

Eric Raymond: The sound of empire falling - ii
http://esr.ibiblio.org/?p=762

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mlinsey
"Extrapolating from Gates’s implication of about a $12B-per-year burn rate,
MSFT’s cash reserve gives it about 20 months of burn time at this point...I'm
pretty certain from their recent behavior that Microsoft’s own planners aren’t
giving the company more than 30 months to live without one of..."

These parts makes it sound like Microsoft is in the red when in reality they
are making enormous profits, just not as much as they'd like. That 20 month
figure assumes _zero_ revenue.

Legacy customers, in particular in the corporate IT world, will ensure that
Microsoft will retain its profitability long after it loses its stock value
and its relevance (already it has lost a great deal of its relevance, but it
still has much further to fall).

~~~
cabalamat
ESR has a long history of wishful thinking regarding the demise of Microsoft.
Ten years ago he was saying:

"""Windows 2000 will be either canceled or dead on arrival. Either way it will
turn into a horrendous train wreck, the worst strategic disaster in
Microsoft's history.""" -- <http://catb.org/~esr/faqs/hacker-revenge.html>

> _Legacy customers will ensure that Microsoft will retain its profitability
> long after it loses its stock value_

Absolutely. Microsoft's downfall (if it happens) will be from industry-
controlling colossus to large and profitable software and services vendor.

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azharcs
I really didn't like the blog post, it looked more like wishful thinking than
reasoning with facts. Microsoft is clearly going nowhere in this recession, I
would say it is one of the companies along with Google that will come out
stronger than it was. Microsoft's competitors are already feeling the
recession pinch and might find it very hard to survive. Also with cash-
reserves of Microsoft, I surely think they will be buying valuable companies
for cheap. Again have to wait and see, no one has seen the future including
Eric Raymond.

Also just read his previous blog post about Israeli offensive in Gaza. Eric
Raymond surely has some extreme views on the conflict, saying things like
Islamofascists and other things. I was a fan of Eric Raymond but i surely
didn't know he was a right-wing nut.

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markessien
Netbooks are nice, but they are not taking over the market anytime soon. A
certain category of people have always wanted small cheap notebooks, and now
that they are available, they are buying them. The old consumers who purchased
normal notebooks will continue to do so.

Netbooks sell well because they are cheap and small. They are useful for
particular tasks in this configuration, but not for others. The market is
changing, but not towards netbooks exclusively. What people want, and don't
get yet, and will jump to purchase when they come are:

\- Very thin notebooks that are very cheap, but have 15 or 14 inch screens

\- Very thin and small notebooks than have 12 inch to 10 inch screens, and are
very cheap

If any of the above is above 700mhz in speed, it's fine, as speed is not the
main criteria for the bulk of people. The third category of people want

\- the same as above, but with lots of ram and speed for video editing, photo
editing work

All 3 classes want an automatic connection to flat screen screens at 32 - 30
inch at home, auto connection to external mouse and keyboard.

Current style notebooks as well as all categories of desktop computers are not
wanted, they are just taken because they are what is available. Nobody wants a
large box sitting underneath his table, it just happens to come in that form
factor.

Netbooks fulfill a part of the above, and that's why they are selling. They
will not stay low end forever.

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mattmaroon
"Clayton Christensen, author of The Innovator’s Dilemma concluded six years
ago that Linux and open source seemed to be executing a classic low-end
disruption on Windows and closed-source technology."

Yeah, and he turned out to be right. Now, only 6 years later, nobody uses
Windows and everyone uses Linux.

I love how he uses a prophecy that has totally failed to occur at all as the
starting point for rehashing the same prophecy.

~~~
rsheridan6
First of all, he said Linux _and open source_. Open source has definitely
disrupted, most notably on the desktop, Internet Explorer's monopoly. Also,
LAMP and others have done rather well against MS on the server (although this
would have been more retrospective than prediction even 6 years ago).

As far as Linux on the desktop goes, it's too early to call failure. Six years
is not exactly an eternity. But in that six years, Linux has become much more
user-friendly and easy to install, major vendors like Dell have started
selling it pre-installed, MSIE has lost its dominance (which is important
because you can now use the internet without running into MSIE-only sites
now), webapps have made the OS less important, and the netbook thing is
happening, reducing prices to formerly unheard of levels, making the price
differential between Windows and Linux that much more important.

Call failure when the marketshare of Linux stops growing at the expense of
Windows.

Here are some stats: Linux's numbers are low, but growing.

<http://www.w3counter.com/globalstats.php>

~~~
mattmaroon
That looks about the same as it would have 6 years ago. It's still mostly
Windows, then Mac OS. In fact, I'm surprised OSX hasn't grown to more than 5.

Open source hasn't stopped Microsoft or even slightly slowed their growth. The
only thing that's had any noticeable effect is the recession.

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bprater
If Microsoft ships Windows 7 for $99, how does this change the game?

I would go out and buy it immediately for my Mac's VM.

~~~
access_denied
Note very much. The game changer would be 64bit Windows.

~~~
smanek
Windows has had 64 bit versions available since XP. Just like Linux. Hell, I'm
running vista 64bit on my desktop (well, I can dual boot into it) right now.

