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ESR Says as PCs Get Cheaper, Windows Will Die 716

james writes "Eric Raymond reckons Windows will be obsolete because people won't be able to afford it soon." Owning the OS gives MS too great of an advantage. They'd sell the client for 5 bucks if it meant that they could still control Office, the server market, and the zillions of other markets that their OS monopoly lets them crush.
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ESR Says as PCs Get Cheaper, Windows Will Die

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  • Oh lord. (Score:5, Insightful)

    by rebelcool ( 247749 ) on Thursday February 28, 2002 @11:38AM (#3084251)
    More from this idiot. This is of course, assuming that microsoft has no business sense whatsoever and doesnt reduce price accordingly, or find other sources of revenue or one of a million other possibilities. Maybe if the company was ran by dumbasses. But wait, you don't get to be one of the largest in the world by being dumbasses. There goes that theory.

    No, Eric, microsoft will not go away like you've claimed for several years. Linux won't win the desktop 'war'. Get over it. Nobody cares anymore.

    • Re:Oh lord. (Score:5, Insightful)

      by Clay Mitchell ( 43630 ) on Thursday February 28, 2002 @11:41AM (#3084282) Homepage
      While ESR seems to be very zealous and into the (GNU)/Linux scene, he's it's worst enemy. While Microsoft may spread FUD, people look at this guy and "wtf is this idiot doing? what's he talking about?" if i didn't know better, i'd avoid linux for the sole reason i wouldn't want to be associated with that nut.
      • Re:Oh lord. (Score:2, Insightful)

        by Hamshrew ( 20248 )

        RMS isn't much better, if you take that view. Don't get me wrong, I think he's a good guy, and I admire him for standing up for his principles. Both ESR and RMS do this. And I think it's great that people can fight for that. I do agree that they should both hold back a little... they sound more like fanatics than developers.

        What Linux needs is a spokesperson... someone that we can point to and say, "He speaks for us!" (Or she... doesn't matter to me) But, whether it be a good thing or a bad thing, the interests of the Linux "community" are too diverse to agree on one person.

      • Re:Oh lord. (Score:5, Insightful)

        by NumberSyx ( 130129 ) on Thursday February 28, 2002 @12:12PM (#3084563) Journal

        he's it's worst enemy.

        If not ESR or RMS, then who ? The Free and Open Software movement needs someone to represent them. By your standards ESR and RMS may be a little "Out There", but they say what needs to be said and aren't affraid to take a little heat for it. Have you ever heard Michael Dell speak ?, Ballmer ? or even Jobs ? They rant just the same about how their way is the best way. I would even go so far as to say Ballmer is a spaz. nobody calls them zealots and don't fool yourself, they are. The only difference is they wear $1000 suits and live in $20 million dollar houses. The question is who would be better ?

        • by JohnDenver ( 246743 ) on Thursday February 28, 2002 @12:50PM (#3084791) Homepage
          The whole problem with ESR and RMS is they're preaching a religion when all we want are tools and options to get our jobs done. People don't liked to be preached too, they just want thier options. It doesn't matter if you're right and you have the insight of King Solomon, people still don't want to hear you preach.

          Now, If you can explain the *REAL* benefits of a *SPECIFIC* Open Source tool, or *SPECIFICALLY* how the open source model may benefit those involved (Benefitting usually implies the bottom line somewhere), THEN you will get people listening to you.

          Look at the evidence:

          The IBM PC clone didn't need a spokesperson, it's value being a commodity tool available from hundred and thousands of manfacturers spoke for itself.

          As did the birth of Internet's commercialization (Not the .COM bubble. (1993-1997)): Cheap communications medium offered by vast range of carriers (ISPs)

          These products worked because:
          1. They were cheap
          2. They were valuable
          3. They provided business opportunities for people to sell cheap and valuable products.

          If you want Open Source to really take off, forget about a spokes person. Meet these three criteria, and Open Source will speak for itself.

        • Re:Oh lord. (Score:5, Funny)

          by Tackhead ( 54550 ) on Thursday February 28, 2002 @02:04PM (#3085346)
          > I would even go so far as to say Ballmer is a spaz.

          "so far"?

          After seeing "monkey boy" and "developers", I suppose one might also go so far as to describe the Grand Canyon as a ditch.

      • Re:Oh lord. (Score:5, Insightful)

        by Zeinfeld ( 263942 ) on Thursday February 28, 2002 @12:33PM (#3084679) Homepage
        While ESR seems to be very zealous and into the (GNU)/Linux scene, he's it's worst enemy. While Microsoft may spread FUD, people look at this guy and "wtf is this idiot doing? what's he talking about?" if i didn't know better, i'd avoid linux for the sole reason i wouldn't want to be associated with that nut.

        Interestingly enough the thread does not have any pro-ESR comments at this point. I think it is pretty obvious that the Linux community can interpret nuts as damage and route arround them.

        In the early days of Linux the single biggest advantage Linux had was Linus who is a pretty reasonable guy.

        ESR appears to be way over the edge on this one. First off he does not appear to know that OEMs already get Windows at deep discounts over the retail price. Microsoft does not have to provide packaging, retail discount, activation or first level support for those customers so the cost is probably more like $35 for XP Home.

        ESR also appears to overlook that Microsoft has aggressively sold its own sub $350 PC, it is called an XBox and they sell them at Toys-R-Us. Equally Microsoft has not let price bar it from the Pocket PC market.

        The other reason that ESR is wrong is that the lowest price PCs are typically sold as starter PCs for first time buyers. This is a market that requires the ability to run genuine Microsoft Word. Tomb Raider and AOL. Linux users buying this type of machine are typically buying a second, third or fourth machine to use as a cheap server.

        Finally, anyone who has tried to get Linux up on a cheapie PC will know that it is far from simple. The parts used by cheapie PCs are often sourced from obscure vendors and finding a Linux driver often means writing your own. The people who make such machines are typically doing so on a shoestring and cannot afford the cost of development or the delay incurred. In many cases the whole profit on the low cost PC is made by buying parts on 90 days credit, making the machine in 15 days, charging the wholesalers on delivery and making the profit on 75 days worth of interest.

      • Re:Oh lord. (Score:3, Insightful)

        by SirSlud ( 67381 )
        Society honours is live conformists (Balmer, Gates) and it's dead trouble makers (ESR).

        It really doesn't matter if people buy a zealot's rants. It's the ideological equivilent of 'branding'. The ideas will assume a much more moderate and socially applicable tone should the seeds the ESRs and RMSs are planting today take cultural root in the next few decades, and thats what matters.

        Nothing changes in one day by the work of one person. Sadly, those who stand up and talk for forward-thinking principals are usually branded as extremists today, but only a fool doesn't aknolwedge the fact that they themselves are more interested in starting a slow social shift in attitudes rather than expecting the world to drop everything and follow their lead tommorow.
    • Re:Oh lord. (Score:2, Interesting)

      by CmdrStalin ( 551880 )
      That's hardly [] the only place where Mr. Raymond has been making an ass of himself these days. He apparently spends more time stirring up flamewars [] on lkml than he does actually coding his magical kernel configuration machine. He has a tendency to make it sound like his pet project is the most important thing to happen to linux since TCP/IP; the huge threads he spawns would be amusing if he wasn't wasting the time and inciting the anger of the people who actually work on the kernel itself.
    • by JohnTheFisherman ( 225485 ) on Thursday February 28, 2002 @12:13PM (#3084569)
      Like this [] little gem. Conspicuously absent link from the story, don't you think? ESR prediction story on /., clearly topical.
    • by clearcache ( 103054 ) on Thursday February 28, 2002 @12:14PM (#3084573)
      Exactly. In fact, by making the claim that Microsoft can not lower their prices and survive, ESR is making the argument that Microsoft is not a monopoly.

