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Is Microsoft courting disaster?
Globe Technology ^ | 9 January 2003 | Jacques Suveyer

Posted on 01/11/2003 8:20:51 AM PST by ShadowAce

The author is a writer and consultant; he can be reached at www.thephotofinishes.com.

As any one who has substantial technology investments in the stock market knows, IT spending has followed the dot.com bubble burst and is in the doldrums. North American shipments of PCs and servers were down by 5 per cent in 2001 and it looks like this year will barely scratch out 1- to 2-per-cent growth.

The basic problem is that processing power is quickly approaching the point where it's an almost free resource as Moore's Law continues to deliver a doubling in computing power every 18 months; and millions of design engineers go out and translate that into better hardware, devices, storage capacity, and communication hardware.

But who needs it ? Nobody right now, because only the most ambitious of graphics, simulation, analysis, voice and handwriting programs and/or interfaces can hope to swallow sizable chunks of the power of a $2,000 computer. So for most users, corporate and home, why upgrade?

As a result, companies as diverse as AMD, Adobe, Cisco, Corel, Intel, Oracle, Sun, and the other big names of the computing revolution have seen their stocks crater in the past two years. Everybody is affected by the following major trends:

1)PC and Server market saturation are being reached as the power and reliability of existing software and hardware does not justify two- to four-year update cycles, because people and conversion costs are now the critical factors in the upgrade equation;

2)Software innovation is slowing down with no new killer application in the IT arena since the Mosaic browser. Also, Microsoft acts as a strict Gateskeeper of PC innovation - JPEG2000 and Java do not get in, but handwriting and voice do, on Microsoft's terms;

3)Hardware, communication and storage price/performance continue to improve dramatically - but the driver is fear of being displaced, as most developers and manufacturers barely eek out profitable returns;

4)Software costs and development are at transition - as the major player, Microsoft, raises its prices in contrast to just about every other software company.

It is this last phenomenon that I would like to examine in more detail.

In a Down Market - Raise Your Prices

In the DOJ/Microsoft antitrust trial, one of the expert witnesses testifying on behalf of Microsoft argued that the true test of monopoly power was not the holding of 60-, 70-, or even 80-per-cent market share; but the ability to do so for long periods of time - several years, if not decades - and then the ability to uniquely raise prices in markets while its competitors could not.

He then went on to argue that there was no evidence that Microsoft had done so in any markets where it had "large share positions."

What a difference a year and and few months make. Going into its seventh year of 80-per-cent-plus market share of Office Suites, Microsoft has been able, according to Gartner Group, to raise its prices by 30 per cent to more than 100 per cent, while imposing unwanted conditions of renewal and other product update conditions on its largest customers.

Now it its not my intention to debate the merits or drawbacks of the Microsoft Software Assurance Plan, but rather to examine the consequence of Microsoft boldy going where it has never gone before - being the highest-priced producer in some of its major markets.

Let us examine the notion that Microsoft has become like butter, the high-priced spread. For Office XP Standard Edition, CNET's November 18th average price was $390; for Corel Word Perfect 2002 Suite it was $270; for Lotus Smart Suite Millenium, $210; Sun Star Office was $80; and Open Office was and still is $0 (free download at OpenOffice.org). It is estimated that the Office Suite alone accounts for $10-billion of Microsft's $30-billion in annual revenue. For Windows XP Home the price was $190; for Mandrake Linux 8 it was $27 ($0 on direct download); for Windows 2000 Advanced Server it was $2,350 for one CPU 25 users; Redhat 8 Enterprise edition with unlimited users was $149; Solaris 9 on x86 with unlimited users, $90. The estimates vary from $8-billion to $12-billion for the revenue brought in by the Windows server and desktop editions. Microsoft's Visual Studio.NET was $750; GCC and other GPL developer software on Linux, $0.

So for more than two-thirds of Microsoft's software portfolio by revenue the company is no longer the best price/performance producer, but in fact often has one of the highest purchase costs. Now Microsoft might argue that they have the best features and functionality, and in the case of Visual Studio with its drag-and-drop designers and visual debuggers that may well be true.

But not so in the case of Office editions and both desktop and server operatings systems. The core features of Star Office/Open Office (they use 95 per cent of the same codebase) are very competitive with Microsoft Office. In addition, OpenOffice adds the the non-trivial virtues of cross platform performance including running on versions of Windows that Microsoft no longer supports, while supporting an open XML-based file storage format in contrast to Microsoft's proprietary format.

