Sympathy for the devil (was "Why I Hate Microsoft")

L

Thread Starter

Linnell, Tim

>So anyone who provides software that is not OSS is not contributing to
>the common good? I realize you have a major issue with corporations
>making money by creating and selling software, but you can't really
>believe the hogwash you are spouting. There is nothing unethical, or
>immoral about doing so. There are some legal issues involved, but most
>of these legal issues are secondary.

I don't think Curt was saying this exactly, but defending the motives of OSS practitioners against the accusations of being motivated entirely by envy and hate of Microsoft.

However MS hate and envy is certainly deep rooted in the OSS community - remember the comparison between Bill Gates and Bin Laden? No-one not blinded by irrational belief could possibly go as far as to believe that.

I'm going to put my tin hat on and defend Microsoft's contribution to the "common good". I genuinely believe that their contribution to the industry has been a very large net positive. They were responsible in the first place for a version of Basic that did a great deal to democratize computing - many of my generation cut their teeth using some version of Microsoft Basic. Then with DOS, and later Windows, they produced a common and coherent target platform which greatly simplified applications software development to a point where shrink wrapped software was not only possible, but the norm (anyone who ever tried to target one or more of the various competing Unix standards in the 1980s will vouch for just what a pig of a job it was). And with the Office suite and their programming tools - cf Visual Basic - they produced affordable application software of excellent quality, certainly in comparison to any competitor at any given time.

So the net result was a highly usable, coherent platform (which I can target for support tools for our embedded products knowing it will work just about the same anywhere), and some very excellent software. Frankly this is a good thing full stop. I still run DOS programs I bought in 1983 on a machine that could not even have been conceived then.

I do think now that MS's main problem is that they are the first company in history to have completely saturated their target market with a product that is good enough that you never need to upgrade. This is at the root of what I suspect is a misguided licensing and upgrade strategy, since they are scrabbling to preserve income streams from products with no intrinsic obselesence (software doesn't rust or wear out), and expand into other areas (CE, XBox and phones) they can't really deal with. Fundamentally, there are only 4 ways to expand: sell more of the same to the same customers (who now have what they need, hence the need for forced upgrades), Sell to new customers (but there are hardly any available), sell new stuff to old customers (but there is no obvious mass market app for anyone with Office and a web browser), or sell new stuff to new customers (very tough). Without expansion, companies wither and die, but MS is in a very very difficult situation indeed because of its very success, and it's not surprising they are coming up with bizarre attempts to solve their problems. I rather think that the company has reached its zenith.

This may create an opportunity for OSS and other software development models, but apart from Linux I'm struggling to think of a piece of OSS software I would willingly use - Openoffice is extremely flakey, GCC is poor in comparison with (say) IAR Cross compilers and not close to VS in terms of usability; CVS is simply dreadful.

On the other hand, there are some highly dubious aspects to the creation of a culture of free software. As I say, most is poorly executed, and hides quality problems behind a "well, it's not finished yet and hey, you can join us and fix it yourself" attitude. This is chimeric, because the number of people in the user base with the skills actually to dive in and fix complex systems is vanishingly small. In point of fact, the benefit of being able theoretically able to cure problems is heavily outweighed by the practical likelihood of actually having problems!

However there are some philosophical problems I have too. I've had a PC at home for about 5 years, in which time I've bought precisely 7 software packages (a screensaver and 6 kids games). Everything else I've used is freely (and legally) downloaded or provided as freeware. Now I am a software engineer by profession, and I can see a problem here: we are creating a culture which actively devalues software to being a giveaway item (you can see this on the Automation list where people are constantly asking for free software to accomplish some high value task). This is ultimately not sustainable, as we are squeezing any value out of the act of producing software.

Now what OSS does is use the luxury of the free time available to highly educated and well paid people to dump (in the sense that components are dumped) software onto the 'market'. This actually *distorts* competition - companies who can afford to sell software at below cost to support hardware can live in an environment where everything is expected to be free or low cost, but smaller concerns are not able to economically finance support tools out of money gained for them, and innovation in other areas (I am thinking of embedded applications principally) is stifled.

Think of it this way. Is it ethical to go to a third world country with a truckload of free bread and distribute it free of charge to all comers? On the face of it this looks altrustic, but I'd say it is actually very misguided, since it would destroy the livelihood of local bakers and grain producers. Now I'm not comparing the problems of third world economies to my very privileged existence as a software engineer in the West, except to point out that even acts that on the face of it appear blameless need a little deeper consideration. Fundamentally, the risk is that we cut our own throats.

One last point, specifically relating to Automation. The one thing that users of Automation software have in common is that they make many times the capital cost of any piece of Automation equipment they buy from a vendor such as my company, and they make their money by selling the things they make to you and me. Why should there be a clamour for Free software, when there is no corresponding clamour for free food, free cars, free stuff in general? Why is software viewed as something so intrinsically different from any other product of the economy that it must be given away for nothing as a point of principle? I don't have an answer to this question - except that it may derive from the fact that it is easy to copy and has no obvious intrinsic value other than the medium transferred on - but it does intrigue me.

Cheers

Tim
 
Tim Linnell:
> However there are some philosophical problems I have too.
...
> we are creating a culture which actively devalues software to being a
> giveaway item (you can see this on the Automation list where people
> are constantly asking for free software to accomplish some high value
> task). This is ultimately not sustainable, as we are squeezing any
> value out of the act of producing software.

The standard response to this, as I'm sure you are aware, is that software for sale (mass-market) is a fairly small fraction of the market. The usual estimates are in the 5-10% range.

The great majority of software is custom-written, and this is the livelihood of the majority of automation-l subscribers: not the resale of PLCs and gadgets and shrink-wrapped programs, but their programming and customisation for particular circumstances, machines and factories.
Programming as a service.

For basic software infrastructure, a good example to follow might be Apache, the webserver. Its development model sounds like a good fit for the automation industry.

Jiri
--
Jiri Baum <[email protected]> http://www.csse.monash.edu.au/~jirib
MAT LinuxPLC project --- http://mat.sf.net --- Machine Automation Tools
 
B

Blunier, Mark

> I do think now that MS's main problem is that they are the
> first company
> in history to have completely saturated their target market with a
> product that is good enough that you never need to upgrade.

It would be nice to think that you never need to upgrade, but with the amount of bugs and security holes, that isn't realistic. However your point is not missed. Every vendor of proprietary or OSS software has the exact same problem, so it isn't like MS is any worse off than anyone else in this respect.

> This is at
> the root of what I suspect is a misguided licensing and upgrade
> strategy, since they are scrabbling to preserve income streams from
> products with no intrinsic obselesence (software doesn't rust or wear
> out), and expand into other areas (CE, XBox and phones) they can't
> really deal with.

Trying to get as much money from the customer as they can does seem to be their goal.

> Fundamentally, there are only 4 ways to expand: sell
> more of the same to the same customers (who now have what they need,
> hence the need for forced upgrades), Sell to new customers (but there
> are hardly any available), sell new stuff to old customers
> (but there is
> no obvious mass market app for anyone with Office and a web
> browser), or
> sell new stuff to new customers (very tough). Without expansion,
> companies wither and die, but MS is in a very very difficult situation
> indeed because of its very success, and it's not surprising they are
> coming up with bizarre attempts to solve their problems. I
> rather think
> that the company has reached its zenith.
> This may create an opportunity for OSS and other software development
> models, but apart from Linux I'm struggling to think of a piece of OSS
> software I would willingly use - Openoffice is extremely
> flakey, GCC is
> poor in comparison with (say) IAR Cross compilers and not
> close to VS in
> terms of usability; CVS is simply dreadful.

So you don't OSS software that's available.

If you think MS solutions (or anyone else's are technically better and choose those products for those merits great. Most of us that seem to be anti-MS aren't opposed to seeing you choose MS products because they are good, it because of there monopoly position that is isdifficult to do others, despite having products that are technically better, or = that they have prevented others from producing a better product since they would not be able to get market penetration, and didn't even try.

> On the other hand, there are some highly dubious aspects to the creation
> of a culture of free software. As I say, most is poorly executed, and
> hides quality problems behind a "well, it's not finished yet and hey,
> you can join us and fix it yourself" attitude. This is chimeric,
because
> the number of people in the user base with the skills actually to dive
> in and fix complex systems is vanishingly small. In point of fact, the
> benefit of being able theoretically able to cure problems is heavily
> outweighed by the practical likelihood of actually having problems!
>
> However there are some philosophical problems I have too.
> I've had a PC
> at home for about 5 years, in which time I've bought precisely 7
> software packages (a screensaver and 6 kids games).
> Everything else I've
> used is freely (and legally) downloaded or provided as freeware.


