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Re: Microsoft Slitting their own Throats?

billwg wrote:
> Robert Newson wrote:
> > Erik Funkenbusch wrote:
> > ...
> > Care to comment on my original statement that if MS is going to use /Market
> > Share/ as opposed to /Insalled Base/ then every PS/3 being sold as a /Linux/
> > [games] machine is going to cause the percentage of the market share to
> > Linux to be high?
> >
> You have a wrong view of "market share", bob.  Market share relates to
> how much of the available market are you selling versus how much your
> rivals are selling.

That is a very legitimate view.  After all, if Microsoft is selling
roughly $20 billion in royalties on $200 billion worth of computers,
each year, those are some significant numbers.  Of course, if $140
billion of those computers are getting upgraded to Linux, and the other
$60 billion of those computers are being sold at "fire sales", that's
not as good a number.

Of course, Open Source technology provides the access, routers,
servers, and support systems to generate nearly $4 TRILLION in revenue.
 But there's no money in open source. ;-)

Still you are absolutely right.  Those foolish people who put Linux,
and all of that free software like OpenOffice, FireFox, Knote, and so
on, into their computers, have more to spend on things like hardware,
services like broadband access, and of course, a few pieces of really
nice commercial software.  Microsoft users are smart, they let the OEMs
mark up the machines $300 extra for Windows, $400 extra for Office, and
then discount the machine $500 if they sign a 3 year agreement to pay
$20/month to MSN, which totals $720, not including any premium
services, revenue earned by Microsoft on advertizing, and of course
Microsoft's ability to collect more information than the CIA, FBI, DHS,
DYFSS, and IRS (or their equivelants in other countries) put together.

>  After all, the pupose of business is to make
> money, not establish mindshare in some population group.  If you want
> to do that, you need to get into politics.

That's what Ken Lehey said.
And Martha Stewart.
And Arthur Anderson.

Silly politicians, they keep making those horrible laws.  Except
copyright laws of course, those are good - especially copyright
licenses, and Digital Millenium Copyright Act.
Those are GOOD laws.

;-)

> A business measures its success by its profits compared to its
> investments.

Which makes OSS really good business.  When you are the CUSTOMER,
paying extra for something you can get for much less, is good business.
 If a business can save 30% on their IT costs by using OSS unstead of
Windows/Office, then that's money you can invest into things that
generate sales, like finding the customers most likely to make a
purchase, and making the most effecient approach to them - like
Advertizing in GOOGLE!!

;-)

> Market share is only a metric that can be of use in
> determining product development tactics.

Very true.

>  For example, a Taurus and a
> Corvette are distinctly different vehicles.

Better yet, the Chevy Camero, and the Honda Civic.

>  If GM were to look at the
> Corvette's share of a market comprised of all auto sales, they might
> despair and terminate the Corvette business as being a loser, but they
> do not do that because they can recognize that the Corvette sells to a
> distinct segment of buyers and dominates that segment.

The Camero was a really popular car, especially prior to 1974, and the
Honda Civic was almost a joke.  It was a motorcyle engine in a 4 wheel
chassis.  But then the gas shortage hit, baby boomers stopped getting
money from daddy, and they had to pay their own expenses.

Suddenly, in less than 2 years, Honda was selling everything they could
deliver, and "Muscle Cars" were sitting in car lots for weeks or even
months.

Chrysler was still trying to sell hot rods and muscle cars to the guys
who fought in WW-II, and wanted Muscle cars in the 1950s and station
wagons in the 1960s, and then bought muscle cars for their kids in the
early 1970s.

>  They will rather evaluate the potential of the segment than their share of it.

That's what GM and Chrysler said.  All those kids in the 1960s who were
buying VW bugs in college, were buying their own first cars in the
1970s, and with gas jumping from 25 cents/gallon to over $1.25 per
gallon, in less than one year, they were buying cars they could afford
to drive.  They sacrificed muscle, style, and even comfort, to be able
to get to and from work every day without spending 1/2 their paycheck
on gas.

> If you have 80% of a market you will make the same decisions that you
> would if you had 99% of the market and they would be different from
> those made if you hade 20% of your product market.

I'll take your word for it.  I've worked for many companies that had
20% of their market, but not even AT&T, IBM, or Prudential had 80% or
even 99% of their market.