On the Windows side, Microsoft has set a hefty pace for including many free utilities and services with the operating system, but Sun's Solaris and many of the Linux distributions have matched most of those utilities and gone Microsoft two or three major systems better. For example, Solaris now includes an Application server plus complete Java development environ. Linux has not just a Java environ; but development tools for C, C++, Perl, PHP plus a very good MySQL database, along with a host of other utilities. So again, on the OS side the features and functionality of Solaris and Linux match if not exceed Windows.

But on total cost of ownership, both Solaris and Linux have much superior records for availability, reliability and especially security. In the past two years Microsoft shops have had a particularly onerous set of administrative- and cleanup-related costs associated with Windows desktop and server. Office, and especially Outlook and Internet Explorer, have racked up onerous TCO (Total Cost of Ownership) costs in the reliability and security areas.

So why does Microsoft raise its prices having surrendered one of its key competitive advantages - being consistently the best price/performance leader in many of its markets.

Well, as professor Schmalensee might argue, it's because as monopolists, they can.

Others would argue that Microsoft is taking advantage of the fact that software has entrenchment costs which now exceed almost all other IT costs. Companies don't want to switch because they might suffer high conversion and retraining costs. Then again, perhaps Microsoft executives believe that it has gained unmatched hypothetical leads in ease of use, manageability, and customizability of its software. And with the promise of better reliability and scalability largely delivered in SQL Server and to a lesser extent in the Windows OS, Microsoft managers might think why not raise prices when usable software easily displaces hardware as the crucial factor in delivering functional IT systems.

Or perhaps there is truth to the oft re-emerging rumour that Microsoft is determined to move much of its software over to an annual subscription model at the least and on-demand utility pricing models as the best for Microsoft and its customers as well.

But these are exactly the turbulent market conditions that famed Economist Joseph Schumpeter called capitalism's "creative destruction". Is eWeek right that given the increased prices, forced updates, and continued slow improvements to its core applications, Microsoft Office is courting a catastrophe? Stay tuned - Microsoft may be like a teenager changing lanes on the Enterprise IT freeway before it has mastered delivering the requisite availability, reliability, scalability and security capabilities across its total product line.

And we haven't even whispered any words on interoperability, until now.


TOPICS: Business/Economy; Culture/Society; Technical
KEYWORDS: microsoft; monopoly; techindex
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To: Dominic Harr
Then again, who wants to write 'windows-only' internet applications? Is the internet to become a 'Microsoft.net'?

Actually, .NET has been ported to BSD Unix ("Rotor") and to Linux ("Mono"). The BSD port means you could run .NET on your Macintosh if you wanted to.

21 posted on 01/11/2003 8:06:02 PM PST by BlazingArizona
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To: Joe Bonforte
Here are things I don't know if Java can do or not, but .NET sure can: Run in offline mode (no server connection at all), store partial data results and later auto-update to the server. Local deployment with automatic updating. All this with minimal or no additional coding.

The real advantage for .NET is its just-in-time compilation of bytecode to platform-specific machine code as the bytecode is being interpreted. Subsequent executions of a loop, or re-entry to a compiled method, execute at machine code speed instead of interpretive speed. Java, in contract, is interpreted each time through. This makes it s-l-o-w.

22 posted on 01/11/2003 8:11:40 PM PST by BlazingArizona
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To: Joe Bonforte
A lot of fancy graphics (and pretty impressive at that), but nothing that can't be done in Windows Forms in

Yet until I needed to run your demo, I had no reason to get any recent Java downloads. How is the Java client stuff ever going to achieve critical mass on the client machines?

You mean, before today, the most recent Java you've seen was 4 years old -- yet you make such pronouncements declaring .NET better?

Okay . . .

It is impressive. Very, very impressive. My clients are blown away every day.

I guess thats like in music, where some group does the club circuit for 10 years, then suddenly the public discovers them, and the press labels them an 'overnight sensation'.

Java can indeed do all the things you thought it can't. The true irony here is that I have indeed done some C# work, and am very familiar with it. I know of what I speak. Yet you've not seen any Java recently . . .

Somehow, you've never seen any of my comments on .NET? You are so wrong about my opinion it's rather odd you have such a strong opinion. I'll repeat:

I think it's a vast improvement over any other Windows-only technology -- especially VB.NET. But there are a few realities you are *not* owning up to:

I think that I, and you, and all other developers should continue to play with it (I built a 'Jeapordy' game for our Director of QA to use in a class). Use it for small tools and such, but NO mission critical apps, until it's been heavily tested for years.