Curious. You don't like OSS software (that is presumably free), but yet "everything else" that you use is freeware.

> Now I
> am a software engineer by profession, and I can see a problem here: we
> are creating a culture which actively devalues software to being a
> giveaway item (you can see this on the Automation list where
> people are constantly asking for free software to accomplish some high
> value task). This is ultimately not sustainable, as we are squeezing
any
> value out of the act of producing software.


A lot of people are tired of getting charged the price of inventing the wheel everytime we buy a wheel.

> Now what OSS does is use the luxury of the free time
> available to highly
> educated and well paid people to dump (in the sense that
> components are
> dumped) software onto the 'market'. This actually *distorts*
> competition
> - companies who can afford to sell software at below cost to support
> hardware can live in an environment where everything is expected to be
> free or low cost, but smaller concerns are not able to economically
> finance support tools out of money gained for them, and innovation in
> other areas (I am thinking of embedded applications principally) is
> stifled.
>
> Think of it this way. Is it ethical to go to a third world country with
> a truckload of free bread and distribute it free of charge to all
> comers? On the face of it this looks altrustic, but I'd say it is
> actually very misguided, since it would destroy the
> livelihood of local bakers and grain producers.

I find it highly doubtful that a giving a truckload of bread to starving people is going to destroy the livelihood of local bakers. They don't have enough food, and even after having a truckload of food, they still don't have enough food.

> Now I'm not comparing the problems of third
> world economies to my very privileged existence as a software engineer
> in the West, except to point out that even acts that on the face of it
> appear blameless need a little deeper consideration.
> Fundamentally, the
> risk is that we cut our own throats.

I think I see your point. You seem to think that society has an obligation to provide programmers with jobs, and software companies profitable markets. It doesn't. When cars were invented, horseshoeers went out of business. Would it be OK for GM to put chips in there cars so that after they were 5 years old the engines would put out 10% less power every year so that we would have to buy new cars?

> One last point, specifically relating to Automation. The one thing that
> users of Automation software have in common is that they make
> many times the capital cost of any piece of Automation equipment they
buy from a
> vendor such as my company, and they make their money by selling the
> things they make to you and me. Why should there be a clamour for Free
> software, when there is no corresponding clamour for free food, free
> cars, free stuff in general? Why is software viewed as something so
> intrinsically different from any other product of the economy that it
> must be given away for nothing as a point of principle?

The farmer must WORK to grow food. The auto assembly man must WORK to build a new car. The news reporter must WORK to get the news. The telephone company must WORK to maintain the telephone system. The work to make the software has already been done and paid for. We don't mind paying reasonable costs for new software, but paying for old stuff that when someone has been paid for his labor many times over, paying for it one more time seems wrong.

> I don't have an
> answer to this question - except that it may derive from the fact that
> it is easy to copy and has no obvious intrinsic value other than the
> medium transferred on - but it does intrigue me.

That is a good way to determine what the software is worth after the cost of making it has been depreciated. That and payment for the work someone does to make and distribute the work.

Its not just the software industry that thinks that society is obligated to give lots of money to them. The recording industry thinks they = should be rich. The film industry thinks they should be rich. Sports figures think they should be rich. Go to other forums and you'll see some people whining cause they don't make as much as they used to, or expected to, and you'll see people whining back that its unfair. Business models have to change over time.

I think I'll go home now and sit by my artificial tree that put a Christmas tree farmer out of business.

Merry Christmas.

Mark Blunier Any opinions expressed in this message are not necessarily those of the company.

> Cheers
>
> Tim
 
C

Curt Wuollet

Hi Tim

Just a few points on your well thought out positions.

List Manager wrote:
> ------------ Forwarded Message ------------
> From: Linnell, Tim
>
>>So anyone who provides software that is not OSS is not contributing to
>>the common good? I realize you have a major issue with corporations
>>making money by creating and selling software, but you can't really
>>believe the hogwash you are spouting. There is nothing unethical, or
>>immoral about doing so. There are some legal issues involved, but most
>>of these legal issues are secondary.
>
> I don't think Curt was saying this exactly, but defending the motives of
> OSS practitioners against the accusations of being motivated entirely by
> envy and hate of Microsoft.
>
> However MS hate and envy is certainly deep rooted in the OSS community -
> remember the comparison between Bill Gates and Bin Laden? No-one not
> blinded by irrational belief could possibly go as far as to believe
> that.

Bill Gates is no hero, sorry. And envy doesn't enter into the picture, at least in my case. I am acutely aware of what my ethics are costing me. And gaining me. That's entirely different from envy. And, once more, read the context.

> I'm going to put my tin hat on and defend Microsoft's contribution to
> the "common good". I genuinely believe that their contribution to the
> industry has been a very large net positive. They were responsible in
> the first place for a version of Basic that did a great deal to
> democratize computing - many of my generation cut their teeth using some
> version of Microsoft Basic. Then with DOS, and later Windows, they
> produced a common and coherent target platform which greatly simplified
> applications software development to a point where shrink wrapped
> software was not only possible, but the norm (anyone who ever tried to
> target one or more of the various competing Unix standards in the 1980s
> will vouch for just what a pig of a job it was). And with the Office
> suite and their programming tools - cf Visual Basic - they produced
> affordable application software of excellent quality, certainly in
> comparison to any competitor at any given time.

I won't argue with any of that except perhaps to say that our opinions differ on quality and the "Common Good" has had to contribute plenty to Microsoft. Selling at high margins isn't really contribution in the same sense, but they did bring some of those things into the world. My specific point is what they have done with their popularity, which is to wipe out competitors and gain monopoly control of even markets they don't participate in like PC hardware, ISPs, etc. etc. I haven't ever said that they haven't done any good. They are lately doing some things that are very bad and the effect of those bad things multiplied by monopoly power is very bad indeed. You can't possibly think, for example, that it's good to have no alternative whatsoever. Yet we are much closer to that than most people think we are.

> So the net result was a highly usable, coherent platform (which I can
> target for support tools for our embedded products knowing it will work
> just about the same anywhere), and some very excellent software. Frankly
> this is a good thing full stop. I still run DOS programs I bought in
> 1983 on a machine that could not even have been conceived then.

Of course, the bulk of software along the way was obsoleted, but, I will concede that DOS would be my choice if I had to write for an MS platform. It's about the only thing that has remained nearly constant.And I can still run OSS from any UNIX system since about 1971 on Linux as well.

> I do think now that MS's main problem is that they are the first company
> in history to have completely saturated their target market with a
> product that is good enough that you never need to upgrade. This is at
> the root of what I suspect is a misguided licensing and upgrade
> strategy, since they are scrabbling to preserve income streams from
> products with no intrinsic obselesence (software doesn't rust or wear
> out), and expand into other areas (CE, XBox and phones) they can't
> really deal with. Fundamentally, there are only 4 ways to expand: sell
> more of the same to the same customers (who now have what they need,
> hence the need for forced upgrades), Sell to new customers (but there
> are hardly any available), sell new stuff to old customers (but there is
> no obvious mass market app for anyone with Office and a web browser), or
> sell new stuff to new customers (very tough). Without expansion,
> companies wither and die, but MS is in a very very difficult situation
> indeed because of its very success, and it's not surprising they are
> coming up with bizarre attempts to solve their problems. I rather think
> that the company has reached its zenith.

Let's hope so, because there won't be an industry if they gain much more power and control.

> This may create an opportunity for OSS and other software development
> models, but apart from Linux I'm struggling to think of a piece of OSS
> software I would willingly use - Openoffice is extremely flakey, GCC is
> poor in comparison with (say) IAR Cross compilers and not close to VS in
> terms of usability; CVS is simply dreadful.

As I said, we do have differences :^) But frankly, I'm glad we can still use different toolchains and OSs for programming in the general computing world. That isn't possible in the OTS automation world, which is what this discussion is really about.

> On the other hand, there are some highly dubious aspects to the creation
> of a culture of free software. As I say, most is poorly executed, and
> hides quality problems behind a "well, it's not finished yet and hey,
> you can join us and fix it yourself" attitude. This is chimeric, because
> the number of people in the user base with the skills actually to dive
> in and fix complex systems is vanishingly small. In point of fact, the
> benefit of being able theoretically able to cure problems is heavily
> outweighed by the practical likelihood of actually having problems!

I'm going to ignore that whole paragraph. The financial sector, among others, is doing a much better job of refuting that than I could. And Apache is showing taillights to anything commercial. Embedded is a whole different world. Until very recently, most folks there were writing their own OS or executive, which is rather extreme. Linux seems to be doing quite well there for the kinds of projects it's suited for. There's room for everybody.

