Microsoft is a huge company, raking in about $35 BILLION a year. That is over $1000 every SECOND. It has about $60 billion in assets. Windows runs on more than 90% of the world's desktop computers. So how can I say it will fail?
Beneath the surface there are a number of currents which, all together, are slowly but surely driving the SS Microsoft to the rocks. Complexity theory tells us that a small change on inputs can have a large effect on outputs. The problems below are enormous, and any ONE of them can sink the SS Microsoft. Together they spell disaster.
1.Staff turnover / morale. There are numerous blogs on the web indicating that MS employees are very unhappy - see http://minimsft.blogspot.com/2006/03/vista-2007-fire-leadership-now.html for example. Unhappy staff means low productivity and poor quality products. If the company can no longer attract the bright sparks they need, then clearly they have a problem. Microsoft has grown into a huge, bloated bureaucracy. There is one manager for every three staff members -- and these managers have people managing them, all the way up the food chain. MS is drowning in its own paperwork.
2.Profitability. 4 out of 7 divisions are running at a loss. One division showing a very small profit. Two divisions carry the company: Windows and Office. It has been estimated that MS looses $200 on every XBox 360 it sells; and the target for this year is 5,000,000 sales. In other words, MS plans to loose a billion dollars on one product. Like Cheney said (I think it was him): "A billion here and a billion there, and pretty soon you are talking about real money."
3.The “Good enough” syndrome. Maybe it's true that Windows runs on more than 90% of the world's desktop computers, although I have yet to see any scientific proof of this. But WHICH Windows? 95? 98? ME? NT4? Win2000? XP? Or a combination? Microsoft's biggest competition is Microsoft, meaning that many people stick with their current setup simply because it's "good enough". Indications are that a lot of companies will not jump on the Vista bandwagon because XP/2000 is "good enough". The same attitude applies to users of Office, and Office 2007 will be facing serious resistance.
4.API compatibility. Part of Windows' problem is the hacks placed in the OS for backwards compatibility. But it would appear that Vista will offer far LESS backward compatibility than XP -- see http://www.joelonsoftware.com/articles/APIWar.html If companies can not run the applications they currently run, why on earth would they switch from XP to Vista?
5.Malware. 'Nuff said, really. Malicious software is strangling PC's to death, and Microsoft's response is underwhelming, to say the least. I find it very interesting that in my small town I personally have installed Linux on more than a dozen home PC's, because the owners got fed up with all the malware on their Windows boxes. And I don't run a PC business; these were simply friends and neighbors. Feedback from these people indicate a huge sense of relief.
6.Risk exposure for litigation is more than 25% of gross income! During 2004, MS indicated $9 billion in their financial statements either having paid out or kept in reserve to cover legal costs. That is on revenue of $35 billion. Microsoft is embroiled in numerous litigation cases: see http://www.groklaw.net/staticpages/index.php?page=2005010107100653 for details.
7.Microsoft is perceived to be an unethical company. Many companies are very bitter because they feel they are being shafted by MS's licensing schemes. "Software Assurance" turned out to be a scam. Threats of software audits and litigation leave a bad taste in the mouth. Simply put, companies feel exploited and are very, very angry with MS.
8.Linux threatens Windows. Even though MS fiercely denies this, any sane person has to agree that Linux is making huge inroads and at a rapid pace. Hindsight will show that the tipping point was reached in 2005, and the adoption of Linux in 2006 is increasing. Ubuntu Linux now has more than 2 million users, and Ubuntu is one of more than 200 Linux distributions. That means that Microsoft has lost the potential sale of 2 million copies of MS Office. "A billion here....."
9.OpenOffice threatens MS Office. Despite numerous arguments that OpenOffice lacks this or that feature, the "good enough" syndrome will ensure that OpenOffice will eventually overtake MS Office. If, as has been suggested, Office 2007 is going to require massive retraining, companies are going to look at OpenOffice much more closely. The funny part is that OpenOffice is being used by many people to fix MS Word documents that MS Word cannot read!
10.MySQL / PostgrSQL / Firebird threatens MS SQL Server. SQL Server is the one division that showed a modest profit in 2004, but many database professionals are switching Open Source alternatives. Even though sales for SQL Server is growing, it is growing at a slower rate than the overall market.
