For Microsoft, market dominance doesn't seem enough

dahamsta

For Microsoft, market dominance doesn't seem enough
Thomas Fuller/IHT International Herald Tribune | Wednesday, May 14, 2003

Discounts for biggest users are aimed at keeping software rivals at bay

BRUSSELS More than 90 percent of the world's personal computers run on Microsoft software. For Orlando Ayala, that was not enough.

Last summer, Ayala, then the top sales executive at Microsoft Corp., sent an e-mail titled "Microsoft Confidential" to senior managers laying out a strategy to dissuade governments across the globe from choosing cheaper alternatives to the ubiquitous Windows operating system.

Ayala's e-mail told executives that if a deal involving governments or large institutions looked doomed, they were authorized to draw from a special internal fund to offer software at a steep discount, or free, if necessary. Steve Ballmer, the Microsoft chief executive, was sent a copy of the e-mail.

The memo, which focused on system software for desktop computers, specifically targeted Linux, a still small but emerging competitor. "Under NO circumstances lose against Linux," Ayala said.

This memo as well as other e-mails and internal Microsoft documents obtained by the International Herald Tribune offer a rare glimpse into the inner workings of a company with so much cash - $43.4 billion, as of December - that it can aggressively discount its products in a bid to protect its huge market share amid the wreckage of the technology sector.

[...]

sceptre

There was an article on this in Business Week (March 4 or thereabouts). They also track the changes in Microsoft's attitude about Linux from "hey we don't care" all the way to "OMFG, fasten the hatches, let's get these mothers"

Well-worth picking up if you're near a library

Capt'n Midnight

Since M$ insist on changing the upgrade path and licensing conditions every two versions - license compliance is a bloody nightmare - constantly moving goal posts. Anyone know what licensing policies will be around in 3-5 years time ?? - so how is anyone supposed to budget for it ?


Then there is the rumour of new options in 2003 server to be delivered later - but are chargable. - And the deliberate hobbling of networking functionality in XP Home.

Previous policies of allowing users to have the same software on two machines which you could transfer to sell on, changing to ones where the cost of OEM licenses exceed the cost of the PC it came with and you are not allowed to use it on any other PC - actually cause a huge increase in SW costs - even thought the nominal prices stays the same...

Previous policies of making sw so easy to pirate that no one would buy competiting products also make licensing compliance difficult - 1 in 7 chance of guessing a serial number and since your users need admin / power user rights to add printers - it is very difficult to prevent software being copied.

Bill Gates is very good at what he does - getting money for microsoft shareholders.

dahamsta

Originally posted by Capt'n Midnight
Bill Gates is very good at what he does - getting money for microsoft shareholders.

Well, up until this year the only way they could make money was by selling their shares, because they paid their first ever dividend this year; in spite of the fact that they have $45m+ in the bank. So it's probably more accurate to say that he's good at getting money for Microsoft directors.

His skills as a businessman are dependent on your perception of his practises. Certainly, he's built an amazing company, and there's no doubt that no matter what happened Microsoft would have been successful. But you'd wonder if Microsoft would still be quite so omnipresent if he hadn't allowed the anti-competitive and often illegal practises his company is famous for.

adam

Capt'n Midnight

He has not done anything that has caused the share price or market share to go down. He has not gone to prision. He has paid the fine's - c.f. the way Irish motorists used to consider the €50 euro speeding fine a luxury tax.

And as evidenced all over the world - if the present benefit of doing something illegal more than compensates (and better still pays for) a possible future penalty then cost/benefit analysis would say to break the law every time.

The only time they need to keep within the law (from a $'s point of view) is of course if there is a high likelyhood of it backfiring and costing more in the long term than the short term gain is worth.

PS. the 1$Bn fine recently was paid by effectiverly donating a fifth of the marketing budget in the form of Kit to academic organisations to which in Europe anyway it would probably have been have illegal to do on the "below cost selling" basis...

dahamsta

I tend to put humanity pov's over dollar pov's when it comes to things like this CM. We all like making a few quid, but there's no call, or need, for anyone to make that much money. It's obscene.

adam

Lemming

Originally posted by Capt'n Midnight
PS. the 1$Bn fine recently was paid by effectiverly donating a fifth of the marketing budget in the form of Kit to academic organisations to which in Europe anyway it would probably have been have illegal to do on the "below cost selling" basis...

Actually, they didn't do that in "good faith". Look at it. They just got a $1Bn foothold inside the US education system. A system that until now was rather free of M$ and using Apple and such. Now, all the teachers are going to need training in M$ tech, and maintenance contracts are going to have to be sorted too.

More money in the long run for M$ & the breaking into of a new untapped market.

And the US government walked RIGHT into it

ballooba

Reminds me of the episode of the Simpsons where Bill Gates comes to buy Homer out.

As regards the ethics of business, who do you think the likes of Dermot Desmond, Michael O' Leary and Tony O' Reilly are? Mother Theresa?

You can't make an omellette (SP?) without breaking any eggs. I've been studying business for a couple of years and it disturbs me the mindset you have to have to be ultra-successful (in monetary terms). It takes a certain type of person to be ultra successful monetarally and I think the image of Bill as portrayed by Matt Groening is probably pretty accurate in a fúcked up way.

ballooba

Originally posted by Capt'n Midnight
And as evidenced all over the world - if the present benefit of doing something illegal more than compensates (and better still pays for) a possible future penalty then cost/benefit analysis would say to break the law every time.

There is an excellent example of this on a smaller basis closer to home. A prominent Dublin nite club makes a lot of money by importing alcohol into the country illegally (not sure if its civil law or what) and selling it to punters.

They calculated the amount of money they were likely to make and weighed it against the amount of money they were likely to lose in a hypothetical lawsuit over the practice. The amount of money they were set to make far outweighed the amount that they could potentially lose.

Capt'n Midnight

Bill is richer than 40% of Americans

The richest 500 people have more than the poorest 2,000,000,000.

The 50th richest corporation is richer than the 50th poorest country.

(last two were on BBC radio 4 BTW)