That's only common sense.

Applets are indeed more powerful -- you should look into applets. You confidently say that they're less powerful, yet you've never even seen one before.

Funny.

I think that *if* MS sticks with it, in 3 or 4 years, it will be a serious competitor. I hope they do. If it improves, I'll use it more.

Until then, I'm a Java Bigot because I use both, and know which is better. You're a .NET bigot because -- well, I wonder why. You've not evaluated Java, and are so wrong about so much you claim about it . . .

And yes, it is ironic that Java devs are better at OOA/OOD. And it is ironic that Java devs like me do better with the new MS stuff than the folks who stuck with MS. MS comes to the Java folks, not the other way around. If I was a new developer, I'd notice that the *last* group of MS-only devs -- VB developers especially -- are having to learn an entirely new paradigm (pure OO, especially). If I was a new developer, I'd notice that and assume that sticking with Java was best, because MS will come to you, leaving the Windows-only folks behind.

It's so interesting how you can have such a strong opinion about Java with so little Java exposure. My personal belief -- that alone will kill .NET. I, and most Java devs, have used .NET. Most MS developers have never even looked into Java.

Advantage, Java.

23 posted on 01/11/2003 8:25:20 PM PST by Dominic Harr (Certified Java Bigot [also a 'chainsaw' bigot for cutting down trees])
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To: Joe Bonforte
And we're starting to see applications that run off a web page as soon as you click on them, as long as you've got the .NET Framework installed.

Sounds like a great reason to NOT install the .NET framework. It's just another security breech waiting to happen.

24 posted on 01/11/2003 8:30:14 PM PST by e_engineer
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To: BlazingArizona
Actually, .NET has been ported to BSD Unix ("Rotor") and to Linux ("Mono").

A small subset, not the entire CLR, and they'll have to continue to keep up with the changes and bug-fixes of MS.

And besides -- does anyone here really trust MS to not destroy that initiative if/when it eats into their market share?

Java, in contract, is interpreted each time through.

Haven't seen any Java for 4 years, I suppose? JVM's have been JIT compiling since Java2, back in what, 97? 98?

Why is it the .NET advocates know almost nothing about Java?

That, I think, is our greatest advantage.

25 posted on 01/11/2003 8:31:20 PM PST by Dominic Harr (Certified Java Bigot [also an email bigot when it comes to staying in touch with distant relatives])
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To: BlazingArizona
Reading back over my comments, they came out a bit more rudely than I intended.

My sincere apologies, sometimes I just get worked up.

26 posted on 01/11/2003 9:16:12 PM PST by Dominic Harr (Certified Java Bigot [also an email bigot when it comes to staying in touch with distant relatives])
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To: Dominic Harr
And yet again you manage to completely miss the point. Real production apps are almost always about data. I talked all about the stuff .NET can do to manipulate data on the client that Java cannot do (at least that's what the Java experts who have changed to .NET tell me). And you pointedly don't address that. Nor the code-access security model that a smart client must have to be viable, and which my Java friends tell me it does not have.

And again I ask - if this Java client stuff is so great, how come you're the only one I hear talking about it? How come all the tech articles slam Swing? How come the stock analysts have trashed Sun and BEA?

And you keep talking about all the .NET you've done, but in previous threads you keep getting Windows Forms mixed up with Web Forms and other obvious mistakes that demonstrate ignorance of the technology. A Jeopardy game? Write a real rich client data app using .NET Remoting over HTTP some day - with 3000+ of those rich clients deployed.

It's true, I've had too much fun learning and using .NET the last 2 1/2 years to pay much attention to Java. But hey, if it's so great why isn't so ubiquitous that I would have needed to look at it long ago? Surely you're not the only one who knows how to write this great client stuff that your customers like so much, and you talk about how it's been available a long time. So where is it? Who's using it besides you and your gaming sites.

When I did work with Java briefly (1998 or so), I was not impressed, though I understand it has come a long way. But people whose opinion I respect and who know Java well tell me the exact opposite of what you say - that Java, while good on the server, is very deficient on the client, and that's why we don't see any mainstream client stuff in Java.

