Slick,
I am not going to argue, value add people will pay for. The question, and more to the point issue, I am raising is that the value add that MS will give, will continue to deminish. Right now there in my oppinion or only a few true open source projects that are doing it right and well, those center around 2 major products, APACHE/JAKARTA which are phenomenal, and Unix derivatives (FreeBSD, LINUX etc..) Now certainly there are more opensource products out there databases, EJB containers etc etc..
The point I am making is not that MS has a value add, the point is, what value add will they be giving in the future? Products like Word, and the rest of Office, really are not adding new features that have any impact or that are driving most people to upgrade. So you have relatively static products, that are not driving user upgrades. When you have that type of situation, the value add becomes less and less over time.
Once you no longer have product driving use through advancement you must fall back on compatibility (file format).. right now MS has this, the question though is if the product is stable/static can it continue to expect to stay the defacto? Remember, there once was a product called Word Perfect and it was the defacto standard... MS leveraged its OS monopoly with a concerted effort against WordPerfect to change that. Don't think MS is immune from that happening, just because they have the OS.
So, you have software mainly being supported now, not by its own features, but by the OS tie (IE upgrade of Office happens not from a need for new features, but because new OS is out...)... And most OS sales are from hardware upgrade not out of need either (because OS is not advancing huge features driving upgrade, and machines are replaced on lease every 2-3 years or less)... So you have this whole thing essentially dependent on the hardware cycle upgrade, not on their own individual merits. Now since machines are faster and faster, and quite frankly are far more powerful than most business users will ever tap, even at the low end these days, will that cycle continue ad infinum?
If it does, MS is fine, because it can continue to make high margins on new computers being sold, however if it doesn't and MS needs to sell upgrades on their own.... it starts to come apart. Think about it, why do I as a business need to buy the new Office XXXX or windows YYYY? what I have works fine.. so I don't.... there is no compelling reason to upgrade. If there is no real compelling reason to upgrade, then any competitor, opensource or otherwise is going to gain ground during such times.... So your value add becomes less over time, not greater. Right now and quite frankly for average user, a good while MS has had no compelling upgrade argument, and continues to rely more and more on the upgrade cycle.
MS's knows this, they know they have a problem, if they didn't they wouldn't be trying so hard to find a market for their goods outside of their core, but thusfar have been unable to, because unlike the OS/Office world, they don't have that monopoly to leverage.. So far nothing outside of that core area has been successful. And their core is not going away today, but it is not going to be what it has been in the past.
If MSFT rests on its laurels, it's doomed. If it continues to innovate, and continues to offer value, it'll be fine.
Will .NET kick J2EE's ass, or will it be a failure? Will the new file-system-as-relational-database be a bust, or will it be the greatest thing since sliced bread? Will the tablet PC revolutionize the way we work, or will it be another Apple Newton?
Only time will tell...
In computers, people play with Microsoft because they have to. In other areas, everybody's doing their best to make sure they don't have to play with Microsoft.