Compared to just "how much" MicroSoft is getting from big customers like the City of Munich for installing 14,000 copies of Linux?!
Posted on 09/13/2003 7:32:43 PM PDT by chilepepper
Governments like open-source software, but Microsoft does not
IN MAY, the city of Munich decided to oust Microsoft Windows from the 14,000 computers used by local-government employees in favour of Linux, an open-source operating system. Although the contract was worth a modest $35m, Microsoft's chief executive, Steve Ballmer, interrupted his holiday in Switzerland to visit Munich and lobby the mayor. Microsoft even dropped its prices to match Linux—a remarkable feat since Linux is essentially free and users merely purchase support services alongside it. But the software giant still lost. City officials said the decision was a matter of principle: the municipality wanted to control its technological destiny. It did not wish to place the functioning of government in the hands of a commercial vendor with proprietary standards which is accountable to shareholders rather than to citizens.
Worryingly for Microsoft, Munich is not alone in holding that view. Across the globe, governments are turning to open-source software which, unlike proprietary software, allows users to inspect, modify and freely redistribute its underlying programming instructions. Scores of national and state governments have drafted legislation calling for open-source software to be given preferential treatment in procurement. Brazil, for instance, is preparing to recommend that all its government agencies and state enterprises buy open source.
Other countries are funding open-source software initiatives outright. China has been working on a local version of Linux for years, on the grounds of national self-sufficiency, security and to avoid being too dependent on a single foreign supplier. Politicians in India have called on its vast army of programmers to develop open-source products for the same reasons. This month, Japan said it would collaborate with China and South Korea to develop open-source alternatives to Microsoft's software. Japan has already allocated ¥1 billion ($9m) to the project.
Why all the fuss? Modern governments generate a vast number of digital files. From birth certificates and tax returns to criminal DNA records, the documents must be retrievable in perpetuity. So governments are reluctant to store official records in the proprietary formats of commercial-software vendors. This concern will only increase as e-government services, such as filing a tax return or applying for a driving licence online, gain momentum. In Microsoft's case, security flaws in its software, such as those exploited by the recent Blaster and SoBig viruses, are also a cause of increasing concern.
Government purchases of software totalled almost $17 billion globally in 2002, and the figure is expected to grow by about 9% a year for the next five years, according to IDC, a market-research firm (see chart). Microsoft controls a relatively small part of this market, with sales to governments estimated at around $2.8 billion. But it is a crucial market, because when a government opts for a particular technology, the citizens and businesses that deal with it often have to fall into line. (In one notable example, America's defence department adopted the internet protocol as its networking standard, forcing contractors to use it, which in turn created a large market for internet-compliant products.) No wonder Microsoft feels threatened—the marriage of open-source software and government could be its Achilles heel.
Policymakers like open source for many reasons. In theory, the software's transparency increases security because “backdoors” used by hackers can be exposed and programmers can root out bugs from the code. The software can also be tailored to the user's specific needs, and upgrades happen at a pace chosen by the user, not the vendor. The open-source model of openness and collaboration has produced some excellent software that is every bit the equal of commercial, closed-source products. And, of course, there is no risk of being locked in to a single vendor.
That said, open-source is no panacea, and there are many areas where proprietary products are still far superior. Oracle, the world's second-largest software company, need not worry (yet) about governments switching to open-source alternatives to its database software. But Microsoft is vulnerable, because an open-source rival to its Windows operating system exists already, in the form of Linux.
If Microsoft is indeed squeezed out of the government sector by open-source software, three groups stand to benefit: large consultancy firms and systems integrators, such as IBM, which will be called in to devise and install alternative products; firms such as Red Hat or SuSE, which sell Linux-based products and services; and numerous small, local technology firms that can tailor open-source products for governmental users.
As a result, the company has been fighting back. Microsoft and its allies have sought to discredit open-source software, likening its challenge of proprietary ownership to communism and suggesting that its openness makes it insecure and therefore vulnerable to terrorism. The firm also created a controversial slush fund to allow it to offer deep discounts to ensure that it did not lose government sales to Linux on the basis of price. And Microsoft has paid for a series of studies, the latest of which appeared this week, which invariably find that, in specific applications, Windows costs less than Linux.