> However there are some philosophical problems I have too. I've had a PC
> at home for about 5 years, in which time I've bought precisely 7
> software packages (a screensaver and 6 kids games). Everything else I've
> used is freely (and legally) downloaded or provided as freeware. Now I
> am a software engineer by profession, and I can see a problem here: we
> are creating a culture which actively devalues software to being a
> giveaway item (you can see this on the Automation list where people are
> constantly asking for free software to accomplish some high value task).
> This is ultimately not sustainable, as we are squeezing any value out of
> the act of producing software.

We can't simply lump it all together as "software". The vast majority of software in the world is never published either in closed or Open form. It is written for in house use and is payed for by the value it delivers. Usually many times over. What is done with the tiny fraction that is published affects the livelihood of an insignificant percentage of coders. If one out of a hundred programmers writes mass market software, I would be astonished. So that argument doesn't hold water. Whether you code the unpublished majority on Linux or Windows isn't going to affect the value of programmers one iota. It will have a very profound impact on competition in the market however. This argument keeps resurfacing, especially among the folks here who by and large, do in-house or ad-hoc work and wouldn't do anything much differently no matter what their tools run on. Three guesses as to who _is_ propagating that worldview, along with the cancer and unamerican bit. This is a point I would like to hear other views on.

> Now what OSS does is use the luxury of the free time available to highly
> educated and well paid people to dump (in the sense that components are
> dumped) software onto the 'market'. This actually *distorts* competition
> - companies who can afford to sell software at below cost to support
> hardware can live in an environment where everything is expected to be
> free or low cost, but smaller concerns are not able to economically
> finance support tools out of money gained for them, and innovation in
> other areas (I am thinking of embedded applications principally) is
> stifled.

But conversely, in the extremely cost sensitive (per unit cost) world of embedded systems, the absence of a licensing fee and/or royalties can raise margins by more than any other single factor. If it was bad for business, embedded Linux wouldn't be passing the sum total of the MS systems in the lightly embedded market. Call it a redistribution if you will, "dumping" embedded Linux on the market seems to be a net gain for systems houses. And the little players will still have their niches. Again, somehow, there is confusion between what's good for who. And again, you would get paid the same either way.

> Think of it this way. Is it ethical to go to a third world country with
> a truckload of free bread and distribute it free of charge to all
> comers? On the face of it this looks altrustic, but I'd say it is
> actually very misguided, since it would destroy the livelihood of local
> bakers and grain producers. Now I'm not comparing the problems of third
> world economies to my very privileged existence as a software engineer
> in the West, except to point out that even acts that on the face of it
> appear blameless need a little deeper consideration. Fundamentally, the
> risk is that we cut our own throats.

In all of these, you are confusing what's good for you and what's good for Microsoft. You would be paid exactly the same or more to be a Linux engineer. Wouldn't you?

> One last point, specifically relating to Automation. The one thing that
> users of Automation software have in common is that they make many times
> the capital cost of any piece of Automation equipment they buy from a
> vendor such as my company, and they make their money by selling the
> things they make to you and me. Why should there be a clamour for Free
> software, when there is no corresponding clamour for free food, free
> cars, free stuff in general? Why is software viewed as something so
> intrinsically different from any other product of the economy that it
> must be given away for nothing as a point of principle? I don't have an
> answer to this question - except that it may derive from the fact that
> it is easy to copy and has no obvious intrinsic value other than the
> medium transferred on - but it does intrigue me.

I agree that software is a very strange animal. If the automakers wanted you to agree to a license that resembles the EULAs I've seen, they wouldn't move many cars. They would however clean up on the total absence of liability and warranty. Some software needs to be commoditized to make the world go round but most never can. And in automation, my problem is not so much the pricing, although as an electronics and software type, I do derive a great deal of dark amusement from that. At least there is a choice of hardware. But there's only one, poor (from an engineering standpoint) choice of what OS you are going to spend most of your working life dealing with. Why is that? Especially when the rest of the world is coming around.

Regards

cww

> Cheers
>
> Tim
 
M

Michael Griffin

On December 20, 2002 02:03 pm, Linnell, Tim wrote: <clip>
> On the other hand, there are some highly dubious aspects to the creation
> of a culture of free software. As I say, most is poorly executed, and
> hides quality problems behind a "well, it's not finished yet and hey,
> you can join us and fix it yourself" attitude.
<clip>

It's worth noting that quite a bit of (if not most) very expensive software is "poorly executed" and hides quality problems behind a "we'll fix it in the next upgrade" attitude or a "it's the best we could do and still meet the release deadline" attitude. To be quite honest, I've never noticed any significant correlation between software price and software quality.

I would also guess that a good deal of the general software quality problem in recent years has been that the IT boom (which has now burst) has sucked a lot of very untallented people into jobs as programmers who were able to command high salaries without commensurate high abilities.

A good example of what I am refering to is when someone decides that the reason why Visual Basic would be a good choice as the development language for their industrial project (e.g. a test system) is that "there are lots of VB programmers around" doing business systems. I cringe at that one - the thought that all you need to do the job is a general knowledge of VB syntax and know how to click the "compile" button.

> However there are some philosophical problems I have too. I've had a PC
> at home for about 5 years, in which time I've bought precisely 7
> software packages (a screensaver and 6 kids games). Everything else I've
> used is freely (and legally) downloaded or provided as freeware. Now I
> am a software engineer by profession, and I can see a problem here: we
> are creating a culture which actively devalues software to being a
> giveaway item (you can see this on the Automation list where people are
> constantly asking for free software to accomplish some high value task).
> This is ultimately not sustainable, as we are squeezing any value out of
> the act of producing software.

I think you are closer to the mark on this one. I think though you have missed the real source of most the "free" software which people are exposed to. In the city where I live, there aren't many retail stores left who sell software to consumers. Most of the surviving ones seem to sell mainly video games (e.g. Sony Playstation). The retail market has largely dried up because when most people buy a computer, all the software they will ever use comes bundled with it. If you buy a scanner, then it comes with software too.

This software isn't really "free", because it gets built into the cost of the computer. If you ask what the price of "Internet Explorer" is though, you get told "it's free". Companies that produce hardware actually have to *pay* Microsoft to include their drivers with Windows.

So I guess that most people (at the consumer level at least) don't have much exposure to buying software anymore. This is a lot more people than have ever heard of, let alone used "open source software". If you want to blame anyone, blame the companies that bundle independent packages with PCs, and blame Microsoft which is bundling everything including the kitchen sink into Windows (which I believe takes 2 GB to install now) and claiming "it's free".

> Now what OSS does is use the luxury of the free time available to highly
> educated and well paid people to dump (in the sense that components are
> dumped) software onto the 'market'.

I believe that if you look into the OSS situation in detail, you will find that much of the high profile stuff is developed by full time professional programmers who are getting paid a normal salary to develop this software. Yes there are people who do contribute to this as a hobby. However, on the big projects you will find a core of people for whom this is a career. This isn't a lot different from traditional software in this respect.
There are of course people who write OSS software as a byproduct of their normal activities or to fulfill a need which isn't being met commercially. This isn't entirely new though. Similar activites were going on from the early days of the computer business, and the various OSS licenses have merely formalised the process. The internet has lowered the cost of communication and distribution which has made this software widely available.

You'll also find that many of the companies which distribute OSS also sell proprietary products based on the OSS as well. For example, Red Hat sells a version of Apache as "Stronghold". Mandrake sells a firewall (I forget the name). Sun sells a version of OpenOffice as StarOffice (the revenues of which cover all of Sun's costs in their involvement in this project).
You could of course download the source to Mandrake's firewall and sell it yourself, but you would have to remove all of Mandrake's logos and sell it under your own name and without Mandrake's support and update program. Good luck getting your foot in the door with it under your own name at most businesses though.

> This actually *distorts* competition
> - companies who can afford to sell software at below cost to support
> hardware can live in an environment where everything is expected to be
> free or low cost, but smaller concerns are not able to economically
> finance support tools out of money gained for them, and innovation in
> other areas (I am thinking of embedded applications principally) is
> stifled.

The focus of the software business is no longer on the PC market - its on large scale business systems. PCs are becoming a backwater in the IT industry. Part of that is due to the natural evolution of technology (e.g. the internet) providing new markets for large scale business systems.
Part of it also has to do with Microsoft's ability to use it's large pile of cash to buy any market they take a fancy to and their ability to use one monopoly to leverage another. It's rather difficult to get financing for any business venture that competes with, or might compete with Microsoft. The end result is technological stagnation, as revolutionary innovations rarely come from market leaders.

