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Court Decisions May Not Save Microsoft


by Glen Emerson Morris

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The recent court decision letting Microsoft off the hook for alleged predatory business practices may ultimately bring the software giant more problems than a harsher sentence might have provided. While the decision largely left Microsoft free to do business as it wants to, it has convinced many business and private computer users that the government will offer them few, if any, of the consumer protections normally expected under the Uniform Commercial Code.

Rather than use Microsoft products under these conditions, a number of businesses (and governments, too) are considering open source, or free, software, as an alternative. The front runner is the Linux operating system. It's a viable option, and it has Microsoft worried.

Publicly, Microsoft is attempting to appear to embrace at least part of the open source philosophy, but at the same time, and with less fanfare, it's taking many actions designed to cripple any company wanting to make open source products compatible with Microsoft products.

According to an industry insider, Microsoft is requiring prospective open source partners to sign a restrictive agreement just to see the terms of their open source partnership contract. The restrictions are said to make it largely impossible for any company to release open source software after they have signed the agreement, even if they don't become open source partners with Microsoft.

Microsoft has even tried attacking open source products in the press, but so far, the attacks seem to have backfired. At one point, Microsoft attacked open source software for not providing the level of security of commercial software. Information Technology professionals were not impressed with the argument, especially since Microsoft may have one of the worst records for security in the history of the industry. At best, Microsoft's arguments undermined its credibility, and pointed out just how out of touch it is with the public's perception of it.

One of the problems facing Microsoft is that its core line of products, the OS and the MS office suite, are getting harder to improve enough to justify the upgrade prices Microsoft demands. Microsoft has gotten a lot of flack, and lost some big accounts, because of its new licensing plan which forces most companies to pay far higher licensing fees than they used to.

To make matters worse for Microsoft, Sun has been refining its MS Office compatible suite of office tools, named StarOffice, which also includes a word processor, spreadsheet, and presentation program, and sells for only $75.95 each (or $50.00 each in quantities of 150). StarOffice runs on Solaris (Unix), Windows, and Linux, and is gaining credibility as an acceptable replacement for MS Office. (For more information on StarOffice, see Sun's Website at http://wwws.sun.com/software/star/staroffice/6.0.)

Microsoft has identified open source software, like StarOffice, as the biggest threat to their business model, and for good reason. Microsoft depends on locking businesses into proprietary software, allowing them to raise prices at will, and this can't be done if there are viable alternatives.

Microsoft's argument for its ever-increasing prices is not based on the improved benefit it offers, but instead the lack of a viable alternative, and the planned obsolescence built into its upgrade program. How much extra revenue will a company expect to see if it upgrades all of its employee's computers to the latest Windows OS or MS Office? Probably not much, if any. How much could a company expect to see if it were to spend the same amount on advertising? Probably a lot more. Microsoft seems to have forgotten computer technology is a bottom line issue with customers, and especially with the advertising industry.

In the early days of Apple and the DTP revolution, it was estimated that typography on a Mac cost about 50% less compared to conventional (for the time) typography. This is why Macs took over the graphic production market, and largely still own it. Can a similar savings be made by buying the latest MS Office or MS operating system? Not likely. These products only succeeded in the business market because Apple kept prices too high for most business users, who just needed a word processor, spreadsheet, and maybe a presentation program.

As a result, many businesses in the advertising industry were forced to buy and support two different, and largely incompatible, operating systems; Macs for graphic production, and Windows for everything else. This has cost the industry advertising industry millions of dollars in additional support costs that would have been avoided if the industry had been able to standardize on one platform.

This time around, things are a bit better, at least on the Mac front. Apple has shrewdly made the new Mac 10.2 OS compatible with Microsoft's Samba based network protocol, so Macs are now easy to integrate into Windows networks. The new Macs may not run Windows software, but at least they'll talk to Windows machines, and that's a nice advantage. However, the Windows platform is becoming increasingly expensive, and this is a trend that can't be allowed to continue.

From an advertising agency's point of view, and from a client's point of view, it makes more sense to invest in additional advertising, than in Microsoft upgrades that will add little if any additional revenue. One of the advertising industry gurus once commented that a good ad could produce up to 17 times more sales than a mediocre one. It's hard to see any Microsoft product affecting the bottom line so powerfully.

The advertising industry might want to consider that it's best course of action, especially in a depressed economy, may be to support moving to the Linux platform for both itself, and its clients. The long term savings would likely make it worthwhile, and it would be just sentence for Microsoft's business practices.

Copyright 1994 - 2010 by Glen Emerson Morris All Rights Reserved

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