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Microsoft The Almighty Buck

OSS Officially On Microsoft's Financial Radar Screen 639

seldo writes "More news from Microsoft's latest quarterly filing: according to eWeek, Microsoft says it may have to lower its prices in response to competition from open-source software. From the filing: "To the extent the open source model gains increasing market acceptance, sales of the company's products may decline, the company may have to reduce the prices it charges for its products, and revenues and operating margins may consequently decline". This is a fairly major revelation from Microsoft, and if it happens, it may be one of the biggest wins yet for open-source software: what do you know -- competition works!"
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OSS Officially On Microsoft's Financial Radar Screen

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  • What? (Score:2, Informative)

    by Anonymous Coward on Tuesday February 04, 2003 @08:57AM (#5222041)

    Linux was on the space shuttle, and look what happened to it! Linux proliferation will only cause more disasters. Fuck linux!

    Don't talk crap. NASA uses embedded BSD for their critical stuff. Anyway, the disaster was a hardware fault, not a software fault.

  • it's true! (Score:2, Informative)

    by Anonymous Coward on Tuesday February 04, 2003 @08:57AM (#5222044)
    At my university ( there are posters everywhere that advertise MS products for 90% off of the 'estimated retail price'.

    But who wants XP anyway?
  • Re:That's good (Score:2, Informative)

    by Warshadow ( 132109 ) on Tuesday February 04, 2003 @09:25AM (#5222170)
    Umm crashy? I find it amusing how people go on and on about Windows being so unstable; yet in my ~10 years of using Windows the only time I've had it crash was due to a driver issue. Sure they should have done something to keep borked drivers from crashing it I'll grant you that, but in the end it's the drivers fault not the fault of Windows.

    Oh did I mention I've only had XP crash on me about 5 times total (twice for crappy nvidia drivers and 3 or so for crappy RAID controller drivers; neither of which were programmed by MS)? And my machine is constantly used and it up 24/7.

    In my ~9 years of using various Linux distro's I think I've had it crash on me nearly as many times as the various versions of Windows.

    The problem in general is poor system upkeep. I have a good track record because I take care of my machines; be they Windows or Linux.

    Oh and I purchased a legit copy of XP and it sure as hell didn't cost me $300.

    And how in the world did the parent post get marked insightful? Try troll. Oh yeah if you rag on MS you're not a troll. Silly me.
  • by mkrist ( 586065 ) on Tuesday February 04, 2003 @09:26AM (#5222173)
    Windows does have a huge monopoly, but don't forget that there must be a reason why it has it. The reason is probably that it's very easy to use and it doesn't consume as much time to set up as, for instance, most UNIX flavours.

    My point is that Windows sometime in it's existance must have shown some good sides, compared to other operating systems.
  • by Lev13than ( 581686 ) on Tuesday February 04, 2003 @09:36AM (#5222224) Homepage
    Microsoft knows that they are doomed (that's why Bill Gates and all the other executives with a clue sell thousands of shares each month) and that it's right now just a matter of how much they can milk out of their customerbase.

    Ummm... Gates sells "thousands" (he actually sells about a million []) of shares every month because 1) He's got 600 million of them gathering dust, 2) MSFT didn't start paying dividends until recently (even at $0.16/share that's only $96mm per year), and 3) the guy needs to live. Can you get by on a mere $96 million per year? I didn't think so.

    Gates sells a fixed amount of shares every month - he always has and likely always will. One major reason is so that people can't draw weird conclusions from his personal stock sales.
  • Re:Prices??? (Score:5, Informative)

    by AsbestosRush ( 111196 ) on Tuesday February 04, 2003 @09:39AM (#5222259) Homepage Journal
    Pricing for tech support depends on the product.

    IIRC (I used to work for MS tech support. Don't flame me) rates are as follows:

    Office gets 2 free application support incidents, with each incident thereafter costing $35, with no timed charges. Installation support is always free.

    Most of the home products (Works, the games, etc) only get free support for installation. $35 for each incident for anything else. Even if it's a 30 second "Sorry, your data's hosed.".

    Now here's where it gets tricky... Professional support for stuff like "I have this massive spread sheet in XL that isn't working, but all of my 900 lines of macro code appear to be right", "Access forms aren't working like I think they should", or "Exchange is acting funny" start at $245 per incident.