More strikingly, Microsoft has been imitating the ways of the open-source “community”. Last year, the firm launched a “shared source” initiative that allows certain approved governments and large corporate clients to gain access to most of the Windows software code, though not to modify it. This is intended, in part, to assuage the fears of foreign governments that Windows might contain secret security backdoors. Microsoft has also made available some portions of the source code of Windows CE, which runs on handheld PCs and mobile phones, to enable programmers to tinker with the code. Tellingly, this is a market where the company is a straggler rather than a leader.
Jason Matusow, Microsoft's shared-source manager, says that developing software requires leadership and an understanding of customer needs—both areas where proprietary-software companies excel. As for proposed legislation that would stipulate one type of software over another, it is anti-competitive and could leave users hamstrung with products that are not the best for their specific needs, says Robert Kramer, executive director of the Initiative for Software Choice, a Microsoft-supported lobby group. Microsoft will advance these views next week in Rome, where it is hosting the latest in a series of conferences for government leaders. But the signs are that many of them have already made up their minds.
Compared to just "how much" MicroSoft is getting from big customers like the City of Munich for installing 14,000 copies of Linux?!
So why not release its code into Open Source?
I disagree.
Consider: MicroSoft was willing to drop the price of Windows XP down so low as to compete with the Linux pricing for the City of Munich.
But why drop your top of the line pricing?
Why not use obsolete OS's like Windows 95 in Open Source to compete with Linux?
Use a product that is currently considered "dead" to provide an Open Source, low cost alternative to the Linux crowd.
Surely that makes more sense than dropping the price for actively supported OS's like Windows XP!
The other upside to releasing Windows 95 as Open Source is that you would end up keeping more clients on MicroSoft compatible platforms.
In contrast, once a city like Munich goes to Linux, you lose future sales of MicroSoft products such as MS Word/MS Office/MS Excel.
At least an Open Source Windows 95+ would keep the MicroSoft platform.
Something to consider...
NT 4 would be nice to open source, but I'm afraid that the NT 4 code is currently so good as to frighten MicroSoft away from releasing it into Open Source (especially as a first step since they've never done this to date). On the other hand, it's pretty tough to argue that Windows 95 code threatens current and future Windows releases!
Which 3 applications are you referring to?... And which features aren't needed by users?
Not hardly. As it becomes more popular with the general public it too will become a favorite target of hackers.
That's the thing, Southy. He spelled it out in black and white.
This is all about monopolistic market control. Your idea would erode MS's control of the market by introducing a competitor to their main line of products.
That's the whole point of MS's illegal monopolistic behaviors. They're in a position where they're goal is to prevent all possible competition, even that provided by a nearly decade-old one. Like with the RIAA and online music -- the monopolist can make a lot of money by opening up. But they lose the market control that is their bread and butter.
B2k was very correct -- MS exists by controlling the marketplace, and this would erode MS's control of that market by allowing a Windows-compatable OS a foothold in the market.
MS's entire business model is built on denying consumers access to just such an operating system.
Anyway, this highlights one of the few flaws in the OSS development model that I can think of. Let's face it - writing and debugging software to read and write "foreign" filesystems is boring as all hell, and not the kind of thing most programmers dream about doing in their spare time. Lots of people want to write flashy new window managers or get down into the guts of the kernel, but there's kind of a dearth of good people who want to write that boring middleware stuff, whereas the market provides ample incentive for commercial vendors to fill that gap. Which is why I can buy a perfectly reliable ext2/3 driver for Windows, but have to settle for "dangerous" if I want to read and write NTFS under Linux - that, and NTFS is proprietary and has to be reverse-engineered, which slows it down even further.
Except that MicroSoft already has such a competitor.
What I suggested was to use old, dead MicroSoft code (e.g. Windows 95 as Open Source) to compete with said competitor (i.e. Linux), rather than discount the price of new frontline software such as Windows XP down to a competitive price.
Strategically, what MicroSoft tried to do in Munich was suicidal. MSFT can't go running around giving away its frontline OS's in order to compete with Linux, as that will set a precedent that will eventually destroy their system (as other cities and companies will likewise start to demand such discounts).
The correct solution is to discount 2nd tier rather than 1st tier code. Especially if the 2nd tier code can be dressed up identically to the competitor (by making it Open source). Give it a cool name such as "Open-5," provide some intitial corporate support to get the whole thing jump started, and then let your 2nd tier customers have that "new" system as they look for alternatives, as opposed to just watching them switch over to Linux (which erodes not only your base, but also future application sales).