WordPerfect once had 85% of the word processor market.  But then this
little nerd started bundling Windows and Word together in a "package
deal".  Lotus 1-2-3 had 85% of the spreadsheet market, but then the
same little nerd put the spreadsheet in the same bundle.  Eventually he
was hauled into court, and no matter how hard the DOJ and Microsoft
tried, they couldn't get the Judge to accept a "slap on the wrist"
settlement.

Netscape had 85% of the web browser market, until the same little nerd
decided to defy the same court order that two other judges had
rejected, and then tried to tell the judge that he was stupid and
didn't understand the technology.  He understood the law, but the
little nerd had his lawyer tell the appeals court that the judge was
stupid, and explaine their own version of the facts, their own way,
free from cross-examination - and the appeals court completely ignored
the original transcripts.

Is it an applet or an application?  Doesn't really matter, when you
knock a dominant player with millions of customers, who is getting
revenues from the services and residuals on advertizing - completely
out of the market by defying the court order.  What was really
masterful though, was that the little nerd used the victims own gun to
do the dirty deed (bought Andreeson's Mosaic to kill Andreeson's
Netscape).

> You are looking at market share as some kind of popularity contest
> result and you are not understanding what it means.

I think he understands better than you do.  You only see the license
royalties, nothing else seems to matter.  You get your pound of flesh
up front, and if the victim lives, you can come back for a few quarts
of blood later.  Get those OEMs and milk them like cows.  Get those
corporate CIOs on the support plan and milk them until they bleed red
ink.  As long as you - er - i mean Microsoft, get's it's royalties,
your as happy as a pig in slop.

>  It is a guide for product development and sales tactics
> and is more of a compass than a map.

Very true.  Which is why what happens AFTER the sale can be as
important as what happens BEFORE the sale.  Microsoft sells to OEMs and
CIOs, they don't care what end-users think.  Dell, HP, and Lennovo sell
to end users, and they care deeply what end-users think.  When push
from Microsoft meets push-back from End-users,  something in the middle
is going to shift.  The result is like an earth quake.  Lots of rubble
for the previously established order (bankruptcy and bail-outs for
Chrysler, American Airlines, United Airlines, Northwest Airlines...)
and a shift to new technologies (Honda Civics, Jet Blue, and
"air-buses").

> > It'd be interesting to see how the MS Xbox market share compares to the PS/3
> > [Linux] market share, and what spin MS puts on it.
>
> Right now XBox is outselling PS2 and that is the market.

Yes.  Xbox is about 1 year old and has already been followed up with
Xbox/360, how's that one doing?  PS/2 is older technology and has been
holding the bulk of the user base for years.  Sony is usally the first
company to introduce new technologies.  They introduced the first VCR,
the first walk-man cassettes, the first portable TVs, and so on.  It's
only fitting that they would be the first to introduce the LInux
Desktop machine.

> The conventional wisdom is that MS is in the game box business in order to
> have a nose in the future home network tent.

That makes sense.  They want control of the minds, of information
itself.  What better way to attain that control, than to gain the
ability to examine not only what we do while working on a PC, but also
what we are doing when we are relaxing.  Which commercials do we watch,
which do we ignore.  When watching TV, which programs keep us glued to
our seat, and which have us talking on the phone at the same time.

Microsoft may not be able to "read our minds" but good statistical
profiling will let them get the highest possible amount of cash out of
our wallets in the shortest possible time, and at the highest possible
profits, and they can do so without ever having to deal with us
directly.  Microsoft makes 85% profit margins, while it's agents, OEMs,
VARs, retailers, 3rd party software companies - are lucky to make 10%
profit.margins.

>  What is most interesting
> is that the Home and Entertainment business at MS is more than $4B per
> year, which is a good sized business on its own.  Bigger, I think, than
> the linux businesses combined.

Actually not too far.  According to one report I saw in January, Linux
is raking in about $4-6 billion/year in support licenses, royalties,
and hardware.  Add another $2-4 billion in consulting.  And current
estimates are that this will grow to around 16 million in support
licenses, royalties, and hardware, and about 6-8 billion in consulting.
 And now they are thinking that this was underestimated.

These days, the customers are telling us to use Linux.  Windows isn't
even an option.


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