    An incident is defined as follows:

    An assisted support incident is defined as a single support issue and the reasonable effort needed to resolve it. A single support issue is a problem that cannot be broken down into subordinate problems. If a problem consists of subordinate problems, each shall be considered a separate incident.

    Before Microsoft provides support for an assisted submission, the customer and Microsoft's designated Support Professional must agree on what the problem is and the parameters for an acceptable solution.

    An assisted support incident may require multiple phone calls and off-line research to resolve it. Support Professionals are responsible for determining what a single support issue is and communicating this to customers.

    I could be wrong tho. It has been over 6 months since I left tech support hell to do something else for a while. I worked my way out of support twice before, just to get shafted by the company that I was working for, so I'm kind of shying away from the IT industry.

  • Government (Score:3, Informative)

    by BigBir3d ( 454486 ) on Tuesday February 04, 2003 @10:02AM (#5222398) Journal
    This has nothing to do with what the common citizen is thinking.

    This is because of governments such as Germany's opting to mandate open source instead of mandating using the best available package, regardless of what that is*

    * = Could be OSS, could be MicroSoft, could be a proprietary UNIX, could be Mac, etc.
  • Re:Quick Translation (Score:3, Informative)

    by NineNine ( 235196 ) on Tuesday February 04, 2003 @10:25AM (#5222534)
    Um, no. It's a release to the SEC. It's to notify their owners (shareholders) why the share price may go down. It's a financially and publically responsible thing to do.
  • by ergo98 ( 9391 ) on Tuesday February 04, 2003 @10:33AM (#5222587) Homepage Journal
    Microsoft has only two profitable products (Office and Windows) that strongly depend on each other.

    I adore how cute it is when some FUD is propagated on Slashdot, and soon you can hear it being repeated verbatim as stone-cold facts time after time by Slashbots. Microsoft has three profitable divisions: Client, Server Platform, and Information Worker. I'm hardly surprized that some dullards interpreted that as "Office and Windowz!", yet in reality those three divisions account for the overwhelming majority of products with the Microsoft name on it. SQL Server? Yup. Visual Studio? Yup. Visio? Yup. SNA Server? Yup. Indeed, if you looked within even the unprofitable divisions you would find a bevy of highly profitable items: The Home and Entertainment Divison encapsulates Microsoft hardware, such as mice and keyboards, which themselves are highly lauded and tremendously profitable, however their profitability is being masked by the xbox.

    This is all so laughable anyways, and indicates the core naevity of most open sourcers. Egads Microsoft mentioned open source! The reality, of course, is that such filings must include forward looking risks of any sort, including potential lawsuits, and envisioned risks by the pundit community. The fact that open source is mentioned in there is a given. To make this even more hilarious, though, the prior [] quarterly report included the same risk statement, while the quarterly report before that included the statement "the availability of competitive products or services such as the Linux operating system at prices below Microsoft's prices or for no charge" as a risk factor. Looking at the annual report from 3 years ago [] yields the statement "With an increased attention toward open-source software, the Linux operating system has gained increasing acceptance. Several computer manufacturers preinstall Linux on PC Servers and many leading software developers have written applications that run on Linux. Microsoft Windows operating systems are also threatened by alternative platforms such as those based on Internet browsing software and Java technology promoted by AOL and Sun Microsystems. " and " The Company continues to face movements from PC-based applications to server-based applications or Web-based application hosting services, from proprietary software to open source software, and from PCs to Internet-based devices.". I'm sure I could go back two more years and find similar forward looking risk statements.

    I suspect that someone read an SEC filing for the first time in their life and thought they found a real revelation (as did the Slashdot editors when they posted this), when it's the same thing that has appeared in their filings for years now.
  • by Captain Large Face ( 559804 ) on Tuesday February 04, 2003 @10:39AM (#5222620) Homepage

    This is the actual radio transcript [] used as the basis of the parent joke.

  • by Spoing ( 152917 ) on Tuesday February 04, 2003 @11:00AM (#5222747) Homepage
    The Securities and Exchange Commision's rules on filing reports on public companies has changed and old rules are being more strictly enforced. Because of that, compounded by the scandals of the last few years that have lead to shareholder lawsuits and other government actions, companies are acting in a more above-board and sane manner.

    In Microsoft's case, they are following the SEC's guidelines like many other companies. This is a change for many companies. In Microsoft's situation, we have seen these very recient changes;

    Years ago, they should have issued they plan to.

