[LINK] Microsoft (was: GPLv3 - Update)

Glen Turner glen.turner at aarnet.edu.au
Mon Jul 31 12:33:15 AEST 2006

Brendan Scott wrote:

> Is what really so?  I don't follow.

Sorry. I was questioning if software is becoming a service.

> Microsoft has been public about trying to move away from having their 
> revenue tied to new product releases for some time. They are dogged by 
> the customer mindset of perpetual licences (= one off cost) which is why 
> they've been pushing Software Assurance (tm) over the past few years.   
> However, as I understand it, customers have called their bluff on SA

I wouldn't say "called their bluff" so much as done the math.
Any organisation that signed up for SA is now spending more
money than they would have buying the software outright.

That's partly because of the product cycle and the story will
change when the new Windows and Office appear.  But if you made
the not-too-difficult call that Vista would be late; did the
math on SA; resisted the doom and gloom scenarios, threats and
outright pleading from Microsoft; and bought outright; then you won.

Worse for Microsoft is the graphics requirements for the Vista
user interface.  They're much higher than on corporate PCs
being installed today.  So an entire "Vista Premium Ready"
fleet of PCs will need to be installed to run Vista.  Corporates
lease their PCs for three years, so Microsoft are looking at
three years before they see much corporate revenue from Vista.

This is Microsoft's own fault.  They still haven't finalised
a minimum machine specification for Vista running all the
bells and whistles.

> (Between you and me, I also suspect that Microsoft is a little scared by 
> the limitations in its development model.  Vista has been missing 
> milestones and dropping major features.  Having a services based 
> approach means they're setting different expectations about the release 
> of new versions.)

Nice point.  A software service could be gently updated over time.

> I would also speculate that it will provide a means for them to 
> license/legitimate "pirate" copies.  However, if they did this, they 
> would undermine their channels/cut off their resellers.

They've already done that.  Microsoft dropped the requirement
for retailers to check for student ID for the "Student and
Teacher Edition" of their software.

The retailers seem happy.  If you walk into Harvey Norman then
you'd be pushing it to find any copy of the software that isn't
the academic version.

Similarly, the "OEM version" of Microsoft's software requires
a hardware purchase. But of a motherboard, CPU or hard disk.
There are lots of cheap hard disks out there.

The real killer with Microsoft's software at the moment is
"client access licenses" for their server products. For a
small-medium business these work out at about $40 per head
for file sharing and about the same again for e-mail.
That's where open source software currently has a huge
price advantage, as it's CAL price is $0.

> I think their reading of what customers want/will tolerate is a little 
> self delusional.  The whole model of 
> controlling-the-platform-so-we-can-shove-stuff-down-their-throats is 
> what got them into a mess with IE.

Unfortunately I think their assessment is pretty accurate.
People will take whatever operating system comes with their
hardware.  Unless you are a hobbyist or unless someone else
does the work, life's too short for anything else.

And Microsoft are fighting particularly toughly to make
sure that it retains it's grip on corporate users.  Look
at the goings-on in Massachusetts, where Microsoft had a
politician do its bidding and destroy the career of the
public servant that proposed a path away from reliance
on the Microsoft .DOC format.

Microsoft want to keep Linux in the engineering departments,
just as it kept Macs in the graphics design departments.

What it really doesn't need is the recognition that Linux
ease of system administration for large deployments is
orders of magnitudes less than that of Windows.  That
pays for a lot of conversion training (and at a time
when staying with Microsoft also implies an increase in

> They will need to be a lot more  subtle than they have
 > been in the past for it to work.

Corporates are not looking for subtlety -- they've seen that
at work in SCO v IBM and it was a pain to deal with. [1]

They are looking for mature behaviour: open competition
and cooperation with other suppliers in establishing the
field for that competition to occur.

I don't think we can expect that.  Maintaining Microsoft's
share price requires it to have another Windows 95 revenue
event.  For that it needs to completely dominate a growth
market.  Thus the XBox, the mobile phone, the competitor to
the iPod.  And the same argument implies they are developing
a competitor to the Asterisk soft PABX.

I'm being a little unfair with the XBox.  Sony might be
stuffing up the PS3 development and Microsoft may have its
first genuine competitive win in years.


  [1] Not that SCO v IBM turned out as Microsoft may have
      hoped. IT shops evicted machines running SCO (taking
      a strategic decision to dump a toxic supplier) rather
      than evicting machines running Linux.

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