Saturday, January 03, 2004

The IT industry is shifting away from Microsoft

I'm not sure if this is really true, but this article has some good points:

- last quarter was the first in Microsoft history where earnings were flat

- Microsoft slashed price for MS SQL Developer Edition by 80% to compete with MySQL

- a discounted "Student & Teacher Version" of MS Office is now available - buyers do not have to prove they are students or teachers

- still, home users switch to OpenOffice/StarOffice. One of the reasons is Microsofts Product Activation.

- Licensing 6.0 was unsuccessful, far from 100% of Microsoft customers signed up. Microsoft added free training, home-use-licenses etc. to make it more appealing. But it still does not work. The Thai government now gets a 95% discount on Windows+Office list price: 36$. There are probably many other similar deals. What will this do to Microsofts profit in the medium/long term?

- "The fact is, if you are negotiating with Microsoft, and you pull out a SuSE or Redhat box, prices drop 25 per cent from the best deal you could negotiate. Pull out a detailed ROI study, and another 25 per cent drops off, miraculously. Want more? Tell Microsoft the pilot phase of the trials went exceedingly well, and the Java Desktop from Sun is looking really spectacular on the Gnome desktop custom built for your enterprise, while training costs are almost nil. It isn't hard to put the boot in to Microsoft again and again these days -- being a Microsoft rep must be a tough job. And whatever it does, people are still jumping ship."

- despite its announcements a year ago, Microsoft has not managed to make its products more secure: Blaster, DCOM/RPC etc. The fact remains that security has been getting worse every year since Windows 95 was released. One hell of a track record. The fact remains that Microsoft's entire infrastructure is based on fundamentally flawed designs, not buggy code. These designs can't be changed. To change them, Microsoft would have to dump all existing APIs and break compatibility with everything up till now. Microsoft and its customer are addicted to backwards compatibility in a way that makes a heroin addict look silly.

These are interesting point. However, how many home users are really shifting to Open/StarOffice? How many companies that had an expiring software assurance contract have not renewed under licensing 6.0?

If Microsofts profits start to erode significantly, this could mean they stop playing in fields where they make huge losses - like ERP, XBox, etc. It could also mean they are getting even more agressive especially in the ERP field, because this area has not yet been significantly impacted by open source software.