And let me say again - I want Java to do well, because I want Microsoft to have some competition. But believing it to be far superior to .NET is the way to oblivion. Microsoft is the best in the world at stealing good ideas from other products and then making the whole thing cost effective. There's a lot of Java concepts in .NET, along with a lot of good ideas from other sources. Plus Microsoft has the advantage of building their framework into the operating system so that it's guaranteed to be on a large majority of machines in a couple or three years.

On the other hand, Java has to struggle with getting their runtime distributed, and (according to everybody but you) they are behind in technologies on the client. Their good story on the server (and Java has a pretty good story there) is not going to be enough. Plus the fact that because of the way Sun handles Java (the spec process), innovation is slower. So you guys cannot afford to fall very far behind, because it's such an uphill fight to make up ground against Microsoft. If the market ever gets the idea that Microsoft has taken the lead, you're sunk. And whether or not you want to acknowledge it, the market is getting dangerously close to that point, because Microsoft is supplying the ammunition to convince them. (See the most recent Pet Shop controversy for an excellent example.)

I'm genuinely glad that you're pleasing your clients and have five years of work lined up. But I can't help remembering - that's exactly the story I got from those PowerBuilder guys in 1994 - just before their market collapsed and Visual Basic became the dominant software development tool for corporate client-server apps.

27 posted on 01/11/2003 9:47:47 PM PST by Joe Bonforte
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To: e_engineer
Sounds like a great reason to NOT install the .NET framework. It's just another security breech waiting to happen.

Malicious code is always a danger, but the default security settings prevent code deployed from the Internet from the access it would need to do any damage. The code access security model in .NET is one of its most powerful capabilities. It's very flexible. And the security breaches that exploit buffer overruns are not possible in .NET because of strong type checking (Java also has that capability, I believe).

However, as with stuff that comes attached to emails today, if the code is copied to the local file system, it has the ability to do significant damage, even with default settings. That can be prevented, but at the cost of locking down the client system and causing a lot of inconvenience.

28 posted on 01/11/2003 9:54:06 PM PST by Joe Bonforte
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To: Joe Bonforte
I talked all about the stuff .NET can do to manipulate data on the client that Java cannot do (at least that's what the Java experts who have changed to .NET tell me).

Um.

My friend, what you don't know is a lot. There's a reason Java has come to completely dominate server development. And .NET challenge there? Consider -- the vast majority of servers are running Unix or Linux. How long before .NET is competitive there? How many years?

You're familiar with the Pet-Store fiasco, where MS paid for a falsified report. That kind of stuff *kills* MS among developers who aren't MS-only. MS *has* to lie, because they're losing in head-to-head comparisons every day. Java pushes data like a champ -- *the* champ.

IBM has bet the farm on Java/Linux. They're by far the biggest torch-carrier of Java these days. You think IBM is going under? Sun can die, I'd actually like that. McSqueally is an idiot. But he's already made it clear if they go in four or five years, they'll release the Java licenses into the public domain. It's already fully open-source, so no big deal.

Java is currently the best tech for server-side data pushing, period. .NET *may* catch up, in 3 or 4 years, on Windows-systems only. But it's not even close, today. Heck, .NET server (now renamed, MS already backing off .NET, interestingly enough) isn't even out of beta yet!

If you 've been using .NET for 2 years, and you know so little of the current state of web development . . . advantage, Java.

You should get outside the MS cloud, and read some non-MS tech articles and reports. MS *will* lie to you, over and over and over again.

Look how much false info they've put into your head. You really think Java can't manipulate data on the client in literally any way you can think of? I don't address that for the same reason I won't argue with someone who claims the sun is cold.

You really don't know about Java's security model, the one so secure it's the industry leader?

You are in for an interesting awakening.

You remind me of one of those VB developers who claimed they'd bury Java years ago -- the ones now having to re-learn an entirely new paradigm.

Bottom line -- you have no actual knowledge of the current state of Java, or why Java has already dominated server dev and now is poised to take over the desktop.

Advantage, Java.

29 posted on 01/11/2003 10:31:10 PM PST by Dominic Harr (Certified Java Bigot [also an email bigot when it comes to staying in touch with distant relatives])
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To: e_engineer
Sounds like a great reason to NOT install the .NET framework. It's just another security breech waiting to happen.