      The classic definition of monopoly power is that a company has the power to price above marginal cost - or the cost of producing an additional unit. While we know that real life is a little more complex than this classic definiton, by making the argument that M$ will crumble if forced to lower their prices, ESR is actually saying that Microsoft is not a monopoly...that the current pricing scheme used by M$ is driven by the market.

      In one statement, ESR just poked a hole in his own argument without even realizing it. Nice job!
      • by making the argument that M$ will crumble if forced to lower their prices, ESR is actually saying that Microsoft is not a monopoly...that the current pricing scheme used by M$ is driven by the market.

        Actually, I think he means that Microsoft is currently using monopoly pricing, and has in the past. But when PC prices were higher, the market simply absorbed the monopoly prices and accepted them. Now that the market is changing due to the plummeting cost of every other component of the PC, Microsoft may no longer be able to maintain their pricing. Since the current structure of the company is based upon massive profit margins, the company could be in real danger if they have to give up their monopoly pricing and adapt to the market. Just because Microsoft may not be able to maintain monopoly prices in the future does not mean that they don't get those prices today. Or that they haven't in the past.

        Monopolies come and go. Just because M$ may not have a monopoly next year doesn't mean that they didn't have one last year. By your logic, AT&T was never a monopoly since they aren't one today. All ESR is really arguing is that he thinks the market is changing to where M$ will not be able to keep their monopoly, and that they will not be able to adjust to that change. While you can argue about whether the market is actually changing to a point where M$ might have to actually lower prices, it's not really much of a stretch to believe that M$ would collapse if they had to go from their ~40% profit margins down to single digit margins like a lot of companies in the PC business.
    • Re:Oh lord. (Score:2, Insightful)

      by Eccles ( 932 )
      This is of course, assuming that microsoft has no business sense whatsoever and doesnt reduce price accordingly [...]

      ...which -- given that the cheaper the price, the more PCs will be sold -- means that Microsoft will pretty much maintain the same income from OSes anyway.
      • Re:Oh lord. (Score:3, Interesting)

        by rseuhs ( 322520 )
        I don't think so []

        Yes I know I'll be called an idiot too, if I doubt the invincibility of Microsoft through all eternity.

    • Oh lord.

      On one hand, I'm inclined to agree here - Microsoft will always have a presence in the desktop market, will continue to place its products to its own advantage and will certainly not be replaced entirely [or even significantly] by Linux. And yes, ESR sounds like an idoit - PC desktops are not Microsoft's main focus anymore, losing that market would only be a damaging (not crippling) blow.

      There are other aspects to consider though. While Microsoft's future financial stability may not depend on desktop PCs, but their internal accounting practices. A recent Bill Parish report [] states that Microsoft's financial security may not be as stable as everyone believes. He cites as examples Bill Gates' aggressive stock unloading and Microsoft's use of stock options in leiu of direct compensation. He even goes so far as to accuse them of using Enron-like financial structures internally. Whether this stuff is true / misleading / applicable is left as an exercise for the reader, but it's at least worth thinking about before you make your next big MSFT purchase.

    • Microsoft Tax (Score:5, Insightful)

      by Martin S. ( 98249 ) <> on Thursday February 28, 2002 @12:26PM (#3084643) Homepage Journal
      assuming that microsoft has no business sense whatsoever and doesnt reduce price accordingly

      1) This has nothing to do with 'Business sense', Microsoft's entire business model is driven by Stockmarket growth, and to acheive that the markets require increase earnings.

      2) Microsoft are actually increasing licence fees, not decreasing them, the 'Microsoft tax'.

      3) As for the idea of opening other market segments for revenue, each time they tried the've been soundly beaten, Servers, Enterprise, PDA's, Web-TV, and even there latest attempts are looking increasingly shakey Mobile Phones, Consoles.

      • Well, kind of.

        Rather than just raise prices outright on Windows and Office, what they're doing is trying to increase the frequency of upgrades that require that you purchase new versions. Call it rental or whatever.

        They have the whole desktop market, so there's no growth there. Even if all the Macs and Linux desktops were converted to Windows that would results in what, a 4% increase?

        As others have observed previously, the only way for MS to satisfy stockholder demands for growth is to get into new markets.

        That means leveraging the heavy crowbars (Windows, Office) they have to enter markets like enterprise storage software, TV set top devices, PDAs, gaming consoles, CRM software, etc.

        If this is not exactly what they've been doing and continue to tod, then I'll be a monkey's uncle.

        Given a free rein and tens of billions of cash they will eventually succeed. Even if they have to do things like buy Great Plains Software to do it.

        Their early forays into PDAs suffered against PalmOS, but where most businesses would not have had the resources to pour into such a lopsided battle, MS can draw on substantial reserves until by sheer force of money it gets the new market. And guess what, PocketPC devices are finally starting to sell.

        I won't claim that they make a profit in these new markets yet, but they're in it for the long haul.

      • Wrong (Score:3, Interesting)

        As for the idea of opening other market segments for revenue, each time they tried the've been soundly beaten

        What?? NT and Win2K have made serious dents in the Unix market and have been high-margin products for MS.


        Again, what are you talking about? Exchange and SQL Server have made serious dents against entrenched players in each market.


        While Palm still has market share, its obvious that there is considerable momentum for PocketPC, which has rapidly increased its share.

        Yes, Microsoft has had its failures, but it has also had some stinging successes in the last few years. You didn't mention how IE has taken almost 90% of browser share or how IIS has pushed iPlanet/Netscape off of the map.

        • Umm... (Score:3, Interesting)

          by autechre ( 121980 )
          >or how IIS has pushed iPlanet/Netscape
          >off of the map.

          Except that they can't seem to get rid of that pesky Apache:

          Unless, of course, you're counting Apache's 58% as totally's been that way for quite some time, and I really don't see lots of people shifting from Apache to IIS in the near future.

          I'll grant that Microsoft's products have made some headway in the server market, and the fact that they will (eventually) have a 64-bit platform will certainly help them there. But there are still plenty of things they can't do (or just can't do well), and places they won't be used.

          You are also right about the PDA market, though as has been pointed out, the Windows interface does not make sense on a handheld.

    • This is of course, assuming that microsoft has no business sense whatsoever and doesnt reduce price accordingly, or find other sources of revenue or one of a million other possibilities. Maybe if the company was ran by dumbasses. But wait, you don't get to be one of the largest in the world by being dumbasses.

      Agreed. Would ESR be complaining if he was still Surprised by Wealth []? To me, this just looks like sour grapes, since his own business made such monumentally bad decisions.
    • Re:Oh lord. (Score:5, Interesting)

      by pmz ( 462998 ) on Thursday February 28, 2002 @12:32PM (#3084677) Homepage
      you don't get to be one of the largest in the world by being dumbasses

      The most successful criminals are the smartest of their kind. The most successful politicians are the smartest of their kind. Yet, why are these successes often controversial? Criminals are immoral and don't care. Politicians are often immoral and don't care. Big Business is no different. Swindling, abusing, and cheating get you to the top faster than anything...but the result is unstable and you eventually fall. This is where Microsoft lies now: at the top and nearing their fall.

      Is Mr. Raymond an idiot? No. Are Microsoft executives dumbasses? No. Simply, the Economy is bigger than us all, and, if Microsoft's position within it isn't very sound, they will simply be crushed to become a figment of history.
    • Re:Oh lord. (Score:2, Interesting)

      by yintercept ( 517362 )
      assuming that microsoft has no business sense whatsoever

      I am always amazed how the shear corporate greed at these companies keep them from realizing changes in market forces. These lumbering giants often lose the ability to adjust to the market.