11.The Open Document Format (ODF) is now an ISO standard, and governments are starting to look at ODF as an alternative to MS Office formats. The reason is simple: using ODF prevents the possibility of documents not being able to be accessed in the future. MS Office formats means a lock-in to MS; clearly in direct conflict with governments mandate to provide information to citizens in a free and open manner. Despite Microsoft's furious FUD campaign it is very clear that they are simply trying to protect their one fat cash-cow: Office.
12.Lack of innovation. Despite the noise from Microsoft's huge PR machine, the fact is that there is very little truly innovative MS products. MS prefers to buy products, rather than develop in-house. MS is not a software company -- it is a marketing company. Bill Gates has said so quite clearly. And what MS cannot buy, they kill. "Embrace, extend, extinguish" is the strategy it has followed in the past to fight technologies it could not control. The real threat of Open Source Software to MS is not only that OSS is threatening it in the marketplace, but that OSS is showing the world how to write innovative and exciting software. The emperor has no clothes, and OSS is showing this to the world. It is noticeable how MS's FUD against Linux changed from "Software written by amateurs" to "Total Cost of Ownership" -- because they realized that these "amateurs" were showing them off.
13.Monopolistic practices. MS has been found guilty of illegally using their monopoly position to unfairly dominate other industries -- and they STILL do it. The European Union is currently reviewing the MS case, and by all accounts MS is going to loose that one. MS's attitude is that fines are simply a cost of doing business; in other words, breaking the law is OK. To put it bluntly: despite numerous cases where MS has been found guilty, they simply ignore the courst and carry on as before. This sort of arrogance is the symptom of a very dangerous disease.
14.PC centric thinking. MS simply does not have an understanding of thin client, Web based computing. For them, one PC = 1 copy of Windows + 1 copy of Office + 1 user. It is their business model, and they cannot get away from it. Their stabs at the Internet have all been failures, and the "new" Live.com venture is simply an attempt to monetize the idea of web portals. The so-called groupware attempt, Sharepoint, is a disaster and laughably so.
15.T.C.O. Only MS can claim that $400 is less than $0 (MS Office vs. OpenOffice). Only MS can claim that a SysAdmin managing 200 Linux workstations is more expensive than a SysAdmin managing 50 Windows workstations. MS Corporation needs 1 SysAdmin for every 15 workstations!
Why Microsoft will fail
Why Microsoft will fail
Friday, May 12, 2006
http://toorg.blogspot.com/2006/05/why-microsoft-will-fail.html
Microsoft is a huge company, raking in about $35 BILLION a year. That is over $1000 every SECOND. It has about $60 billion in assets. Windows runs on more than 90% of the world's desktop computers. So how can I say it will fail?
Beneath the surface there are a number of currents which, all together, are slowly but surely driving the SS Microsoft to the rocks. Complexity theory tells us that a small change on inputs can have a large effect on outputs. The problems below are enormous, and any ONE of them can sink the SS Microsoft. Together they spell disaster.
1.Staff turnover / morale. There are numerous blogs on the web indicating that MS employees are very unhappy - see http://minimsft.blogspot.com/2006/03/vista-2007-fire-leadership-now.html for example. Unhappy staff means low productivity and poor quality products. If the company can no longer attract the bright sparks they need, then clearly they have a problem. Microsoft has grown into a huge, bloated bureaucracy. There is one manager for every three staff members -- and these managers have people managing them, all the way up the food chain. MS is drowning in its own paperwork.
2.Profitability. 4 out of 7 divisions are running at a loss. One division showing a very small profit. Two divisions carry the company: Windows and Office. It has been estimated that MS looses $200 on every XBox 360 it sells; and the target for this year is 5,000,000 sales. In other words, MS plans to loose a billion dollars on one product. Like Cheney said (I think it was him): "A billion here and a billion there, and pretty soon you are talking about real money."
3.The “Good enough” syndrome. Maybe it's true that Windows runs on more than 90% of the world's desktop computers, although I have yet to see any scientific proof of this. But WHICH Windows? 95? 98? ME? NT4? Win2000? XP? Or a combination? Microsoft's biggest competition is Microsoft, meaning that many people stick with their current setup simply because it's "good enough". Indications are that a lot of companies will not jump on the Vista bandwagon because XP/2000 is "good enough". The same attitude applies to users of Office, and Office 2007 will be facing serious resistance.
4.API compatibility. Part of Windows' problem is the hacks placed in the OS for backwards compatibility. But it would appear that Vista will offer far LESS backward compatibility than XP -- see http://www.joelonsoftware.com/articles/APIWar.html If companies can not run the applications they currently run, why on earth would they switch from XP to Vista?
