Microsoft Warns SEC of Open-Source Threat By Peter Galli

eWeek Magazine ^ | 4 February 2003 | Peter Galli

[chilepepper]

Microsoft Corp. may in the future be forced to lower its software prices as a result of the growth of open source, the company cautioned in its latest filing with the Securities and Exchange Commission.

In its latest 10-Q quarterly filing, Microsoft said that the popularization of the open-source movement continues to pose a significant challenge to its business model.

This threat includes "recent efforts by proponents of the open source model to convince governments worldwide to mandate the use of open source software in their purchase and deployment of software products.

"To the extent the open source model gains increasing market acceptance, sales of the company's products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline," it said.

At the root of the problem for Microsoft is the challenge open-source software presents to its traditional business model—which is based on customers paying to license its software. Under this commercial software development model, software developers bear the costs of creating the software but receive license payments for its use.

[chilepepper]

Well, ignoring and belittling and name calling apparently didn't work for Microsoft. What will Bill & Steve do now??

[freedomcrusader]

Microsoft Corp. may in the future be forced to lower its software prices as a result of the growth of open source, the company cautioned...

Funny how competition will do that.

[Bob]

I wouldn't put too much stock in this. It sounds like part of the standard kind of 'potential risks' gobblydeegook contained in every SEC filing that I've ever seen.

If it weren't there, people could object that MSFT wasn't being properly diligent in running the company.

[Apple Pan Dowdy]

Did any of you see the movie "ANTITRUST" that is currently showing on SHOW Movie channel? Although it never uses names, it is remarkably like Bill Gates and Microsoft.... the Gates-like software mogul (in Portland... and his house looks a lot like the real Gate's house!!) hires a young genus programmer to work for him, who then begins to suspect what is going on ..... the bad guys are the big software Company, the good guys are open-source proponants of course. You all have to see it.

There is a trailer here

[Question_Assumptions]

More evidence that competition is good. The biggest problem that the Open Source movement poses to Microsoft is that they can't either (A) buy the competition or (B) destroy their competition's business because the people who develop the software aren't doing it for money. There is no business to buy or crush.

Note that I'm not saying that there isn't a place for commercial software. I've purchased quite a few Microsoft Office licenses for my own personal use. Indeed, I've probably spent several thousand dollars on licenses since all of my software is legitimately licensed. I'm also not anti-Microsoft. Not only do I have copies of Office and Windows Media Player installed on my Macintosh iBook, I also own copies of several of Microsoft Press' software development and project management books. I'd simply have more respect for Microsoft if it were competing on the quality of its products (which it can do with Excel, Word, and other software) instead of through anti-competative tactics.

[afz400]

My biggest problem with Microsoft is their obsession with surrepticious snooping of what people are doing on their computers (cookies, XP keeping track of MP3 use etc).

[dwollmann]

"lower its software prices"? This will probably manifest itself as a reduction in the rate of increase. I'd be shocked (shocked) if Microsoft actually reduced prices on existing products across the board.

[Bush2000]

Part of the motivation for this filing, in my opinion, has to do with heading off future shareholder suits that could have risen from accusations that the company was painting an overly rosy perspective of the competitive landscape. You will notice that MS tends to err on the side of caution in all of its filings. This isn't a coincidence.