They're called Windows Forms apps. They run sand-boxed, just like Java applets so they can't access local files, registry, or memory -- except with far better performance.
30 posted on 01/11/2003 11:23:47 PM PST by Bush2000
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To: Dominic Harr
You're familiar with the Pet-Store fiasco, where MS paid for a falsified report. That kind of stuff *kills* MS among developers who aren't MS-only. MS *has* to lie, because they're losing in head-to-head comparisons every day. Java pushes data like a champ -- *the* champ

Lies, damned lies, Harr. Java's database drivers are crap. ADO.NET is about 10 times faster.

Java is currently the best tech for server-side data pushing, period. .NET *may* catch up, in 3 or 4 years, on Windows-systems only. But it's not even close, today. Heck, .NET server (now renamed, MS already backing off .NET, interestingly enough) isn't even out of beta yet!

You and your kind never see it coming. MS always seems to sneak up on you each and every time. Like a snake. Why? Your overconfidence is your weakness. You got fat, dumb, and lazy competing against ... no one. .NET changes all that. So ignore it, laughing boy. I'm glad you are. It will make your awakening that much sweeter when you find out that your clients are moving to .NET.
31 posted on 01/11/2003 11:31:04 PM PST by Bush2000
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To: Bush2000
I was just speaking about MS-only people's lies, and suddenly up you pop.

Coincidence?

I think not.

32 posted on 01/11/2003 11:32:57 PM PST by Dominic Harr (Certified Java Bigot [also an email bigot when it comes to staying in touch with distant relatives])
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To: Dominic Harr
There's always a foul smell around FR when you're around...
33 posted on 01/11/2003 11:35:50 PM PST by Bush2000
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To: ShadowAce
For Office XP Standard Edition, CNET's November 18th average price was $390; for Corel Word Perfect 2002 Suite it was $270; for Lotus Smart Suite Millennium, $210; Sun Star Office was $80; and Open Office was and still is $0 (free download at OpenOffice.org).

 

EBAY completed auctions:

Office XP Standard Edition            About $125   (You only get 4 programs in the standard edition)

Corel Word Perfect 2002 Suite      About  $20

Lotus Smart Suite Millennium        About  $15 and very few bids

BTW I have Lotus Smart Suite '97. The 1997 edition. Bought it on eBay 4 years ago for ~$15. The word processor has a lot more foreign language capability, such as grammar and spell checks in Spanish, French etc., than MS Word. For 1997 MS Word (Office '97) you had to pay $100 for the Spanish language module. I realize businesses have their own requirements for office suites. 

I also have Office '97 and 2000 for comparison. 
I even have a copy of Corel 2000 office suite that I got 2 years ago at a flea market for $10

34 posted on 01/12/2003 12:08:34 AM PST by dennisw (http://www.littlegreenfootballs.com/weblog/weblog.php)
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To: Dominic Harr
Java has already dominated server dev and now is poised to take over the desktop.

Fine. If you're so confident, go sink your retirement money into Sun stock. After all, according to you, it's a sure thing, right? If Java is going to take over the world, how could Sun fail to be valuable?

Of course, if you've been doing that the last three years, you've thrown 90% or so of your money away...

35 posted on 01/12/2003 9:38:50 AM PST by Joe Bonforte
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To: Joe Bonforte
If Java is going to take over the world, how could Sun fail to be valuable?

Did you even read my post?

Have you seen those IBM commercials about the magic pixie dust, the 'universal business adapter', etc?

Do you not even know what they're selling?

If and when .NET is tested, secure and superior, I will use it more. I use whatever is the best solution, regardless of vendor. But I base that analysis on actual knowledge of both.

Have a good career, friend.

I honestly wish you luck.

36 posted on 01/12/2003 11:19:11 AM PST by Dominic Harr
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Comment #37 Removed by Moderator

To: MySteadySystematicDecline
IBM is going to own Java pretty soon.

You may very well be correct about that. Sun can't seem to make any money from it.

But then what happens to Java's portability? Is IBM going to be interested in having it run on competing platforms? Maybe. But it certainly changes the game a lot.

The other important independent technologies that IBM has acquired (Lotus Notes, for example) have not had noticable success under their umbrella. I don't know if Java would have the same problems.

38 posted on 01/12/2003 8:00:08 PM PST by Joe Bonforte
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To: Joe Bonforte
But then what happens to Java's portability? Is IBM going to be interested in having it run on competing platforms? Maybe. But it certainly changes the game a lot.

IBM platforms, sure. But it's questionable how much they'd test on their competitors' platforms.
39 posted on 01/12/2003 8:22:41 PM PST by Bush2000
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Comment #40 Removed by Moderator


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