5.Malware. 'Nuff said, really. Malicious software is strangling PC's to death, and Microsoft's response is underwhelming, to say the least. I find it very interesting that in my small town I personally have installed Linux on more than a dozen home PC's, because the owners got fed up with all the malware on their Windows boxes. And I don't run a PC business; these were simply friends and neighbors. Feedback from these people indicate a huge sense of relief.
6.Risk exposure for litigation is more than 25% of gross income! During 2004, MS indicated $9 billion in their financial statements either having paid out or kept in reserve to cover legal costs. That is on revenue of $35 billion. Microsoft is embroiled in numerous litigation cases: see http://www.groklaw.net/staticpages/index.php?page=2005010107100653 for details.
7.Microsoft is perceived to be an unethical company. Many companies are very bitter because they feel they are being shafted by MS's licensing schemes. "Software Assurance" turned out to be a scam. Threats of software audits and litigation leave a bad taste in the mouth. Simply put, companies feel exploited and are very, very angry with MS.
8.Linux threatens Windows. Even though MS fiercely denies this, any sane person has to agree that Linux is making huge inroads and at a rapid pace. Hindsight will show that the tipping point was reached in 2005, and the adoption of Linux in 2006 is increasing. Ubuntu Linux now has more than 2 million users, and Ubuntu is one of more than 200 Linux distributions. That means that Microsoft has lost the potential sale of 2 million copies of MS Office. "A billion here....."
9.OpenOffice threatens MS Office. Despite numerous arguments that OpenOffice lacks this or that feature, the "good enough" syndrome will ensure that OpenOffice will eventually overtake MS Office. If, as has been suggested, Office 2007 is going to require massive retraining, companies are going to look at OpenOffice much more closely. The funny part is that OpenOffice is being used by many people to fix MS Word documents that MS Word cannot read!
10.MySQL / PostgrSQL / Firebird threatens MS SQL Server. SQL Server is the one division that showed a modest profit in 2004, but many database professionals are switching Open Source alternatives. Even though sales for SQL Server is growing, it is growing at a slower rate than the overall market.
11.The Open Document Format (ODF) is now an ISO standard, and governments are starting to look at ODF as an alternative to MS Office formats. The reason is simple: using ODF prevents the possibility of documents not being able to be accessed in the future. MS Office formats means a lock-in to MS; clearly in direct conflict with governments mandate to provide information to citizens in a free and open manner. Despite Microsoft's furious FUD campaign it is very clear that they are simply trying to protect their one fat cash-cow: Office.
12.Lack of innovation. Despite the noise from Microsoft's huge PR machine, the fact is that there is very little truly innovative MS products. MS prefers to buy products, rather than develop in-house. MS is not a software company -- it is a marketing company. Bill Gates has said so quite clearly. And what MS cannot buy, they kill. "Embrace, extend, extinguish" is the strategy it has followed in the past to fight technologies it could not control. The real threat of Open Source Software to MS is not only that OSS is threatening it in the marketplace, but that OSS is showing the world how to write innovative and exciting software. The emperor has no clothes, and OSS is showing this to the world. It is noticeable how MS's FUD against Linux changed from "Software written by amateurs" to "Total Cost of Ownership" -- because they realized that these "amateurs" were showing them off.
13.Monopolistic practices. MS has been found guilty of illegally using their monopoly position to unfairly dominate other industries -- and they STILL do it. The European Union is currently reviewing the MS case, and by all accounts MS is going to loose that one. MS's attitude is that fines are simply a cost of doing business; in other words, breaking the law is OK. To put it bluntly: despite numerous cases where MS has been found guilty, they simply ignore the courst and carry on as before. This sort of arrogance is the symptom of a very dangerous disease.
14.PC centric thinking. MS simply does not have an understanding of thin client, Web based computing. For them, one PC = 1 copy of Windows + 1 copy of Office + 1 user. It is their business model, and they cannot get away from it. Their stabs at the Internet have all been failures, and the "new" Live.com venture is simply an attempt to monetize the idea of web portals. The so-called groupware attempt, Sharepoint, is a disaster and laughably so.
15.T.C.O. Only MS can claim that $400 is less than $0 (MS Office vs. OpenOffice). Only MS can claim that a SysAdmin managing 200 Linux workstations is more expensive than a SysAdmin managing 50 Windows workstations. MS Corporation needs 1 SysAdmin for every 15 workstations!