      Look at how long AT&T held on to the buck fifty a minute phone card after their costs fell to the nickel a minute. We just saw the same phenomenum happening at a macrolevel across the whole tech industry. Tech companies believed in reinvesting 100% of their profit...and guess what, the price of their goods fell below cost.

      'Nother example, the big three auto dealers failed to produce decent higher mileage cars when the 70s gas crisis was making their market unstable. It is highly possible that MS will simply dive into crisis mode, and create an opening for others in the market. It is not a sure thing, but possible.
    • Re:Oh lord. (Score:3, Insightful)

      by Technician ( 215283 )
      Think subscription model instead of purchase model. MS planns of getting everyone on the subscription model. A MS computer will be as usefull as a cable TV box or a Dish Network receiver without a subscription. The software will be free, just like AOL client software. The software will come bundled with your hardware, just like the software in your cable tv box. I know it's a diffrent business model for most people and I think MS will loose a lot of people when this happens.
      I can see them trying to charge about 1/4 the price for the OS/Office that they charge for MSN internet.
      The hardware will be close to free when you sigh up for a 4 year subscription. Sound familiar?
  • Yeh, whatever. I'm like so sure that microsoft wouldn't lower their prices or anything like that if the alternative was loss of their monopoly.

    And hasn't M$ been pushing CE as a platform for low-end home equipment?
    • Re:What? (Score:3, Insightful)

      by gmack ( 197796 )
      Thay can't lower prices. To ensure their massive cash flow they need stock prices to keep rising and the only way it will do that is if they post revenue increases.

      The Desktop market is already dead for them. Too many buisnesses don't see the point of upgrading beond W2K. Office has the same problem. THis all has nothing to do with Linux.

      The server market is the one place Linux is actually doing damage.

      CE isn't making it's development money back.

      WebTV was a big flop.

      What's left X-BOX. Cell phones?

      We have a company too used to being the dominant player to be able to break into new markets and going by the spew of new products into new markets lately they know the old revenue stream is dying.
  • Windows Bundles (Score:2, Insightful)

    by CptLogic ( 207776 )
    To be honest I don't think teh majority of Windows users actually bought a copy from a store.

    When you go to the shops (or mail order) and buy a new PC, usually they have a software bundle with them and that's where you get your copies of Windows and Office (Well, mostly MS Works) from.

    Because of this, and because it's very difficult to buy a PC *without* Windows, I don't think that this is at all true.

    • Re:Windows Bundles (Score:2, Interesting)

      by HCase ( 533294 )
      the point of the cost is that when a pc costs $350 new from a store, that the microsoft software would be taking up say, $200 of the price the store had to pay to get the system set up. that would only leave them $150 for the components, labor, and profit. with that little revenue left going to the store it wouldn't be profitiable for them to put window on it anymore.
    • That's the point of the article -- if you buy a PC bundled with Windows and all, the people selling it have to pay for Windows and for the hardware. So far, when PC prices have dropped, the hardware manufacturers have taken the cuts -- Microsoft's prices haven't changed.

      The article assumes that microsoft's prices will continue to be inelastic in the face of price pressure -- which is one of the many definitions of monopoly pricing -- and that hardware distributors will respond by dropping Windows.

      The counter argument, made in numerous threads and by the story editor above, is that before that would happen, Microsoft would actually start responding to price pressure. Sure, that would kill their financials, and start forcing them into negative revenue growth, but it won't "kill Windows on the Desktop".

      The article doesn't have to do with people buying/selling the OS separately.

  • Amazing logic. (Score:5, Insightful)

    by TheConfusedOne ( 442158 ) < ... minus cat> on Thursday February 28, 2002 @11:39AM (#3084258) Journal
    News flash: Product fails because no one's buying it.

    Anyways, PC's are a LUXURY, not a necessity. You can either afford the box or you can't. Plus, how much of that cost is actually Windows? No one knows, no one's talking.

    The average consumer thinks Windows is "included" with their PC purchase. That means that in their mind it's free, not a major portion of the actual cost. As long as that price is hidden it won't be a factor in a purchasing decision.

    The single best thing we could get out of an MS settlement (since we're not going to get the break-up that they deserve) would be to require all PC sales adds to prominently display the cost of Windows and the percentage of total cost that it represents. That would certainly open a few eyes.
    • Re:Amazing logic. (Score:3, Interesting)

      by einhverfr ( 238914 )
      I agree with Raymonds conclusions but not his logic (he seems to be doing worse these days ;)

      Here is my reasoning: There are two markets for PCs-- They are an absolute necessity for the corporate environment because without them, larger companies cannot move the information in sufficient quantity or speed, nor can the process the inforamtion fast enough to remain competitive in today's environment.

      In the home market, they are a luxury, but are slowly becoming more necessary.

      The real problem is that hardware is progressing much faster than software, and this leads to a couple of very bad scenarios for Dell, Compaq, HP, etc. and also by extension Microsoft. If hardware is more powerful than necessary, it stays around a bit longer. This means fewer sales for PC manufacturers and often longer upgrade cycles in the IT world. We are already seeing sluggish sales, and the IDC has forcasted very modest growth in the next couple of years-- we may already be in the flattening phase.

      In the PC manufacturing market, there is a strong economy of scale, but this is even more noticeable in the software world where the vase majority of expenses fall under R&D and marketing. Shrinking markets mean higher costs both of hardware and of software. Again, this is far more deadly in the software market than in the hardware market.

      The single best thing we could get out of an MS settlement (since we're not going to get the break-up that they deserve) would be to require all PC sales adds to prominently display the cost of Windows and the percentage of total cost that it represents. That would certainly open a few eyes.

      To be honest I have never understood this logic-- the breakup plans were very bad from a marketplace perspective. Why should we breake one predatory company with two monopolies into two predatory companies with one monopoly each? IMO, this could have drastically harmed Linux and all competitors and created a baby-bell situation (referring to local service, not long-distance). Furthermore, two predatory companies are far more agile than one, and so I would FAR prefer to see Microsoft deemed guilty and only slapped on the wrist than broken up. (That way, further predatory activity could be handled by civil suits which even when unsuccessful have been shown to be effective in most circumstances, as per IBM.) Basically, I feel that we are dealing with the IBM of the early PC market here, not Standard Oil.
      • Re:Amazing logic. (Score:4, Informative)

        by mcc ( 14761 ) <> on Thursday February 28, 2002 @01:16PM (#3084973) Homepage
        To be honest I have never understood this logic-- the breakup plans were very bad from a marketplace perspective. Why should we break one predatory company with two monopolies into two predatory companies with one monopoly each?

        this has been gone over a million times, but i'll try to do it here as best i can.
        horizontal and vertical monopolies are *very* different things. the point of such a move would not be to immedately break microsoft's OS stranglehold. the point would be to prevent microsoft leveraging its OS monopoly to create and maintain monopolies in application areas.

