and to a lesser extent Europe) may call it ‘Free Trade’ but it increasingly is viewed as colonialism by the remainder of the world.

  8. Jim Lee said,

    January 28, 2009 at 5:30 pm

    Gravatar

    No offense taken, ram. There’s a contingent of us here who take a very dim view of Steve Baller’s tactics. There are some brilliant engineers at Microsoft (well, a few anyway) but their hands are tied by the baboons who pose as their leadership (Ballmer, Jim Allchin, et al) as well as the greedy, winner-take-all, ethics-be-damned corporate culture at Redmond; it’s been that way for *years*.

    It pains me that these guys are seen as the face of American business, and I usually bristle at the thought of being even remotely associated with them. At least the majority of the world has (thus far) refused to drink the Microsoft “Kool-Aid”.

  9. Roy Schestowitz said,

    January 28, 2009 at 5:41 pm

    Gravatar

    What’s needed is a potent regulatory system to restrain behaviour. This ought to be applied to foreign affairs too.

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