As for the "embedded market", to most people today (investors that is) that means the telecommunications and entertainment markets (particularly cell phones and video distribution). I haven't heard of innovation being stifled there yet. Of course now that most of the companies involved in this are one step from bankruptcy, their software suppliers may need to look for new markets.

<clip>
> One last point, specifically relating to Automation. The one thing that
> users of Automation software have in common is that they make many times
> the capital cost of any piece of Automation equipment they buy from a
> vendor such as my company, and they make their money by selling the
> things they make to you and me. Why should there be a clamour for Free
> software, when there is no corresponding clamour for free food, free
> cars, free stuff in general?
<clip>

People look at Microsoft making a 90% profit margin on Windows and Office, and they look at their own business making 5% (if they are lucky). Quite frankly, a lot of people think they are getting ripped off by greedy software companies who sell defective products for outrageous prices. Perhaps that isn't a fair description of your own company, but then you shouldn't be surprised at getting tarred by the same brush as the better known companies, especially when you feel obliged to defend them.
Suppose now to use your own examples, that other companies had similar monopolies on "food", "cars", and "stuff in general". Suppose they used these monopolies to push prices up to where they too were making truly staggering profits. And let us also suppose that their money seemed to put them beyond the reach of justice. Do you for any reason doubt that consumers would be upset? Is there some reason why you think these companies would not also be considered to be greedy grasping SOBs regardless of whatever order and uniformity they may have brought to the incoherent "food", "car" and "stuff in general" markets?
If monopolies are good, why then let us have more of them. But please, let us at least be consistent.

"Treat all economic questions from the viewpoint of the consumer, for the interests of the consumer are the interests of the human race." - Frederic Bastiat.

************************
Michael Griffin
London, Ont. Canada
************************
 
R

Ranjan Acharya

<clip>
> I do think now that MS's main problem is that they are the
> first company
> in history to have completely saturated their target market with a
> product that is good enough that you never need to upgrade.
</clip>

I never agree with broad statements such as this. Sort of like saying WorldCom was the first stock market scandal or we are entering a new
paradigm of business. Stock market fraud is older than the South Sea Bubble and market saturation is even older still.
 
L

Linnell, Tim

Firstly, apologies for the long and rambling chain of argument in my initial post - this was really the result of it being the last afternoon before breaking up for Christmas holidays. I think I'd like to try and restate the core of the argument a little more succintly, and take on some of the counter points made.

Note also that this is something of an exercise in Devil's advocacy, and hence the subject line. But I do get tired of constant Microsoft bashing, so perhaps another subject would be "What have the Redmondites ever given us?" (if I could make my e-mail sound like John Cleese).

And the short answer to that question is one hell of a lot. Windows and MSDOS revolutionised the PC market by providing a coherent mass market OS which vendors could target with a confidence never possible with any of the flavours of Unix (Apple effectively won the battle for the PC for MS by closing the PC architecture while IBM left theirs open). MS democratized programming, first with MS Basic, then later with Visual Basic (like these or no, they are usable by the masses). Then they provided truly excellent office automation packages at ridiculously low prices, historically speaking.

So why is Microsoft so hated? Let's revert back to the Osama Bin Laden comparison for a moment, because there's something in there of great interest. There are broad similarities between the way the Open Source movement views Microsoft and Bill Gates and the way radical Moslems view the US and George Bush (and here I stress I am not labelling OSS as anything vaguely equivalent in moral or any other terms to Bin Laden and crew - Al Quaeda is obviously a criminal organisation, and the OSS certainly is not). Looked at from the outside, the US and its relentless globalisation (e.g. a MacDonalds in every town in every continent) looks like a culturally all devouring monster, and this is precisely the terms in which the OSS movement couch their opposition to MS. I would guess that most in the US would believe (as I do) that they are in fact a beneficial force in the world, and I would guess that Bill Gates and MS think the same about themselves (and I agree here too). George Bush is not evil, but neither is Bill Gates, and to think otherwise is to fall prey to a testosterone sodden caricature. (Incidentally, my favourite definition of religion is "an argument over who has the best imaginary friend", and here Bill Gates v. Linus Torvalds seems to fit the bill quite well).

I touched on the merits of OSS software relative to commercial offerings, and Michael Griffin quite rightly pulled me up noting that a good deal of commercial software is poor too. I guess what I was trying to express here was my disappointment with the lack of quality like for like, and the risk of losing good commercial software if free stuff prevails. To give an example, I was a strong advocate for OpenOffice.Org within my organisation, until we discovered that it hardly ran at all on slower machines, failed to install (looking for an .html file on install when it had copied an .htm), and that the spreadsheet failed to print in landscape mode! CVS, which was adopted by my organisation because it was 'free' actually makes my job harder than, say, PVCS, because it works according to its own prejudices and paradigms. And IAR compilers run rings around their GNU counterparts. Linux is wonderful though I don't see a need to use it, and I suspect the reason it is wonderful is that it was conceived as a technical challenge and not as part of a whole philosophy of existence, and from hate for MS.

So this was the point about free software distorting the market: in a culture where everything is expected to be free or low cost, we squeeze small specialist companies out, because they cannot economically produce software and sell it at a profit (I am specifically NOT talking about MS here). Larger companies - the ABs of this world - can present loss leaders, but it is impossible for a niche device manufacturer, with R&D of perhaps 5 engineers, to provide devices and decent quality tools. The result is they go out of business just as surely as MS pushed Netscape out of the way by giving Explorer away.

I was taken to task thus about my own software usage:

"Curious. You don't like OSS software (that is presumably free), but yet "everything else" that you use is freeware."

Well why wouldn't I if its available? There's a wonderful line in Catch 22 where someone asks Yossarian what would happen if everyone behaved like him, and he replies that if everyone behaved like him he'd certainly be a fool to do anything else. Behaviour that makes perfect sense individually may well be wrong collectively. The point I'm trying to make here, and with the analogy about the act of giving bread potentially destroying the ability to make bread, is to demonstrate that even something that seems on the face of it blameless and beneficial to the consumer (free stuff) is actually quite a complex act with unexpected repercussions, and may in fact be morally suspect. I can say that without embarrasment, because one of the accusations levelled against MS is that they destroy the competition by through money at their products and effectively giving free stuff away. Similarly, dumping of Far Eastern components is regarded as a bad thing. This is precisely what OSS and other freeware does - supply software at less than the cost of production. I will use it, because I am weak and parsimonious with my home computing budget and prepared to live with the flaws (and as Michael points out, most of the complex software I actually need came with the PC, so freeware tends to be graphics viewers, PDF creation, hobby stuff), but fundamentally it would be better if software were more highly valued.

Now I don't believe anyone owes the software industry a living - this is clearly ridiculous. But if value is squeezed out of software (here I am thinking specifically of tools to support automation devices), then it won't be produced. What you are paying for is not a rehashed wheel, but to support a corpus of expertise that can produce the tools you need to fit wheels now and in the future. I consider this a worthwhile investment personally, but I am a little biased because I work as part of an R&D team. In short, the work Mark talks about having to fund by repeated purchases of the same tool, is actually in different areas - the cash cows pay for the nascent cash calves (some of which will fail), and falling margins and rapid obselescence in our markets make constant striving for new products absolutely essential. If you want innovation, you do need to pay for it.

And so to the last point, which was to do with why software is expected to be given away, when other products of industry are not, which I think is related to a double standard in the way we perceive their relative values. It would be quite possible for GM (or anyone else) to build a car that never rusts away, or a vacumn cleaner or washing machine that doesn't fail after 5 years (I remember my parents running a Hoover bought in the 1950s which was working well into the 1990s when replaced by a sequence of flashy new machines that failed after a few years). Software does not rust, nor does it wear out. If the industry, MS at the head, is trying to create some 'rust' equivalent through a forced upgrade policy, then I don't see that this is any more or less immoral than planned obselescence in other industries, although I don't personally support it. Why do we apply these double standards as to the relative value of software versus, say, a car (which we continuously have to replace, just like the constantly re-purchased software 'wheel' Mark spoke about)? I have no answer, but it intrigues me.

I hope this is a better expression of what are in fact several different arguments, and that I've countered some of the points made against mine. I think I've been quite consistent in previous posts on the subject that what I actually believe - sympathy for the Devil notwithstanding - is that there is a place for both models. What I dislike is the creation of unchallenged received wisdom that MS is somehow morally deficient relative to any other business, who, as others have pointed out, would be able to get away with much the same behaviour. MS have problems with sustaining growth precisely because of their dominance and they can't simply buy new markets, as Xbox, their mobile phones, Win CE, and so on have. They made some mistakes with strategy - that I might have made in their place - but MS is not Enron; Bill Gates is not Osama Bin Laden, and Windows is actually pretty neat for the cost...