        The idea is that microsoft's app division has, if they so desire, direct access to all sorts of internal things that no one outside microsoft has. If MS were split into two companies, then *all communication* between the apps and OS microsofts would have to be above-ground and visible to outside-microsoft entities. For example, if MS-Apps wants to embed a web browser into the OS, then they have to publicly ask MS-OS if this is possible, and MS-OS will have to create some kind of public object framework or plug-in architecture that would make such a thing possible and publish the interface to it. The end result of this would be that MSIE can be embedded into microsoft windows, but if netscape or opera so desires they can embed themselves into the OS as well because the manner in which MSIE did this was documented. There would be three upshots of this:

        • MS-OS would be forced to create more flexible and almost certainly superior interfaces because (to continue the above example) they'd be designing "an architecture to embed a web browser in file browser windows" rather than just copy&pasting code from internet explorer into the windows graphical shell. (i will attempt to refrain here from attempting in detail to explain how years before windows 98 was even thought of, apple had a plan to use something called opendoc to eventually merge any web browser you liked into the OS, because it not relevant..)
        • It would be an important first step toward levelling the playing field insofar as software apps go. Microsoft would still have an intense head start insofar as money in the bank and product inertia goes, but if the DOJ forced MS to fully document the Word file format then microsoft word would be forced to compete on its own merits. (Never mind that all of MS Word's real competitors are now dead; never mind that after all the time MS has had for a head start, MSWord would probably win on its own merits anyway..)
        • If MS was forced to document everything for the public, then projects like WINE would have an exponentially easier time.
        You could of course say that the DOJ could just force MS to publicly document all interfaces, but MS has a quite clear history of basically spitting in the face of any legal judgements passed on them. Ensuring and enforcing compliance with something like "MS, you must publicly document all interfaces to the OS" would be near impossible, especially since MS has made it clear they are very good at avoiding obeying legal judgements. Witness the early 90s "no product tying" consent decree. . . this is just the *only* way to absolutely make certain that MS-Apps is not recieving preferential treatment, to ensure that the two divisions can only communicate by publishing APIs. Nothing else works. Moreover, once MS-OS and MS-Apps were seperate companies whose survival is not necessarily dependent on each other, if they continue to give each other preferential treatment then their respective stockholders will NOT be happy.

        This does not mean that a breakup would solve all problems. However, i think it would be an important first step towards allowing some fresh air in to the OS Apps industry, i believe there are a number of things that can only be achieved by breaking up MS. I believe that if MS-Apps was forced to compete the same way normal companies are, other companies might be able to create viable competing products, and those products might be ported to and make viable MS-OS's competitors. It may be it is too late to reverse the damage MS has done to the software industry in sucking up basically all of its resources into one entity. I don't know. Still, though, i would say that splitting up MS is certainly a valid course of action, even if it is not the most logical one.

        Does this make sense to you?

    • "The average consumer thinks Windows is "included" with their PC purchase. "

      Yep, Msft as the 'default' system shipped with each PC is the vigorish & tax on PC's that made them billions and billions. I've been bashing my boss for years that "The hardware's cheap, it's the software that kill's you" and he STILL, this very morning, asks for "Could you setup Joe in shipping with a computer? Doesn't have to be anything fast, just an old pc with access to the database". So I wrote back, "Once again, the hardware's cheap, the software's expensive: it's going to cost about $500 for the software", to get a full Windows ME and Access 2000, to legally install the Win98 and Access 97 that we use on workstations, paying for features that we don't want or use anyway, because we don't really have any consumer 'choice', altho Msft apologist claim that 'consumer choice' is what made Msft the giant it is today. And have you seen what Monopoly price gouging prices individual Office components are?? $300 each!!!

    • Re:Amazing logic. (Score:3, Interesting)

      by macrom ( 537566 )
      Plus, how much of that cost is actually Windows? No one knows, no one's talking.

      Well, a quick look on Newegg [] shows that Windows XP purchased with hardware runs $140 for a single copy. A jump to look at current prices for Office XP shows us $180 when purchased with software. OK, not the greatest price, but not the hundreds of dollars that you might think. After all, to compare OSes (not office apps, because StarOffice takes the cake there) RedHat 7.2 Professional is selling for $199.99 over at []. Hmm. As far as a consumer goes, this is the equivalent purchase. Yes, there are cheaper distros out there. Yes, we here know that you can download ISOs of various distros for "free", but that's not a valid comparison. Consumers as a whole are not going to do that -- they want point and click, graphical installation programs like Windows has given them for years.

      Given this info, Windows isn't all THAT expensive. If the cost is $140 for XP as a single purchase, I'm sure the big PC builders like Dell, Gateway, Compaq get them in lots of 10,000 for much, much cheaper. So the whole cost of your OS is probably a very small part of your overall system price, depending on how much your system really is.

      As a gamer, I'd probably build a system around $2500, maybe more. This is without Office -- if you go to Dell's (or others') site, they'll charge you at least $200 to upgrade to Office XP. But let's say they get XP for $100 :

      $100 / $2500 * 100% = 4% of the price of my system. I think most people would be willing to pay an extra 4% to get something they're already familiar with. At any rate, it's certainly not a major portion of the cost of the computer.

      • Did you read the article? The whole point was that it's not a deal breaker now, but as prices drop it becomes more and more significant. His price point was $350. When you compare a Windows machine for $450 (and no office) to one at $350 (which all the free office software being made), things start to look different. $100/$350 * 100% = 28.5% of the price of the system.
      • Re:Amazing logic. (Score:3, Interesting)

        by Hostile17 ( 415334 )

        RedHat 7.2 Professional is selling for $199.99

        Yes, we here know that you can download ISOs of various distros for "free", but that's not a valid comparison. Consumers as a whole are not going to do that

        I can get a full version of RedHat 7.2 from Cheapbytes [] for $3.99 plus shipping and Handling. Granted I don't get phone support or a nice printed manual, but this is balanced by the shear amount of software I get. Developement tools, Mail/Web/FTP/Telnet Servers and clients, alot of other stuff as well that cost extra from Microsoft.

    • by GCP ( 122438 )
      The cost of Windows to small OEMs is about $50, less at high volumes.

      It's a mandatory component, just like a CPU or RAM or a keyboard. You don't say that when the price falls below X, you can no longer afford a CPU. The cost is whatever the cost is when you include all the components. The big players will use their purchasing muscle to get lower component costs and price so as to drive smaller players out of business, but nobody is going to price in a way that is independent of the cost of a mandatory component.

      On the other hand, MS wants a broader consumer presence, so they may choose to create a separate "lite" version that they sell for less in order to make $350 computers possible. They could go all the way down to free for lite versions built around access portals to MS online services.

      ESR's open source experience has apparently been more about politics than economics.

  • by lukeduff ( 156720 ) on Thursday February 28, 2002 @11:39AM (#3084260) Homepage
    ZDnet's infalliable crystal ball has never lead us wrong.
  • I'm a college student, and I know that I can't afford anything near the amount of money that Microsoft wants to charge for office.

    Even if they start giving away windows for free, people are eventually going to grow tired of spending another few hundred bucks for the next version of office with no worthwhile new features. Meanwhile, there are other products available that are catching up, like Star Office. Even if Sun's going to be charging for Star Office in the future, I don't think it'll be nearly as expensive as MS Office.

    • If you're a college student, chances are that you can get Microsoft products very inexpensively. I'm a grad student at the University of Michigan, and I bought a copy of Office 2k for $35 a few years ago. IIRC, the price hasn't risen, and a complete (i.e. not just an upgrade) version of WinXP Pro is $45. The first place to check with is your university's computer sales department or just check with the helpdesk and have them refer you to the right people. Even if your school doesn't have a deal with M$, there are some web sites that act as clearinghouses to sell students most popular software at the manufacturer's student prices.
    • I'm a college student, and I know that I can't afford anything near the amount of money that Microsoft wants to charge for office.

      You're modded as funny, but I'll answer anyway: isn't the Student Edition of MS Office something like $99? And even if it was too expensive, as a student, you are unlikely to need the full features of office anyway and could buy the much cheaper but still quite useful MS Works.
  • by 2Flower ( 216318 ) on Thursday February 28, 2002 @11:41AM (#3084278) Homepage

    Okay, so the idea here is that once PCs drop to a certain level of cost, the idea of paying Microsoft a huge sum goes out the window. Two problems. One, which has already been noted here, is that Microsoft can just lower their own prices.