    Decades ago, they should have broken out each division of the company and discussed profits and losses in they do.

    Decades ago, they should have discussed all reasonable impacts on thier profits for each they acknowledge open source.

    Don't think this is a new thing for them. Open source has been a potential impact on MS's profits for a couple years. The only thing that has changed is that MS must acknowledge it as a possibility. If they have suffered an actual loss due to open source, the SEC will pressure and eventually require MS to report the loss after it has happened. As of now, no loss is obvious. Microsoft is speculating and has not acknowledged a loss due to open source -- yet. f they did not point this out, it could be the basis for a future lawsuit if a loss occurs.

    Thank the SEC, though late themselves, for doing things now that force transparency...that forces some information into the open so we have a better chance to judge on merit not PR.

  • by FallLine ( 12211 ) on Tuesday February 04, 2003 @11:19AM (#5222841)
    Slashdot is reading way too much into this. It is common knowledge in the financial industry that 10-Qs are little more than a way of management teams protecting themselves from shareholder lawsuits. It is common practice to state virtually every conceivable risk, no matter how unlikely it is, no matter how far beyond control of management it is to minimize that risk, no matter how unlikely a different investment is to minimize that risk, etc..., so that management cannot be so easily sued if, god forbid, that event actually occurs. Unfortunately in our overly litigious society managements teams have been destroyed financially by frivilous lawsuits like that. In any event, as a result of all of this, it is really a mistake to read anything into 10-Qs. The shear volume of all the disclaimers and the generalities that they must make prevent management from being able to make an honest assesment of the far more likely threats; they get lost in the clutter and in the generalities. They are practically pointless to read these days. In other words, this is not proof that MS takes OSS seriously.
  • by murdocj ( 543661 ) on Tuesday February 04, 2003 @11:42AM (#5222982)
    It's no so much PR, as it is one of those cautionary statements that businesses are required to make. Basically if there's the possibility that this will occur, MS is required to talk about it. Doesn't mean that they think that their empire is suddenly threatened, because it isn't.
  • by swillden ( 191260 ) <> on Tuesday February 04, 2003 @11:58AM (#5223103) Homepage Journal

    Unless I'm mistaken, VB was the first programming tool which allowed programmers to build applications with a click and drag GUI interface.

    You're *very* mistaken. The first incarnation of graphical interface builders was probably at Xerox PARC in the late 70s. I say "probably" because there may have been an earlier one that I don't know about. Through the 80s there were at least two different competing Smalltalk development toolsets, each with a graphical UI app tools.

    I personally worked with a half-dozen different tools that pre-dated VB. One of the best (*still* one of the best, over a decade later) was the NeXTstep UI Builder. Fantastic tool. Even back in the days of DOS applications, prior to Windows, I used a number of click-n-drag UI tools to build both text and graphics mode interfaces. I would imagine there were some early tools for the Mac as well, although I didn't use them.

    In the research world, there have been a number of attempts to build *purely* graphical programming environments, in which you never typed any code whatsoever. The earliest of these that I'm familiar with was completed in the mid-80s (unfortunately I forget the name -- can anyone help)?

    So, no, MS did not invent click-n-drag app development. I'm sure that somewhere along the way MS must have invented *something*, but I can't think what it might be.

  • by Thing 1 ( 178996 ) on Tuesday February 04, 2003 @12:44PM (#5223540) Journal
    plus the fact a lot of the latest hardware lack Linux drivers
    You said it. I've downloaded several ISOs recently (new cable modem) and have yet to find a distribution that works with my several-years-old computer.

    It's a SiS motherboard, with audio/video/nic/usb on the motherboard. The best I've found is Mandrake 9.1 beta 1 has no sound but the network works; beta 2 and 3 are the reverse (no network, but has sound). Red Hat 8.0 has sound but no network.

    This machine works fine with Windows 2000, so it's not a hardware issue. And this machine is several years old!

    I really want to switch over to Linux but it's not a no-brainer.