Best wishes

Tim (tin hat firmly installed)
 
M

Michael Griffin

On December 20, 2002 02:03 pm, Linnell, Tim wrote:

> I do think now that MS's main problem is that they are the first
> company in history to have completely saturated their target market
<clip>
> they are scrabbling to preserve income streams from
> products with no intrinsic obselesence (software doesn't rust or wear
> out), and expand into other areas (CE, XBox and phones) they can't
> really deal with.
<clip>
> Without
> expansion, companies wither and die, but MS is in a very very
> difficult situation indeed because of its very success, and it's not
> surprising they are coming up with bizarre attempts to solve their
> problems. I rather think that the company has reached its zenith.
<clip>

This is a bit of a late reply to the above, but I recalled your message when I ran across a link to Microsoft's most recent financial results and thought it might be useful to bring some hard facts to the discussion. The link was to a mandatory financial statement which is filed with the American goverment financial regulators (the link to the actual statement can be found below).

Essentially, the results are broken down into 7 different product areas. These are:
A) Client - essentially Windows desktop version.
B) Server platforms - WIndows server (plus web server, database, etc.) and development software.
C) Information worker - Essentially Office, plus a few minor related products (Visio, Project, etc.).
D) Business solutions - MS is trying to get into other business areas, and has bought up some companies in the CRM (customer relationship management) software business.
E) MSN - Microsoft's internet service plus Hotmail, etc.
F) CE/Mobility - Windows CE and similar embedded products. G) Home and Entertainment - Video games and XBox.

Essentially, it can be seen that Microsoft is making money hand over fist on Windows (desktop version) and Office. They are making fairly good money on server systems, but not anywhere near so well as with Windows desktop or Office.
They attributed much of the sales growth in these areas though to the new licensing arrangements (higher prices) and making computer OEMs pay in advance for Windows licenses (which I suppose just pulls revenues forward). Foreign exchange movements also contributed (a lower American dollar pumps up apparent revenue in US dollars when translated from euros or yen).

Everything else seems to be a financial sinkhole. Windows CE for example somehow manages to make losses twice as big as their revenues. I'm a bit surprised at that one, as CE isn't exactly a new product.

I'm also a bit surprised to see that server software is showing much less growth than Windows desktop or Office. Servers are supposed to be the "hot" growth area in the industry, so I would have expected better performance there.
Sales increases in the remaining items are not necessarily due to organic growth in existing business, as Microsoft has been actively acquiring companies in all areas. It is also a bit hard to judge what proportion of MSN's sales are due to actual outside revenues, and how much is just internal transfers of money from other MS divisions (e.g. revenue from ads for Windows or Office).

An item in the fine print which is of some relevance to points raised in this discussion is that Microsoft is warning their investors that open source software could be a future financial risk (due to being forced to make price cuts). I can see that if the average level of profitability for Windows desktop or Office were to fall to the same as their server products, their overall profitability (and possibly share price) may possibily implode.

I don't have any particularly profound conclusions, but I thought some hard facts are always good to toss into a discussion. I'm not a financial analyst, so don't take any statements, surmises or speculations you see here as being investment advice.

The rest of the message below are the supporting data.

Microsoft revenues and profits (losses when shown in brackets) for the three months ending the 30th of September 2002.

Product Line Sales Profits (losses in brackets)
Client $2,892 $2,482
Server Platforms 1,523 519
Information Worker 2,385 1,879
Business Solutions 107 (68) MSN 531 (97) CE/Mobility 17 (33)
Home and Entertainment 505 (177)

Reconciling Amounts (214) (455) Consolidated $7,746 $4,050

For the same period in 2001:

Client $2,076 $1,708
Server Platforms 1,330 350
Information Worker 1,932 1,476
Business Solutions 74 (39) MSN 431 (199) CE/Mobility 14 (48)
Home and Entertainment 236 (68)

Reconciling Amounts 33 (283) Consolidated $6,126 $2,897

The following are some statements in the fine print which I found particularly relevant (the numbering of the points is my own).

1) The revenue growth was driven primarily by strong multi-year licensing prior to the Company's transition to its new multi-year licensing program (Licensing 6.0), strong OEM licensing of Microsoft Windows XP Home and Professional operating systems, sales of the Microsoft Xbox video game system, and new OEM licensing arrangements.

2) In addition, the Company completed its transition to new OEM licensing terms under which OEMs are billed upon their acquisition of Certificates of Authenticity (COAs) rather than upon the shipment of PCs to their customers. This transition resulted in revenue related to COA inventory accumulation at OEMs.

3) The Company has made significant investments in research, development and marketing for new products, services and technologies, including Microsoft .NET, Xbox, business applications, MSN, mobile and wireless technologies, and television. Significant revenue from these investments may not be achieved for a number of years, if at all. Moreover, these products and services may never be profitable, and even if they are profitable, operating margins for these businesses are not expected to be as high as the margins historically experienced by Microsoft.

4) In recent years, there has been a growing challenge to the CSD model, often referred to as the Open Source movement. Under the Open Source model, software is produced by global "communities" of programmers, and the resulting software and the intellectual property contained therein is licensed to end users at little or no cost. Nonetheless, the popularization of the Open Source movement continues to pose a significant challenge to the Company's business model, including 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.

5) Product life cycles are currently estimated at three years for Windows operating systems and 18 months for desktop applications.

The link to the actual financial statement is:

http://www.sec.gov/Archives/edgar/data/789019/000103221002001614/d10q.htm

************************
Michael Griffin
London, Ont. Canada
************************
 
T
I don't agree with broad statements on new business paradigms (indeed I have very old fashioned views on economics, i.e. you can't make money without actually selling things or services for more than they cost you, and the maximal sustainable rate of growth of equity is a direct function of the cash you generate from such activities), but I do defend my statement here. I can think of no company in history that has saturated its core markets so completely as Microsoft, and unlike any other form of products from traditional businesses, software does not of itself wear out.

Some way of achieving the sorts of planned obselescence normal in other sectors is therefore required, and hence the policy of forced upgrades. I don't defend this for MS in particular, but until I can buy a rust free car (for example, and CF also the film "The Man in the White Suit"), then I don't see that they are any worse than anyone else.
 
Michael Griffin:
> I would also guess that a good deal of the general software quality
> problem in recent years has been that the IT boom (which has now
> burst) has sucked a lot of very untallented people into jobs as
> programmers who were able to command high salaries without
> commensurate high abilities.

As has been pointed out by others, do you get "X for dummies" or "X in 24 hours" books in other engineering disciplines?

Bridge Design for Dummies?
High-Voltage AC Unleashed?
Advanced Process Control in 24 Hours?

Whether they are a cause or a symptom is anybody's guess, of course; probably a little of both. But would you hire a person whose only claim to competence is having read the relevant one of the above?

Jiri
--
Jiri Baum <[email protected]> http://www.csse.monash.edu.au/~jirib
MAT LinuxPLC project --- http://mat.sf.net --- Machine Automation Tools
 
Tim Linnell:
> Note also that this is something of an exercise in Devil's advocacy,
> and hence the subject line.
...

> So this was the point about free software distorting the market: in a
> culture where everything is expected to be free or low cost, we
> squeeze small specialist companies out, because they cannot
> economically produce software and sell it at a profit (I am
> specifically NOT talking about MS here). Larger companies - the ABs of
> this world - can present loss leaders, but it is impossible for a
> niche device manufacturer, with R&D of perhaps 5 engineers, to provide
> devices and decent quality tools.

The solution is for the niche device manufacturers to band together, because together they can write better quality tools (for free) than any of them could write individually (for money). This is the Apache model.

They can then concentrate on making devices, which is after all their core competency.

...
> What I dislike is the creation of unchallenged received wisdom that MS
> is somehow morally deficient relative to any other business, who, as
> others have pointed out, would be able to get away with much the same
> behaviour.

Not really, as the history of Standard Oil, Bell, etc shows.

Jiri
--
Jiri Baum <[email protected]> http://www.csse.monash.edu.au/~jirib
MAT LinuxPLC project --- http://mat.sf.net --- Machine Automation Tools
 
C
Hi Tim

Thoughtful analysis as usual, but again it speaks to everything but abuse of monopoy power. I agree that MS would be a wonderful outfit if it weren't for the bad things they do.