    But two, and most importantly: What ELSE are you going to install on that computer if not Windows? Linux? Then we get into the 'is Linux ready for the desktop' thing. It doesn't matter if Microsoft charges your first born son, if they're the only viable, usable OS available for Joe Q. User to check their e-mail and read the web with, they'll still get payment even with ultra-cheap computers.

    Of course, if some OS steps up to the plate to replace them for free/cheap AND the PCs drop in cost, then we've got something. Perhaps OEMs will start developing their own user-friendly, stripped down blends of Linux to ship with new PCs?

    • Two problems. One, which has already been noted here, is that Microsoft can just lower their own prices.

      But two, and most importantly: What ELSE are you going to install on that computer if not Windows? Linux?

      Of course not. Linux is not ready for the desktop. In fact, if we hit the mainstream, we would probably crash and burn horribly. Then Microsoft would triumpantly return, and we would be relegated to eternal obscurity.

      We need Microsoft to continue dominating the desktop right now, so we can quitely finish the revolution without getting egg on our face in the process. Its like a magician - we keep Microsoft and the media focusing on our inability to get on the desktop, and in the meantime, we will quietly replace them on all the other processors that really matter (servers, PDAs, game consoles etc...)

      Keeping Microsoft fat, dumb and happy is the only way to kill the dragon.

      • Game consoles will never appreciably see a trong Linux contingent for exactly the same reasons that the desktop won't: there's too much money to be made continuing with the same old proprietary business model.

        Linux successfully invaded the server space precisely because nobody saw any money in turning commodity x86 boxen into production-quality servers at first.
  • Industry Strategy (Score:2, Interesting)

    by 1/137 ( 179946 )

    But he has not taken into effect the combined microsoft plus PC industry strategy, which goes like:

    (1) Build a fast expensive computer

    (2) Write an operating system that uses all the resources of (1) just to run a word processor.

    (3) Go back to (1)

    That can keep the price of both inflated indefinitely. Hopefully someday people will think "Gee do I really a 1 GBit Quantum computer just for the latest version of Word?".

    • Actually, yes you do?

      Why, might you ask.

      Ahh, naive child; you need the Latest and Greatest Intex Thinking Machine(R) to run the Latest and Greatest Virus(R). What kind of a product would Word be anyways in ten years, if it can't propagate a Reach, Extend, Embrace, and Conquer(R) virus through the Office Assitant(R) life-size android.
  • Old News (Score:5, Funny)

    by mosch ( 204 ) on Thursday February 28, 2002 @11:43AM (#3084291) Homepage
    Wow, this is shocking. First ESR claims that Microsoft is doomed. What's next, RMS claiming that the GPL is the One True License, or JWZ saying that Netscape sucks now?
  • by walterbyrd ( 182728 ) on Thursday February 28, 2002 @11:43AM (#3084298)
    Just because an MS product is not profitable does not mean it will "die" as in go away.

    If MS has to give away windows for free, that will just cause windows to proliferate even more. Which means that MS will have an even tighter grip on the industry.
  • ... because his VA Linux stock has made him fabulously wealthy []. Do we need anymore reasons why we shouldn't take the latest ramblings of this pillock seriously?
  • I think Eric is misreading the situation. If a PC goes below 350 bucks, people will be willing to spend much more for the OS. The reason for this is simple, 350 bucks is nothing relative to today's cost of a PC, thus $350 + OS

    People won't move away from Windows for 1 of 2 simple reasons, "I don't have time to learn something new" or "I can't transfer my MS Office documents to ". While there are falacies in both arguments, end users are a stubborn ignorant bunch for the most part.

    Linux will have a heck of a time breaking in on the desktop due to the illusion that there are no apps and that it's difficult to install. All slashdoters know this isn't true.

  • by Lxy ( 80823 ) on Thursday February 28, 2002 @11:45AM (#3084311) Journal

    Apparently the /. editors don't consider this newsworthy. I've submitted it several times to get it rejected, I suppose if ESR had submitted it they would've posted it. [] is selling PCs without Windows []. In a Cnet article (sorry, don't have the link) Walmart announced this because the cost of Windows is offsetting the cost of cheap hardware and Windows is making the computer too expensive.
    • CNET link to this story is
    • That is interesting - I wonder if Msft is pestering WalMart for the customer list?? Because we just KNOW those are used with pirated OS's because EVERYONE uses Windows. There was an article once about that, but I think it was Msft license shops getting strongarmed to snitch on what companies are making large purchases of "PC's Without Windows".
    • I love to order new computers without an operating system. I used to build them from components, but now I've found that for about the same cost (plus a lot less time) I can have a brand new computer sent to my door via my favorite on-line retailer. And since I don't want an operating system installed, I'm not going to be forced into buying it. And that's all well and good since I generally nuke the hard drive as my first order of business anyway.

      Most consumers, on the other hand, are morons. I know this. If I get one more phone call at 1:00am because of some jack#$$ tried to upgrade to WinXP and somehow lost all of his data, I'm going to scream. I don't even like Windows.

      Back a few years ago (it's been a while), Microsoft sent out a memo to all its OEM vendors about how it's bad for the customer to receive a computer without an operating system. The basic reason for this was Microsoft's fear of piracy, which I believe is legitimate. Far too many people who will purchase this type of computer from Wal-Mart will either pirate a copy of Windows or will buy a copy and then have a very difficult time getting it installed. All the various questions it asks always has people calling me at all hours.

      So, give the thing an operating system. Bundle RedHat, Suse, Mandrake, etc into the thing without any cost--and give the end-user a "coupon" to use if they want to activate RedHat's (or whomever's) support. Sure, that will be for extra money--but the end user might be happy to pay for that support if it's needed. And it keeps him/her from having to run back to the store for a copy of XP.

      Nothing annoys a non-computer person more than when they turn a brand-new computer on and all it says is "Not Bootable Devices Found" or whatever. At least give them a Linux distro with all of X's prettiness. Besides--they might actually like it.

      That's just my $0.02

    • Tom's Hardware Guide [] has a little write up about this too. And Applelinks [] and The Register [] and Gamespy [] and []. Whew! I submitted this and was cruelly rejected as well.

      Google [] is your friend!

    • There are also increasingly numbers of alternatives channels, many more suitable for Home use.

      Consider this service ( that I work on, Broadband Internet Access, via a TV, STB and no Windows in sight. Perfectly suitable for Joe Public's (none Geeky requirements).

      The PS3 look's set to be completely broadband enabled and no Windows in sight.

      There are a host of other alternatives, Convergent Devices, Wireless networked Web Pads, 3G Phones, and again no Windows in sight.

    • try this: (Score:4, Funny)

      by Lord Omlette ( 124579 ) on Thursday February 28, 2002 @12:48PM (#3084777) Homepage
      Next time you find something that's News for Nerds, and it hasn't been posted to slashdot, submit the story as you normally would, but include comments from some Open Source luminary who ISN'T quoted anywhere in the story or even remotely related to it. Guaranteed front page post.
  • Considering that WindowsTM can cost as much as a cheap PC these days, not to mention OfficeTM, this truly might be the case.

    Whatever happens, SOMETHING is going to have to give, either the pricing of WindowsTM and OfficeTM or the software people use.

    Microsoft is going to have to drastically cut prices, or lose a huge segment of the market in the near future. This must be why they are trying so hard to go with a "renting" scheme, but I don't think that's going to be workable anytime soon.

    So no matter how things work out, Microsoft's profits are probably going to drop sometime soon, they can either cut prices to hold onto the market, or lose a large part of the market.

    That's how I see it anyway. Anyone see why that's not the case?

  • CmdrTaco (Score:2, Troll)

    by Spankophile ( 78098 )
    Wow.. professional journalism at its best.