Keeping your base on the Windows platform provides a strategic advantage for at least selling MicroSoft's applications, something that is eroded everytime someone switches to Linux.
The very last release of OS/2 was reasonably comparable to Windows 95. IBM could easily sieze the Open Source market by releasing that code into the public domain along with the "IBM Compatible" tagline, especially if MicroSoft continues to insist on leaving Windows 95 code locked up behind bars.
more seriously, code which was never designed to be open is probably pretty messy (sausage-like) and everyone who pored over it would second guess how it was written. It would also show up the "tricks" Microsoft employed to make their products run faster than their competitors (e.g.- where they departed from their own published interface standards without telling anyone -- in order to give the MS database/spreadsheet/word-processor/whatever either an edge in the benchmarks or "more robustness")
Don't you get it? IBM doesn't want to "seize" the open source market. They are delighted that an army of volunteers wants to produce the world's finest operating system. That's money they don't have to spend on AIX.
If they can chip in a few pieces that they need to run their particular iron, and have big chunks of everything else done by volunteers, well that's a beautiful thing. Who would want to screw that up? Not a hardware vendor, that's for sure.
If the volunteers want to work on linux, then linux it shall be. It's close enough to AIX that they can bring most of their high-margin middleware over with very little trouble, and when they're done they can still sell the hardware and the middleware, but with much less cost for the OS itself.
Dell, being Dell, probably sees a free operating system. Last time I looked, Dell spent near-zero on R&D, so they will probably not put much back in. But they will sure as hell stop paying Microsoft $100 a box the day it becomes possible.
The thing to understand about linux is that to a hardware vendor, an operating system is neither a feature nor a benefit. It is non-value-added cost. It looks a lot like that to a customer as well. A hardware vendor wants to squeeze all non-value-added costs out of its products. Customers will cheer them on for doing it.
Microsoft will fight that for as long as they can, but in the long run they will have to learn how to make money from middleware and applications instead of big bags of device drivers with a GUI on top.
No, I don't get it, honestly.
IBM could insure that the Open Source went purely IBM compatible. IBM could slam MicroSoft, Linux, Apple, Compaq/HP, and everyone else by releasing OS/2 as Open Source code.
An army of volunteers would soon be modifying OS/2, and the IBM Compatible moniker would tempt even hardcore Linux developers into the OS/2 camp.
Suddenly code that had been idle for a decade would be generating massive new interest for IBM, with new service contracts and new options for IBM clients, as well as newfound cache and panache...would be springing up left and right for the company; all for simply releasing code that they've got locked down and not in use today, anyway.
Ditto for MicroSoft.
The quickest way to cut the legs out from the Linux camp would be to release Windows 95 into the public domain.
For 3rd party developers, the option between either Linux or MicroSoft compatible would be a no-brainer. Turning Windows 95 into Open Source code would be a body blow not only to Linux/SCO, but also to the new government backed OS venture between Japan, China, and Taiwan (with India no doubt jumping in later).
MicroSoft already considers Windows 95 to be both obsolete and dead. Well, why not kill the Linux movement and generate some new revenue from this "dead" code?
So no, I don't get it. I don't see MicroSoft competing head to head with Linux by using MS's top of the line OS's (at discounted prices) as being a winning strategy. Much better to co-opt the Open Source movement and cut Linux down in one bold lightening strike move with Windows 95, imho.
The way I analyze it, the 'market' that MS has monopolized is the IBM PC-Compatible desktop market, with a primary focus on big corporations.
MS uses hook, crook, any leverage they can get to keep that market locked down tight. Remember, in their last filings they showed that Windows and Office products have 90%+ profit margins, and they've just bumped the next Windows (Longhorn) another year. Prices stay high, innovation stifles, the monopoly rakes it in with little to no effort. Monopolized markets are quite a cash cow. And remember, their other divisions all operate at billion dollar a year loss. They are standing on a ticking time bomb. They *have* to keep the revenue flowing.
I'm a big fan of Linux, but I don't believe it's quite there yet on the desktop. Altho it's not very far at all, and will, soon, challenge. It's winning more battles every day.
I believe MS *can't* open up and allow competition. They won't win in a competitive market, and they know it.
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