Linnell, Tim wrote:
> Firstly, apologies for the long and rambling chain of argument in my
> initial post - this was really the result of it being the last afternoon
> before breaking up for Christmas holidays. I think I'd like to try and
> restate the core of the argument a little more succintly, and take on
> some of the counter points made.
>
> Note also that this is something of an exercise in Devil's advocacy, and
> hence the subject line. But I do get tired of constant Microsoft
> bashing, so perhaps another subject would be "What have the Redmondites
> ever given us?" (if I could make my e-mail sound like John Cleese).

I recognize the position.

> And the short answer to that question is one hell of a lot. Windows and
> MSDOS revolutionised the PC market by providing a coherent mass market
> OS which vendors could target with a confidence never possible with any
> of the flavours of Unix (Apple effectively won the battle for the PC for
> MS by closing the PC architecture while IBM left theirs open). MS
> democratized programming, first with MS Basic, then later with Visual
> Basic (like these or no, they are usable by the masses). Then they
> provided truly excellent office automation packages at ridiculously low
> prices, historically speaking.

And the Romans brought peace.

> So why is Microsoft so hated? Let's revert back to the Osama Bin Laden
> comparison for a moment, because there's something in there of great
> interest. There are broad similarities between the way the Open Source
> movement views Microsoft and Bill Gates and the way radical Moslems view
> the US and George Bush (and here I stress I am not labelling OSS as
> anything vaguely equivalent in moral or any other terms to Bin Laden and
> crew - Al Quaeda is obviously a criminal organisation, and the OSS
> certainly is not). Looked at from the outside, the US and its relentless
> globalisation (e.g. a MacDonalds in every town in every continent) looks
> like a culturally all devouring monster, and this is precisely the terms
> in which the OSS movement couch their opposition to MS.

You should recognize then, that the perspective of some OSS users is also from the outside looking in. From the inside the view is much rosier. But when nearly everything you want to do with a computer is inhibited to some degree, merely because you wish to use alternatives you do tend to notice the near absolute control over the industry a great deal more. This control is largely invisible to MS users as it doesn't adversely affect their day. And when stomping on competitors it is always much more pleasant to be in league with the stomper than the stompee. This does lead to a divergence of views, depending on which end of the bludgeon you are on. But being on the "right" side
doesn't make bludgeoning right.

> I would guess
> that most in the US would believe (as I do) that they are in fact a
> beneficial force in the world, and I would guess that Bill Gates and MS
> think the same about themselves (and I agree here too).

The DOJ and a lot of state AGs tend to disagree. And I'm sure all the ATT and Standard Oil folks, to a man, were convinced they were doing some good things. Historically, most of the robber barons were also philanthropists. It takes a certain degree of detachment to see these things in perspective. Those who benefit from a predatory monopoly tend to lack this detachment, historically.

> George Bush is
> not evil, but neither is Bill Gates, and to think otherwise is to fall
> prey to a testosterone sodden caricature. (Incidentally, my favourite
> definition of religion is "an argument over who has the best imaginary
> friend", and here Bill Gates v. Linus Torvalds seems to fit the bill
> quite well).
>
> I touched on the merits of OSS software relative to commercial
> offerings, and Michael Griffin quite rightly pulled me up noting that a
> good deal of commercial software is poor too. I guess what I was trying
> to express here was my disappointment with the lack of quality like for
> like, and the risk of losing good commercial software if free stuff
> prevails.

Why would this happen? If it's good enough, it should retain a share if all Microsoft's arguments are correct. After all, Windows is actually cheaper according to recent studies commisioned by MS. :^)

> To give an example, I was a strong advocate for OpenOffice.Org
> within my organisation, until we discovered that it hardly ran at all on
> slower machines, failed to install (looking for an .html file on install
> when it had copied an .htm), and that the spreadsheet failed to print in
> landscape mode!

Did you see the first release of Office? Or Windows 1.0? It's a bit early for fair comparisons. I think it's fair to say that the early releases of OSS tend to be better and improve faster than CSS. And I can fix that spreadsheet for you.

> CVS, which was adopted by my organisation because it was
> 'free' actually makes my job harder than, say, PVCS, because it works
> according to its own prejudices and paradigms.

It works fine for it's intended purpose.

> And IAR compilers run
> rings around their GNU counterparts.

Visual whatever doesn't work worth beans for my Linux projects, either. Supporting as many platforms as it does and changing as rapidly as it does, GCC is not going to do any one thing as well as a more definite purpose compiler. Conversely, it does a lot of things well enough to be in the toolbox of a vast number of programmers. It works for me. Perhaps we do different things.

> Linux is wonderful though I don't
> see a need to use it, and I suspect the reason it is wonderful is that
> it was conceived as a technical challenge and not as part of a whole
> philosophy of existence, and from hate for MS.

Yes, freedom and MS are distinctly different subjects. But from what I can see, Linux is good because it's done by some of the best people, who do good work because they want Linux to be good.

> So this was the point about free software distorting the market: in a
> culture where everything is expected to be free or low cost, we squeeze
> small specialist companies out, because they cannot economically produce
> software and sell it at a profit (I am specifically NOT talking about MS
> here).

That's good because MS has wrecked and pushed out more small companies than free software ever will. And a lot of large ones. But bear in mind that you are talking about free software and I am talking about OSS. Many OSS products make money, not the 80% margins on Windows, but they do make money. I paid for the RedHat on this machine because it's useful to me and my customers. I didn't have to. And in our automation world, I wouldn't neccesarily have a problem with buying alternatives that run on Linux. So free (as in beer) is not the central issue. It's choice.

> Larger companies - the ABs of this world - can present loss
> leaders, but it is impossible for a niche device manufacturer, with R&D
> of perhaps 5 engineers, to provide devices and decent quality tools. The
> result is they go out of business just as surely as MS pushed Netscape
> out of the way by giving Explorer away.
>
> I was taken to task thus about my own software usage:
>
> "Curious. You don't like OSS software (that is presumably free), but
> yet "everything else" that you use is freeware."
>
> Well why wouldn't I if its available? There's a wonderful line in Catch
> 22 where someone asks Yossarian what would happen if everyone behaved
> like him, and he replies that if everyone behaved like him he'd
> certainly be a fool to do anything else. Behaviour that makes perfect
> sense individually may well be wrong collectively. The point I'm trying
> to make here, and with the analogy about the act of giving bread
> potentially destroying the ability to make bread, is to demonstrate that
> even something that seems on the face of it blameless and beneficial to
> the consumer (free stuff) is actually quite a complex act with
> unexpected repercussions, and may in fact be morally suspect.I can say
> that without embarrasment, because one of the accusations levelled
> against MS is that they destroy the competition by through money at
> their products and effectively giving free stuff away. Similarly,
> dumping of Far Eastern components is regarded as a bad thing. This is
> precisely what OSS and other freeware does - supply software at less
> than the cost of production. I will use it, because I am weak and
> parsimonious with my home computing budget and prepared to live with the
> flaws (and as Michael points out, most of the complex software I
> actually need came with the PC, so freeware tends to be graphics
> viewers, PDF creation, hobby stuff), but fundamentally it would be
> better if software were more highly valued.

I place the highest possible value on OSS. That's why I use it. By accepting a good deal, are you undermining free enterprise? Is it vital that more money flows to a large corporation to square things?

> Now I don't believe anyone owes the software industry a living - this is
> clearly ridiculous. But if value is squeezed out of software (here I am
> thinking specifically of tools to support automation devices), then it
> won't be produced.

Again, at least in my case, the same tools for the same price, running on Linux would get my vote. Anything beyond that, such as Open interoperable protocols and OSS drivers or even an OSS product would surely provide more value and make things easier. My guess is that they would garner market share from people who realize that value.

> What you are paying for is not a rehashed wheel, but
> to support a corpus of expertise that can produce the tools you need to
> fit wheels now and in the future. I consider this a worthwhile
> investment personally, but I am a little biased because I work as part
> of an R&D team. In short, the work Mark talks about having to fund by
> repeated purchases of the same tool, is actually in different areas -
> the cash cows pay for the nascent cash calves (some of which will fail),
> and falling margins and rapid obselescence in our markets make constant
> striving for new products absolutely essential. If you want innovation,
> you do need to pay for it.

I want Linux tools and am willing to pay for them, perhaps more for Open tools than closed ones.