    Taco would like you to believe that MS only controls the Office market because of Windows. I guess that's why it's the most popular office suite for Macs too?

    Windows lets MS control the server market? Ummm, how about (cross platform) Apache? Aren't you the one that posts surveys every two months about how Apache dominates? Maybe you mean that since MS only needs to write for one OS, they can focus their energy on things other than porting?

    I of course can't really argue the "zillion other markets." I guess he means hardware, and games, and a zillion minus 2 other things.

    God forbid they control those by making excellent products (mouse wheel, optical mouse), and excellent libraries (DirectX). Don't forget, Windows didn't always rule the gamers world.
    • Re:CmdrTaco (Score:2, Informative)

      by makapuf ( 412290 )
      Taco would like you to believe that MS only controls the Office market because of Windows. I guess that's why it's the most popular office suite for Macs too?

      Ahem, YES. Because if 90% of desktops are PCs, when you're on a mac doing anything, you generally want to be able to open a word document.

      So, windows monopoly -> word monopoly -> even on macs makes perfect sense for me.
  • by Anonymous Coward on Thursday February 28, 2002 @11:46AM (#3084327)
    This is an open letter to Spanish Linux creator Linus Torvaldez. I really hope that these few criticisms are addressed soon.

    Dear Linus,

    I have always felt that Linux is a nice operating system (for hobbyists and geeks), but there are some areas where it is seriously lacking, especially when compared to its main competitor, Microsoft Windows.

    • File sharing. Windows has long been superior when it comes to making large amounts of files available to third parties. Even early versions of Windows automatically detected and made available all directories thanks to the built in NetBIOS-powered file sharing support. But Microsoft has realized that this technology is inherently limited and has added even better file sharing support to its Windows XP operating system. "Universal Plug an Play" [] will make it possible to literally access any file, from any device! I think universal file sharing support needs to be built into the Linux kernel soon.
    • Intelligent agents. With innovations like Clippy, the talking paperclip [] and Microsoft Bob, Microsoft has always tried to make life easier for its customers. With Outlook and Outlook Express, Microsoft has built a framework for developers to create even smarter agents. Especially popular agents include "Sircam", which automatically asks the users' friends for advice on files he is working on and the "Hybris" agent, which is a self-replicating copy of a humorous take on "Snow-White and the Seven Dwarves" (the real story!). Microsoft is working on expanding this P2P technology to its web servers. This project is still in the beta stage, thus the name "Code Red". The next versions will be called "Code Yellow" and "Code Green".
    • Version numbers. Linux has real naming problems. What's the difference between a 2.4.19 and a 2.2.17 kernel anyway? And what's with those odd and even numbers? Microsoft has always had clear and sophisticated naming/versioning policies. For example, Windows 95 was named Windows 95 because it was released in 1995. Windows 98 was released three years later, and so on. Windows XP brought a whole new "experience" to the user, therefore the name. I suggest that the next Linux kernel releases be called Linux 03, Linux 04, Linux 04.5 (OSR1), Linux 04.7B (OSR2 SP4 OEM), Linux 2005 and Linux VD (Valentine's Day edition). Furthermore, remember how Microsoft named every upcoming version of Windows after some Egyptian city? Cairo, Chicago and so on. I think that the development kernels should be named after Spanish cities to celebrate Linux' Spanish origins. Linux Milano or Linux Rome anyone?
    • Multi-User Support. This has always been one of Microsoft's strong sides, especially in the Windows 95/98 variants, where passwords were completely unnecessary. Microsoft has made the right decision by not bothering the user with a distinction between "normal" and "root" users too much -- practice has shown that average users can be trusted to act responsibly and in full awareness of the potential consequences of their actions. After all, if your operating system doesn't trust you, why should you trust it? (To be fair, Linux is making some progress here with the Lindows [] distribution, where users are always running as root.)

      With Windows XP, Microsoft has again improved multi-user support. Not only does Windows XP come with a large library of user pictures that are displayed on the login screen, such as a guitar and a flower, it also has "quick user change". This makes it possible to login as a different user with a simple keyboard shortcut, and the good news is: programs from the old user keep running in the background! Beat that, Linux!

    • Programmability. Microsoft has always been known for making computer machine power accessible to end users. The operating system comes with many helpful tools such as VBScript, a programming language especially useful for developing intelligent agents as mentioned above, and QBASIC, a truly innovative "hacker" tool that makes it possible to develop even sophisticated applications without much foreknowledge. Scripts can even be embedded into documents such as Word files. This together with the mind-blowing Windows XP shell, which now also has amazing features like "autocompletion" (you no longer have to type all those long paths) and a scrollback buffer, makes Windows XP the "hacker's choice". Linux should stop "dumbing down" users with pretty pictures such as in KDE or GNOME. Also, I think that a BASIC interpreter should be an unremovable component of the Linux kernel.

    I also find it disappointing that Linux has not embraced new technologies such as Digital Rights Management which will finally make it profitable for artists to sell their intellectual property on the web. The content industry has calculated that it loses about 450 trillion dollars per day to piracy. If this continues, the economic effects will be devastating. Richard Stallman has supported DRM for years and made it a fixed part of his GNU/Hurd operating system -- Linux should not hold back progress in this important area. DRM should be made part of the Linux Standard Base (LSB), and Linux distributors should put "DMCA-Compliant" buttons on their websites. We all know that Linux would never have been created without strong intellectual property protection as enforced by the FSF, so let's not be hypocritical.

    On the plus side, I have found Linux an absolutely superior operating system for viewing pornography. Porn is loading much faster than on Windows, especially with the Cox and Love kernel patches and powerful porn browsers such as Pornzilla []. This is truly an operating system written by geeks, for geeks!



  • by max cohen ( 163682 ) on Thursday February 28, 2002 @11:47AM (#3084331)
    Didn't he also say NT 5.0 would be DOA because of it's bloat and tardiness? I really wish ESR would stop making so many "predictions." It'd be a good move for his reputation and everyone else in the OSS community that feels the effects of the blanket associations with his comments.
  • ...that the ideal computer always costs $5000.
  • by CDWert ( 450988 ) on Thursday February 28, 2002 @11:47AM (#3084336) Homepage
    This is a good point, I must admit I never though directly about this as a consequence of the reduction in PC costs, BUT theres a flaw in the Logic, software has ALWAYS cost more (since the late 70's) than the hardware itself, it may cause a shift, but certainly not the demise of MS.

    MS would sell..hell give copies of Windows away if it meant they could continue their other markets, Less than 1/3 of MS income comes from desktop operating systems. Now that said they dont want to loose it but certainly it wont kill them.
    • Less than 1/3 of MS income comes from desktop operating systems

      From the 10-Q filed on Feb 8, for the 3 months ending Dec 31, 2001, in millions:
      Desktop Platforms: 2,678
      Desktop and Enterprise Software and Services Revenue: 6,435

      Which makes desktop platforms 41% of the revenue of that division.

      Consolidated earnings from all divisions were $7,741 million. Which makes desktop OS's 35% of their total revenue.

      So, you were pretty close on the 1/3 bit, but it is MORE than one third of their revenue, not less than. And, more importantly, you go tell any business person on this planet that they are going to lose one third of their REVENUE and see what kind of reaction you'll get. I'm not talking profit. I'm talking base revenue.

