SPUG:Microsoft: Open source threatens our business model

Michael R. Wolf MichaelRunningWolf at att.net
Fri Feb 14 20:41:03 CST 2003

I've attached a clip and its link from Computerworld.

Michael Wolf

P.S.  Just because MS sees Open Source as a threat to their business
doesn't mean that *I* see Open Source as a business.  I'm still
looking for a sustainable Open Source business model.  Prove me wrong,
but I don't see Open Source making money, and I do see that M$ is.  I
don't believe that slash/burn is a good farming tactic any more than I
believe that embrace/extend is a good technique for interoprable
standards.  On the other hand, "free as in beer" as a loss-leader is
not a scalable A/R (Accounts Receivable) generator for core

P.P.S.  Full story at http://www.computerworld.com/softwaretopics/software/story/0,10801,78203,00.html?nas=ES-78203

                  Computerworld Morning Update
                      February 5, 2003



Microsoft: Open source threatens our business model

The company said it might have to cut prices for its products, resulting in
lower revenue and operating margins, if the open-source movement continues to
gain market acceptance.



Microsoft: Open source threatens our business model

By David Legard, IDG News Service
FEBRUARY 05, 2003

Microsoft Corp. has confirmed that it sees the open-source software
movement as a threat to its commercial business model in a quarterly
report filed with the U.S. Securities and Exchange Commission (SEC).
The statement, appearing for the second quarter running, amplifies
comments by Microsoft Chief Financial Officer John Connors recently
about the threat of Linux to Microsoft's server business.

"The popularization of the open-source movement continues to pose a
significant challenge to the company's business model," Microsoft
wrote in its filing. "[This is] 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."

Microsoft said it may have to reduce the prices it charges for its
products, with a consequent decline in revenue and operating margins,
if the open-source movement continues to gain market acceptance.

In the SEC filing, Microsoft contrasted its commercial software
development (CSD) model with the open-source movement. The financial
investment in software inherent in the CSD model benefits end users,
according to Microsoft.

"The company believes that the CSD model has had substantial benefits
for users of software, allowing them to rely on the expertise of the
company and other software developers that have powerful incentives to
develop innovative software that is useful, reliable and compatible
with other software and hardware," Microsoft said.

If Microsoft is to vanquish this threat and overcome challenges posed
by a weak global economy, it will have to offer users compelling
reasons to buy its software, the company said.

"The company's revenues would be unfavorably impacted if customers
reduce their purchases of new software products or upgrades to
existing products because new product offerings are not perceived as
adding significant new functionality or other value to prospective
purchasers," Microsoft wrote.


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Michael R. Wolf
    All mammals learn by playing!
        MichaelRunningWolf at att.net

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