> And so to the last point, which was to do with why software is expected
> to be given away, when other products of industry are not, which I think
> is related to a double standard in the way we perceive their relative
> values. It would be quite possible for GM (or anyone else) to build a
> car that never rusts away, or a vacumn cleaner or washing machine that
> doesn't fail after 5 years (I remember my parents running a Hoover
> bought in the 1950s which was working well into the 1990s when replaced
> by a sequence of flashy new machines that failed after a few years).
> Software does not rust, nor does it wear out. If the industry, MS at the
> head, is trying to create some 'rust' equivalent through a forced
> upgrade policy, then I don't see that this is any more or less immoral
> than planned obselescence in other industries, although I don't
> personally support it. Why do we apply these double standards as to the
> relative value of software versus, say, a car (which we continuously
> have to replace, just like the constantly re-purchased software 'wheel'
> Mark spoke about)? I have no answer, but it intrigues me.

We don't, or at least I don't. Screwing the customer is screwing the customer, whether it's cars or software. You'll notice that real competition from Japan has largely discouraged planned obsolecense on the part of US carmakers. Could it be that competition in software would have the same effect? Linux has done more for Windows quality than all the customers complaints combined. Look at the timeline.

> I hope this is a better expression of what are in fact several different
> arguments, and that I've countered some of the points made against mine.
> I think I've been quite consistent in previous posts on the subject that
> what I actually believe - sympathy for the Devil notwithstanding - is
> that there is a place for both models. What I dislike is the creation of
> unchallenged received wisdom that MS is somehow morally deficient
> relative to any other business, who, as others have pointed out, would
> be able to get away with much the same behaviour. MS have problems with
> sustaining growth precisely because of their dominance and they can't
> simply buy new markets, as Xbox, their mobile phones, Win CE, and so on
> have. They made some mistakes with strategy - that I might have made in
> their place - but MS is not Enron; Bill Gates is not Osama Bin Laden,
> and Windows is actually pretty neat for the cost...

As long as you only look at the price tag and not the damage wrought.

Regards

cww
 
L
I think the financial statement Michael posted pretty much agrees with my impressions, that MS are attempting to grow by massaging more cash
from their core markets using leasing and forced upgrades, and thrashing around trying to sell new stuff to new customers - I'm not surprised
that CE is not massively successful; as an embedded programmer I wouldn't go near it unless the pointy haired ones had applied an
exceptionally high voltage to the cattle prods that day.

Similarly, from talking to colleagues, I doubt many IT types would willingly put in a Windows server, simply on the grounds of reliability
(obviously key to a server where I'd argue it isn't to a workstation for which I find Windows at least adequate). And even my 5 year old wouldn't touch an Xbox where a PS2 was available. So as I say, MS have some problems with growth into new areas - selling new stuff to new customers is not easy - and I think we can expect some increasingly bizarre ideas as they get more frantic. I would not be buying MS as a growth stock, personally.

They still make good margins though - looks like about 30% on sales, but I only had a cursory glance. However they also pay a lot of tax, and
employ a lot of R&D engineers - a billion dollars annually. Surely not all of them can be evil? The money they make does circulate into the economy, and not all of it finds it's way into Bill Gates personally bank vault.

Cheers

Tim
 
L
I think the financial statement Michael posted pretty much agrees with my impressions, that MS are attempting to grow by massaging more cash from
their core markets using leasing and forced upgrades, and thrashing around trying to sell new stuff to new customers - I'm not surprised that CE is not massively successful; as an embedded programmer I wouldn't go near it unless the pointy haired ones had applied an exceptionally high voltage to the cattle prods that day.

Similarly, from talking to colleagues, I doubt many IT types would willingly put in a Windows server, simply on the grounds of reliability (obviously key to a server where I'd argue it isn't to a workstation for which I find Windows at least adequate). And even my 5 year old wouldn't touch an Xbox where a PS2 was available. So as I say, MS have some problems with growth
into new areas - selling new stuff to new customers is not easy - and I think we can expect some increasingly bizarre ideas as they get more
frantic. I would not be buying MS as a growth stock, personally.

They still make good margins though - looks like about 30% on sales, but I only had a cursory glance. However they also pay a lot of tax, and employ a lot of R&D engineers - a billion dollars annually. Surely not all of them can be evil? The money they make does circulate into the economy, and not all of it finds it's way into Bill Gates personally bank vault.

Cheers

Tim
 
C
Hi Tim

I agree that you need somehow to stay in business. And I agree that you need to provide people with a reason to upgrade. Most people would agree however, that that reasom should be closer to providing a better product than to extortion. Apply the MS methods to any other product and the clarity becomes acute.

A good example is what inkjet printer manufacturers are doing lately. It's often cheaper to get a new printer than to get the refills to keep it going. So far, that's legal, if financially questionable, marketing. Give away the razor and sell the blades. And if a consumer refills the cartridges, they can get by rather cheaply. But, that throws a monkey wrench in the marketing gears. So to prevent consumers from acting in their own interest, they have developed cartridges that self-destruct if refilled,or more sneaky, print badly if refilled. Questionable, but probably legal since consumers can note that nastiness and shop elsewhere. But, suddenly, every vendor is doing it. That is collusion and perhaps a trust arrangement and I expect legal action soon.

It's my printer and my cartridge and I see nothing wrong with saving money. I'm even willing to accept that the warranty becomes void if I do so. But, it's wrong to systematically and specifically engineer products to prevent it. And it's illegal for the companies involved to agree to do so.

Now, that's all perfectly explicable from a business viewpoint. And, in isolation, justifiable, I suppose. But, it's still plainly and simply screwing the public. And it's absolutely proper and moral for them to resent such treatment, And it's illegal to prevent them from voting with their checkbook by means of agreement and collusion. The only difference from MS is that they haven't, so far, screamed about all the choices you have.

Regards

cww
 
Hi Curt,

Your inkjet story made me smile and think of a comparison, I know, not exactly apples to apples but here it is nevertheless. Would I buy a car if it came with a "chip" in the gas tank cap or oil pump, and after a certain number of miles it shut down the gas, oil or whatever, as inkjets do, "for my own protection or benefit"? Go replace the engine please, it's got 50k miles on it! The inkjets supposedly do this to force users get fresh ink and cartridges and insure consistent quality. The undisputed (yet) assumption being that even if it is obviously benefitting the vendor it is good for the user. Who'd want to buy a good printer and later allow it to produce miserable prints due to neglect? So the vendor acting in our best interest forces us to part with some cash and forces us to maintain "consistent print quality". Now what if cars were like that, and they shut down the engine for good after 3 years of service, after all the warranty ran out and there would be no more "consistent power quality", or what if the car shut down itself when it reached the age of 5 or 10 years? No more driving junk cars, go buy a new one. Upgrade time. Why didn't car makers think of anything like this?

Best Regards,

Matt Tudor, MSEE
http://www.gigahertzelectronics.com
 
M

Michael Griffin

On December 30, 2002 04:55 pm, Curt Wuollet wrote:
<clip>
> A good example is what inkjet printer manufacturers are doing
> lately. It's often cheaper to get a new printer than to get the
> refills to keep it going. So far, that's legal, if financially
> questionable, marketing. Give away the razor and sell the blades.
> And if a consumer refills the cartridges, they can get by rather
> cheaply. But, that throws a monkey wrench in the marketing gears.
> So to prevent consumers from acting in their own interest, they
> have developed cartridges that self-destruct if refilled,or more
> sneaky, print badly if refilled. Questionable, but probably legal
> since consumers can note that nastiness and shop elsewhere.
<clip>

I think the special "self destruct" mode in ink cartridges has very recently been ruled as not permissible in the EC since this conflicts with the recycling directives (refilling cartridges is considered a form of recycling). The printer manufacturers are quite upset about this and are trying to get the ruling reversed. They currently sell the printers at a loss but make it up on the special over priced ink cartridges (that's why these new "Windows printers" are so cheap).

The printer manufacturers may end up having to sell a different printer / cartridge combination in the EC than the rest of the world. This might cause problems getting the right ink cartridges for anyone who exports or imports equipment which includes a printer (some lab or QC equipment is like that).

--

************************
Michael Griffin
London, Ont. Canada
************************
 
M

Michael Griffin

On December 30, 2002 11:39 am, Linnell, Tim wrote: <clip>
> They still make good margins though - looks like about 30% on sales, but
> I only had a cursory glance.

For the three months ending September 2002, the margins on sales were:

Windows desktop - 86% Office (and related products) - 79% Server products (including Windows server, etc.) - 34%

Everything else is a dead loss (e.g. CE is a 194% loss).

The consolidated figures show a 52% profit overall. All of these figures are based on the Microsoft numbers you referred to.

Note that Microsoft's "sales" and "profits" are a matter of accounting opinion. Certain revenues may never actually materialise, and certain expenses may not become apparent until later. It is all more complex than I am prepared to deal with, so I just assumed their bean counters are right and used their numbers from the summary.