      I agree that what ESR predicts is, well, utterly wrong, since MS isn't stupid, but to say that they could give Windows away for free or nearly free and not notice it just shows that someone needs to go read a financial statement or two beforehand.
  • $350 PC's (Score:3, Insightful)

    by asv108 ( 141455 ) <asv&ivoss,com> on Thursday February 28, 2002 @11:48AM (#3084345) Homepage Journal
    Ok lets just go along with this for a second and assume MS has no business sense whatsoever and would not adjust the OS price accordingly, will $350 pc's really be the norm? Even as PC prices continue to fall, it seems that most people are continuing to pay around $1500 or so for a computer because that is what they expect to pay for a computer. Systems that are really cheap have a negative stigma amongst consumers because they assume the computer is obsolete and will not meet their future needs. People are gobbling up multi GHZ machines even though a pIII would work for must people's needs.
    • It depends on who's doing the buying. Right now, the people with money to spend on PCs are largely the small to mid-size businesses, and they aren't spending $1500. Power gamers and 3d editors aren't the ones that will keep Windows going -- if they were enough, Apple would have been/stayed on top from the late 80s onwards.

      Microsoft's dominance has never come from the big spenders, but from the rank and file, and the assertion of the article is that they may lose those people -- even if they keep the niche of the big spenders.

  • Software like Linux also inherently has more appeal to many non-English speaking countries than software generated and controlled by big American firms, Raymond pointed out, which is becoming a significant issue as PC growth outside the US becomes the industry's main driver. "Countries like South Korea are finding that open source is a precondition to their economic and cultural autonomy," he said.

    I thought we'd already seen that countries like South Korea find open source to be a convenient excuse for serving as a spam gateway []. Win some, lose some, I guess....
  • What a stupid article!

    Sure, MS will keep the prices marching up - but it won't be that big a problem because:

    1. People WILL pay it

    2. Most people could never know where / how to by a PC without windows.

    3. Microsoft will sell different versions ("home" m "Office," "Pro," "God-like," etc, each priced appropriatly - so people like my poss can waste money buying "Pro," because they think that they are important enough to need it - for word processing...

    4. Honestly - do you REALLY think that if MS started to see a major slip in marketshare they woldn't cut prices very quickly? Hello - they may be EVIL but they damn well arn't STUPID!
  • I can remember a time when all of our applications and data were locked into proprietary hardware and software solutions. (Wang word processors, among others.) The next step was to break our dependence on one vendor to supply the limited set of choices.

    Today our data can be stored on many different manufacturers' hardware, but we are largely locked in to one vendor's OS because of proprietary file formats. (And the same architecture, to boot.)

    Long term I hope that our data is freed from that prison. We continually re-engineer systems to perform the same functions on different platforms because of the mindset imposed by the prison. However, we are a little closer today. Things like SQL allow us to migrate data reliably from one database to another. I can foresee a time when application vendors allow reliable interoperability, but it will be a while.

    It also occurs to me that MS is in a bit of a pickle. There was a time when new applications provided greater functionality, and people migrated to them because they were superior, or at least people perceived that the new features were useful enough to justify the change.

    Eventually the functionality of the applications on the market increased to the point where they were functionally very similar, and most consumers didn't need much more in the way of application functions.

    Outside of a major paradigm shift, I don't think that many people competing with MS need to do much besides catch up. They are getting closer each year. You can't continually embrace and extend because at a certain point, it's just too much trouble. As an example, my MS desktop here at the house has 93 different typefaces. I use about 10. If you gave me 500, I would still use about 10. I just looked at my Linux system, and it has 2200 typefaces installed! I still use about 10.

    Even if MS makes their OS and apps do 5000 new and snazzy things, most people simply won't use them. Look at the Outlook-based emails that are sent in Arial or Tahoma, and the documents that are printed in Times New Roman. People stick with the deafult because it's too much to think about to do otherwise. My hope is that we break free from the prison imposed by proprietary interfaces and formats.


    Ps - God loves you and longs for relationship with you. If you would like to know more about this, please contact me at tom_cooper at bigfoot dot com
  • ESR, new show on CBS (Score:2, Informative)

    by Microsift ( 223381 )
    Everybody Slams Raymond
  • Does anyone even listen to this guy anymore?

    I know I stopped shortly after he got his "Hey! Look at me I'm filthy rich!" [][1] article on the front page.

    C-X C-S
    [1] Believe me, "Sex tips for Geeks" didn't help his case, either.
  • ESR is predicating his argument on the notion that hardware must necessarily cost more than the software that runs on it. He's obviously never negotiated a contract for a site license for Oracle.

    ESR has made predictions of MS dying before - every time they are usually followed by growth in MSFT as they move into new markets and drive Windows further into the economy.

  • What if to get the next version of Windows .net or whatever you ahve to buy the 64Bit CPU.

    It only runs on Itanium, and Itanium systems cost (theoretically) more than a loaded G4 Power Mac. The Windows Faithful would have to spend $4000 a machine for hardware, what's another $300 for the OS?

    I mean the way they are acting towards the 9 dissenting states, this seems like something they'd do without even blinking. Though I don't know how Intel would take it.
  • I expect that shortly Windows will be one of the most expensive components of computers...but that's just a guess; does anyone know the the terms of MS's deals with OEMs?

    That's one of the reasons MS is trying to move its vic^H^H^Hcustomers to Danegeldware; just as you don't realize how much of your money the government seizes when they do it a bit at a time, you won't notice how much you're paying MS if you do it a bit at a time, and they can play the Polaroid game (sell the cameras cheap, charge mucho $$$ for the film).

  • Non sequitur (Score:3, Interesting)

    by FallLine ( 12211 ) on Thursday February 28, 2002 @12:15PM (#3084576)
    "When the price of a PC falls below $350, Microsoft will no longer be viable," Raymond said in an interview with ZDNet UK. "The reason is that if you sell something below that price, you can't afford to pay the Microsoft tax and still make money." He said the best illustration of this is the handheld PC market, where Microsoft software powers relatively expensive devices, but has no presence in the lower-end market.
    I am sorry, but this reasoning simply does not follow. Even if the hardware were free, it, in and of itself, has no effect on the affordability of the software itself. The customer, if anything, has MORE money to spend on the OS (remember, an OS can save or cost you time and effort). The only way I can possibly see his argument, ignoring his logic or lack thereof, is if the cheapness of PC hardware allows for a fundamental shift in attitudes to PCs and the price of the software (and hence the total price of the system, not the RELATIVE cost) is significant enough to influence this. But this is a stretch and it depends on MS keeping the price static [MS' sales far exceeds their development costs, so MS could slash the prices considerally and they could makeup for a lot of it with the increased sales.]

    As for his whole palm vs PC argument, his premise is wrong. Palm and PocketPC have two very different approaches to the market. Palm knows its market is the PDA market, i.e., handling contacts, appointments, and other daily tasks, whereas PocketPC is about being a mini-laptop (which largely attracts the techies and trendy types). Well both the PocketPC OS and the tasks themselves demand a lot more expensive hardware. PocketPC also eats batteries for its intended uses like none other. I'd also argue that Microsoft's vision for PocketPC is fundamentally flawed given the battery limitations, the hardware for the next couple years, and the problems with data entry/input methods and screen size on anything the size of a PDA. The point being is that we have a lot of good reasons to believe the difference in sales has a lot more to do with other issues than just the licensing price difference between the two OSes. For instance, completely ignoring the price of the total costs of either units, I would not want PocketPC if I all I want to do is use the PDA as a PDA (the battery life and other issues are too significant to me).
  • PCs are going to get cheaper because they use cheaper hardware... that's what they've always done.

    I've got entry level boxes from several companies, from sever different 'eras'. The ones that are still working are the older ones. Its AMAZING the hard drive failure rate on new cheap machines! I'm just starting to replace hard drives from 4-5 years back, but i've already replaced 25% of the drives from machines made 2-3 years ago!