  • by Jason Earl ( 1894 ) on Tuesday February 04, 2003 @01:11PM (#5223810) Homepage Journal

    Yes, and I am sure that they make money off the gumball machine out in their front lobby too. That doesn't mean that the proceeds from said gumball machine have any great effect on Microsoft's bottom line. Last quarter Microsoft generated an operating income of $1.97 billion on revenues of $2.44 billion. MS Office had similarly ridiculous profit margins with an operating income of $1.88 billion on revenue of $2.41 billion. There are plenty of companies with those kinds of revenues, but only Microsoft has the combination of high revenues and ridiculously high profit margins. Even Microsoft's server software margins are only about half of the Windows and Office profit margins. I can guarantee you that, compared to Windows and Office, the profits on keyboards and mice are insignificant. What's more, there is no possible way that Microsoft could ever be even a tenth as profitable selling hardware.

    Thanks to Windows and Office Microsoft is the software powerhouse, without the huge profit margins from these two products they probably wouldn't even be competitive.

  • by workindev ( 607574 ) on Tuesday February 04, 2003 @01:41PM (#5224080) Homepage
    Can you reasonably compare the proffit bassed on M$'s O$ to keyboard sales?

    If you could read, you would know that he was not comparing the "proffit" on Office and Windows to keyboards, he was just pointing out that Microsoft has many profitable products, not just Office and Windows.

    The fact is that there is nothing new here but failure. M$ gets into each new market the same way, by dumping

    No, Microsoft gets in each new market by offering products that people want. The didn't get the largest OS market share by "dumping". They got there by making a product that everybody wants so bad that they wait in line to buy the next release of Windows at midnight the day it is released. Do you seriosly think that "big dumb corporations" would "stick Office on every one of their 7,000 peons desks" if the corporations and peons didn't want to use it?

    People are realizing that free makes economic sense. blah blah blah marketdroid blah blah proprietary blah blah blah blah

    Who are these "people"?? The 2% of users who use Linux? Or the 95% who use Microsoft? I'll tell you what makes economic sense. Buying a product that everybody knows how to use, from the senior engineers down to the HR secretary. Why is it better to transition to "free" software if you have to spend thousands forcing people to learn how to use it, even when the majority do not want to learn?

    Slammer, Code Red, Nmedia, SirCam, I love you, Klez, la te da te da

    Are you suggesting that Linux would be any better [] if they had a 95% market share?

    Oh, and quit with the freeking dollar sign whenever you mention Microsoft. You look like a damn fool.
  • by MtViewGuy ( 197597 ) on Tuesday February 04, 2003 @06:28PM (#5226822)
    You have better luck with Red Hat Linux in terms of hardware drivers because it is pretty much the best-known commercial distribution of Linux here in the USA, and the last thing Red Hat Software wants is being buried in tech support requests to get drivers for even relatively recent hardware.

    But still, look at all the hardware manufacturer sites; just about all of them have necessary drivers for Windows Me, Windows 2000 and Windows XP. A lot of the hardware manufacturer sites seriously lack Linux drivers, so if you're a newbie user it could end up being a aggravating experience finding Linux hardware drivers unless the commercial Linux distribution manufacturer is really on the ball about this. Red Hat's support for the more common PC hardware is quite good, but when you get the oddball stuff, that gets troublesome fast for newbie users. :-(
  • by Lucas Membrane ( 524640 ) on Tuesday February 04, 2003 @06:50PM (#5226963)
    The 30% figure for MS is not "estimated". Last time I divided MS net profit by MS gross revenue I got about 32%. These were bottom-line numbers reported to the SEC, including all current expenses, ie all overhead. This figure is astronomical in comparison to the gross margin of typical firms.

    There is some issue about the amount of stock options that should be showing as a current expense, but no one wants another market crash, so don't worry.

  • by sean23007 ( 143364 ) on Tuesday February 04, 2003 @06:51PM (#5226971) Homepage Journal
    Additionally, even without the initial cost of the product being taken into consideration, a Linux sysadmin can do more for less than a Windows admin. MCSE gets you a job, but no skills.

    All the arguments I've seen in which Linux doesn't beat the crap out of Windows are simply lies.
  • by Black Copter Control ( 464012 ) <> on Tuesday February 04, 2003 @09:05PM (#5227825) Homepage Journal
    But still, look at all the hardware manufacturer sites; just about all of them have necessary drivers for Windows Me, Windows 2000 and Windows XP.

    Something to notice is that just about all of them need drivers for ME, 2000 and XP -- you need different drivers for every version of windows (OK, a bit of an exaggeration -- but only a bit!).

    I don't remember having to hunt down a Linux driver for something since RH5.2. Windows, on the other hand....

The moon may be smaller than Earth, but it's further away.