> However they also pay a lot of tax, and
> employ a lot of R&D engineers - a billion dollars annually.

Note that the expenses for developing the products which we see on the market are supposedly charged directly to that business centre, not under general "R&D". I'm not sure how they define "R&D", so I can't say they necessarily mean "research" in the same sense that you do. The item "purchased software" seems to figure prominently in their explanation of R&D costs, which I find rather odd for a company which you would think already *writes* most of the software they would need to do anything.

"R&D" can be a rather vague term though, so I don't know what sort of costs may have been shovelled into there that perhaps we may have expected to be booked elsewhere. I don't recall having seen anything emerge from the company yet which would seem to be proportional to the amount of "R&D" budget expended. However, I believe they actually buy a fair bit of their "Microsoft Technology" off the shelf from other companies, especially in the embedded area so this might be the "purchased software" they are referring to.

> Surely not
> all of them can be evil? The money they make does circulate into the
> economy, and not all of it finds it's way into Bill Gates personally
> bank vault.
<clip>

I don't know if the engineers are "evil", but some of the salesmen seem to be. The other odd news recently was a case of fraud inside Microsoft where one of their salesmen was arrested for defrauding millions of dollars from the company. The salesman generated bogus sales and then disposed of the software on the black market (as pirate software). The odd thing about it (and the thing that made it newsworthy) wasn't so much that the particular crime occurred as that Microsoft was not interested in having the police continue their investigations (this was not believed to be an isolated incident with one individual). It also showed up a surprising lack of internal accounting controls even when dealing with very large sums of money.

<clip>
> I'm not surprised
> that CE is not massively successful; as an embedded programmer I
> wouldn't go near it unless the pointy haired ones had applied an
> exceptionally high voltage to the cattle prods that day.
<clip>

I believe that currently the main target market for WinCE is cell phones, so perhaps you should judge it in that context. There isn't much outside of the consumer goods market that would justify Microsoft shovelling money into WinCE at the rate they have been so far. They're not after all, the sort of small, low overhead organisation which can go after a niche market. If the cell phone plans don't work out, I don't know where WinCE will end up.

Microsoft could of course just write it off as a bad experience and terminate it without doing any harm to their main line of business. It doesn't really fit in with their existing OS product line very well anyway so that might be their best business option. Some of the markets they originally planned to address with WinCE they now consider to be a better fit for Windows XP Embedded, which of course does fit in better with their other products.

--

************************
Michael Griffin
London, Ont. Canada
************************
 
L
- (Curt's comment in reply to my suggestion that Open Source and freeware products may act to destroy good niche commercial products)
>Why would this happen? If it's good enough, it should retain a share if
>all Microsoft's arguments are correct. After all, Windows is actually
>cheaper according to recent studies commisioned by MS. :^)

Well to some extent it's already happening. GCC is becoming quite prevalent in the microcontroller embedded world, and it's becoming quite difficult to get capital reqs signed off for alternative commercial compilers, even when they are significantly better (IAR being the prime example). There's a general problem that the notional zero price tag on these and other packages can blind the people signing the cheques, and the actual cost of ownership - which can be very high indeed - is ruled out of the equation.

Re OpenOffice.Org V1.0. This isn't in fact V1, is it? It is built on top of a commercial product, and appears to have been rushed out presumably to provide a challenge to MS leasing agreements. As such, it's really a pretty dismal effort, I'm afraid, and I speak of someone who had very high hopes for it. Yes Curt, you may be able to fix it, but I have something that's already fixed.

Let's have a look at the argument that Microsoft is running a predatory monopoly, and is putting people out of business left right and centre, since this is one of the standard mantras of the OSS movement. I don't think it stacks up at all personally. Sample size one, but consider the mix of software I use daily at work:

1) MS Windows 2000 - Corporate Mandate. Supported by our IT partner IBM - I'm happy with it.
2) MS Office - Corporate Mandate. Does the job excellently, and replaced a varied selection of WP and DTP packages including Latex some years ago. The reason for switching was the link between Word and Excel, not any 'secret' MS API features. Any other company (WordPerfect) could have done the same; MS did it - a straight win on a level playing field. They have done nothing yet to screw up, despite grumbles about the leasing, so until something better comes along they have the deal.
3) IAR Compilers - not an MS product.
4) Atmel IDE - not an MS product.
5) Delphi - not an MS product.
6) CVS - corporate mandate because of the low cost (hah!). Known internally as Gnot a source control system. Works well as a filing system for single user products; causes tremendous problems when two users are working on a file concurrently and then have to mess around resolving merge conflicts. Replaced the excellent PVCS system.
7) Visual Studio - A tremendously good package, sourced and bought on merit. Definitely worth the money.
8) Outlook - Corporate mandate (I switched reluctantly from Eudora, but the common adoption of Outlook, and in particularly the diary features, have brought benefits to the network).
9) Explorer - switched from Netscape reluctantly, but no complaints now.

Of the MS products, only Explorer is the one that was an agressive attempt by MS to coerce a competitor (Netscape) out of the business by producing anything that wasn't competing on features and *comparable* price, and as I understand the US judgement it was principally the bundling of MS Internet facilities integrally within Windows they had a problem with. Obviously MS, being late to the Internet and wanting to get their server side products (and desktop extension methodologies) adopted, attacked aggressively. It's a matter of opinion as to whether or not this attack, because backed with a dominant position was anti competitive, and I might add the legal judgement is based on a highly localised legal framework. Murder is murder wherever you do it, but competition law and acceptable business practice varies considerably and is not subject to absolute morality.

Of the other MS products, there are good reasons for adopting them against highly comparable products that simply weren't as good. In no cases did any secret bindings to the OS influence the system. On the other hand there is a constant battle to justify quite high expenditure on professional quality tools sold for a profit. I don't consider myself automatically screwed when I give a profit to a vendor - I have a choice on what I buy and can relate the value I gain to the investment made. I can even see benefits (in terms of my pension and growth in investments) from allowing decent profits. I think that there is a simplistic attitude that profit is the difference between what something costs and the price you are forced to pay, but in any case there are far worse examples of rapacious practices than MS - designer clothes made in the Far East for example, or even planned obselescence in general.

Incidentally, in the time I have been using PCs, the overall cost of system plus bundled components has actually reduced by about 50%. It is difficult to see where the MS monopoly is actually hurting me. In this time I've found MS to be pretty good at anticipating and providing pretty much exactly what I want; I have never needed to call their tech support (neither has my 78 year old Aunt), and they have enhanced, and never diminished, the way I can use my PC.

Jiri suggested that what niche vendors should do is to group together and create common tools. I'm not sure how this could work where the groups are competing, or very specialised, though suspect that to some extent this may happen (a good example being the Profibus development for a common network tool using a device definition language to describe devices). OPC (MS based, of course) gives an excellent means of interfacing to Scada. But these are limited examples, and my argument that creating a culture where software is expected to be given away is causing anyone who can't afford to do this to slip under. This potentially leaves the ground open to larger companies to use loss leaders to grab niche share with probably less good products, so ultimately everyone loses something. There IS no such thing as a free lunch.

It's a simple fact that selling anything for less than the cost of production distorts competition, and the OSS philanthropists do need to take off their white hats from time to time and think a little more expansively. And maybe consider one of Blake's most incisive comments: "Without Contraries there is no progression. Attraction and Repulsion, Reason and Energy, Love and Hate, are necessary to Human Existence". Oh, and "the man who never alters his opinions is like standing water, and breeds reptiles of the mind".

Tim.
 
C
Yes, the interesting part of their argument is that, if you hose up the printhead with "inferior quality" inks, the ones with permanent printheads are gonna sell you a new printer (the replacements are uneconomic) and the ones with the printhead integral are gonna sell you a new OEM cartridge. One must almost assume they are taking a loss on the printer, making it vitally important that you comply and buy your fair share of OEM cartridges.

And the automakers did try this with their "Check Engine Soon" lights that scared many customers into their dealer's clutches. (no pun intended) after X miles. But that was minor larceny, 5 minutes and many dollars later, you were on your way. I empted for a square of electrical tape until I figured out how to reset it.

But, don't talk too loud with the car analogy. It's within their means to ensure that your Ford only runs (well) with BP/Amoco gasoline. (I'm not sure Standard Oil is in the business anymore) Now _there's_ a duopoly. They need a new one since the messy divorce from Firestone. :^)

Of course, people would get really upset about that. Except for those that think everyone should be using BP in their Ford :^)

Regards

cww
 
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