    Manufacturers cut corners were they can be cut. Were they have control, which is the hardware. That, and they're gettin a SWEET deal from software companies anyway!(at least the major companies)

    Which begs the question: Do you really WANT them cheaper? I've seen a trend in our sales from the entry/home-use boxes to mid-line/commercial boxes. We now deal strictly in commercial lines (cpq evo over the presario, hp vectra over the pavilion, etc)just because of the better reliability track record and longer warranty. Although they are $60 to $100 more than the 'equivilant' home-line box.
  • Let's assume that an OEM can have a 25% markup on it's machines and still remain competitive, and that assembly, support, advertising, etc. costs an average of $50/machine, and a Windows liscense costs $50. Now if the OEM is selling machines for $1,000, it's grossing $200. Subtract $100 for expenses, and they've still got $100 profit. If the price drops to $350, they're making only $70 per machine, which means they can't turn a profit if Windows is included.

    Unfortunately, this doesn't mean that OEMs will all stop including Windows, or even that MS will have to drop the price. All they have to do is move the expense out of the initial purchase. They could give the OS away free to the OEMs with a three-month subscription. That way the OEMs could offer a machine that works out of the box, and three months later, the consumer starts paying Microsoft

  • not the hardware.
    The situation is like with DVD's. The medium (hardware) costs maybe $1, but the #&%/s can still charge $20 for a movie (software).

    Suppose Dell could make a PC for $10. If Microsoft charges them $350 for windows, the end customer will have to pay $361 (at least) for a Dell w/ windows.

    This won't change until Linux or another OS can challenge MS on the desktop. I'd pay for MacOS X if only they'd port it to x86...
  • They don't stop using the software and turning to cheaper alternatives... they start pirating it. Why do you think the piracy rates in China and Korea are higher than 90%? (Yes, higher than 90%!) Its because the people can't afford to shell out $150 bucks for the latest software, and at the same time, they don't want to fall behind the rest of us.

    ESR is an idiot, and his rediculous predictions have done nothing more than make me laugh at his stupidity. Its pure nonsense.

  • by Maul ( 83993 ) on Thursday February 28, 2002 @12:33PM (#3084683) Journal
    ESR is being an optomist. While I agree that this is a possibility, I don't see it happening soon. There
    are a few reasons why.

    1) These PCs must be everywhere. There are cheap PCsnow that you can get. Someone mentioned that you can get cheap PCs w/o Windows at WalMart. That is all and good, but these types of boxes must be available everywhere, from every manufacturer. I doubt we'll see Dell advertise a $350 box without Windows anytime soon.

    2) There has to be an operating system to replace
    Windows on these boxes that is cheap. Linux is
    not it. This probably would be a great place for
    BeOS to have stepped in. I always envisioned
    BeOS as being the ideal non-MS OS for the average
    user. Unfortunately, they no longer exist.
    Another unfortunate aspect is that there needs
    to be an OS that essentially will need to have
    a monopoly on these boxes.
    Of course, it could be an Open Source OS.

    3) The said operating system needs to have a few
    good applications for it. One would be a fully
    standard compliant web browser. Another would be
    a word processing program with features roughly
    equivalent to MS Word. There are some other
    necessary apps, like perhaps a simple image
    editing program, email client, media player, etc.
    Basically, programs to cover all the bases.

    4) There will always be people who still buy
    computers that price in the thousands. These are
    people who need and want more powerful PCs.
    I doubt most gamers would care for the $350 PC.
    I think that the number of people willing to pay
    thousands for a superior PC is still high enough.
    If the economy gets worse, however, this might change.
  • There's such a thing as quitting while you're on top. I guess ESR hasn't realized this yet.

    He was a good spokesperson (if not self appointed; I don't recall voting for him), but nowadays he's just spouting off whatever stream of thought he has re: Linux and open source software.

    Newsflash, ESR, in case you haven't read the other 100 or so posts of this ilk: when PCs get cheaper, so will Windows. MS will do whatever it takes to get Windows on PCs, even if it needs to make Windows into a loss leader. You don't become a multi-billion dollar corporation with $0 (yes, **$0**) of debt by not adapting to markets. If any OS is not adapting quick enough, it's Linux, not Windows. (Yes, I'm a Linux/*BSD advocate, but I'm realistic, unlike Mr. Raymond.)

    Someone put ESR to bed... Quickly... Maybe he can tweak his geek sex howto or one of his other myriad unwarranted-but-written-nonetheless documents. Regardless, I no longer consider his rantings to be benefitial to open source development or Linux. Just my personal opinion.

    Flame away.

  • The business world will never abandon Windows because they won't change the way they use computers. The cost of the computers used in business is viewed as an entire system, and software costs with support contracts are already a huge part of the total system cost. Even if the hardware got much cheaper it wouldn't budge the bottom line enough to make a difference.

    The home computer market might be affected by this, but anyone who uses a computer at work will probably still want the same OS and software at home. MS already sells different levels of software between their home and enterprise users so they are aware of the price sensitivity.

    If school boards can look beyond MS's bullshit fud they might consider open source to save money, but the reality is that they MUST teach what is used in the business world with real world hardware and software.

    Walmart's experiment in selling computers without an OS will probably fail, though I hope they can make this program work for customers who know what they are buying.
  • For many people, the value of a product has more to do with the price than what the product can actaully do. By inflating the OS price, Microsoft marketing is trying to make consumers think it's worth more than it is. In the past they would inflate a price to increase desire, then slash the price to make the product ubiquitous, then slowly raise the price again. Why should they change a strategy that has worked so well thus far?

    As PC hardware becomes cheaper, the OS will become cheaper, especially whenever a competing product comes on the scene. Microsoft is big and can afford to forgo profits much longer than potential competitors, thereby forcing them out of buisiness. Kind of like OS2.
  • by Junta ( 36770 ) on Thursday February 28, 2002 @01:03PM (#3084876)
    For example, the thing they set up. Part of those programs was that students would get free copies of Visual Studio and Operating systems, to keep the students interested in developing for MS.

    Lately, I haven't seen this so much, but I have seen the MSDN Academic Alliance, where they sell a massive license to a school for relatively cheap, and then allow all students in that school/deparetment to download all kinds of software for free legally. Included is stuff like Win2k Advanced server (which has a sticker price of nearly 4,000 dollars), and tons of applications. They will put the prices on the OS and development tools as low as they have to, just to keep corporations buying into their products.
  • by sethg ( 15187 ) on Thursday February 28, 2002 @02:27PM (#3085531) Homepage
    • In order to keep satisfying its investors, and to keep using its stock options as currency, the price of MS stock has to keep increasing.
    • In order for that price to go up, investors have to believe that MS profits will continue to grow.
    • In order to keep growing its profits, MS must have lots of current profits that can be reinvested in developing future products (or future versions of current products).
    If pressure from low hardware prices makes MS profits go down -- because MS cuts its prices or because more consumers buy cheap OS-free computers -- then this cause-and-effect chain runs in the other direction.
  • Bullshit. (Score:3, Insightful)

    by BoneFlower ( 107640 ) <> on Thursday February 28, 2002 @11:49PM (#3088579) Journal
    As PCs get cheaper, if Microsofts high price becomes an obstacle to market domination then they will lower it. They only charge that much because they can. Bill Gates will do what he must to stay on top, if that means lowering the Windows price, he will. Then, he gets legions of sheep buying computers for the first time because the most important man in the world was nice enough to lower prices for them.

    ESR is a smart man, I'm sure. But Bill Gates- I honestly do not believe he is after money. He just wants his software running everything in the world. I don't think he actually wants domination, but he wants a piece of every pie just to have it. If it got to the point where to keep the windows dominance he had to subsidize Windows out of pocket for a while, I am convinced he would do so.

"Our vision is to speed up time, eventually eliminating it." -- Alex Schure