~~~
rbanffy
Actually, there was a version of Windows 3.51 running on Alpha processors that
was 64-bit-enabled (as the Alpha was 64-bit with no 32 bit legacy).

64 bits is nothing new. I read my e-mail on 64-bit computers back in 97 or so.

------
Dilpil
Microsoft will die in the same way IBM 'died' 20 years ago.

~~~
dimitar
IBM has a culture of cyclic change. Every 20 years its a different company,
and it has been changing constantly through it 100 year history. IBM has seen
many great CEOs through history.

Microsoft still relies on essentially the same business model (a software-
product company.) essentially the last 30 years. It is trying to diversify,
yes, but most of its money still comes from Windows and Office.

Someone said a company is truly great when it has made it to the 3rd great
CEO. How many CEO who had the ability and the vision to reinvent the company
has Microsoft had?

~~~
chollida1
> How many CEO who had the ability and the vision to reinvent the company has
> Microsoft had?

By my count they are stuck at two.

Jon Shirley, who was credited with taking a very young Microsoft and creating
the proper corporate structure to stear it through its IPO and allow for its
explosive growth.

and of course Bill Gates, who is one of the pioneers and visionaries of the PC
age. He took the company from 800 million a year in revenues to 22 billion in
revenues.

I wouldn't include Steve Balmer in the mix but that is of course up for
interpretation

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lacker
Are netbooks making any penetration into the corporate market? I think Eric
Raymond's timeline of "unless something surprising happens in the next 30
months, Microsoft is toast" is too aggressive.

~~~
access_denied
from esr comment on same page:

>The big issue, however, is that Netbooks are not being bought as computer
replacements

PCs weren’t bought as minicomputer replacements, either. This did not prevent
them from executing a classic low-end disruption on minicomputers. You should
study that concept.

~~~
lacker
No need for the "you should study that" remark.

In fact PCs _were_ bought as minicomputer replacements after their performance
caught up, and that _is_ the classic disruption pattern. The difficulty of
netbooks penetrating the corporate environment isn't just performance, it's
also a combination of the desktop form and the support that corporations want.

Soon, netbook performance will become comparable with laptops, but that alone
won't make Microsoft's empire fall. In time it is likely that the same
commoditization happens to the corporate market. It just won't be with
netbooks, and not as fast as Eric Raymond would like.

~~~
rbanffy
"Soon, netbook performance will become comparable with laptops"

I have been using a netbook as my main desktop and the only complain I had was
with it being really tiny (something quickly offset by me having to carry it).
When I am at home, I use an extra screen/keyboard/mouse.

Sure it's no screamer, but it is a more than adequate development
(Emacs/Python/Django/Plone) machine.

------
etal
It's interesting that ESR implies netbooks are an endpoint. Replacing his
opinion with mine, they're not. In general, laptops are still too expensive
and heavy, and phones still haven't caught up in functionality/cost. My
netbook is a stopgap measure, and it works because I do most of my work on
bigger hardware; when I replace it in a few years, I won't be looking to
replicate the experience.

Quick math: if the burn rate is $12bn/year, and there are a (handwavy) billion
Windows || Office licenses bought or renewed each year, that's $12 per license
to break even -- and that's excluding revenue from Sharepoint etc. Pricing on
both products can fall quite a bit before they're in the red.

And it probably won't matter, if the home PC goes the way of the landline
phone. I assume that's the market ESR is concerned about, anyway.

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aston
This entire essay hinges on the assumption that Microsoft's priced Windows
(and Office?) inefficiently. Implicitly, it may also hinge on the presumption
that the true dollar value of OS software is basically zero.

I'm not so sure on the first, and I know the second is plainly false. For the
average consumer, the switching cost associated with moving from Windows to
Linux is quite hefty relative to buying a new copy of Windows 7...

~~~
StrawberryFrog
MS can always drop the price of Vista and Xp, the costs on those are sunk.

~~~
prospero
At the expense of Window 7's market penetration, which I imagine is the
primary concern right now. They need the latest OS version to be a necessity,
not a luxury.

~~~
rbanffy
I think Vista got that covered.

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alain94040
For once Eric gets it wrong (IMHO). "The death of Windows has been greatly
exagerated".

He basically assumes that Microsoft will do $0 in revenue soon, which is so
unrealistic that it destroys the whole argument.

What's funny of course is that if you believed in his argument that a
recession will hurt OS companies that charge too much for an OS, then Apple
should be in even worse shape than Microsoft. Not quite.

Eric fell in the tempting fallacy of drawing two points on a chart and
assuming that you can draw a line to extrapolate. Linux is free and growing,
Microsoft charges money and is losing ground. Therefore eventually Microsoft
will die. Now try to add Apple to that chart and see how well extrpolation
works...

~~~
gjm11
"For once"?!

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electromagnetic
IMO the one thing that could kill Windows would be if Apple released OS X on
other platforms. I do plan on buying a Mac, however it may end up being a
couple of years, but if OS X was released for all Intel computers then I'd
definitely download a copy and have it in dual-boot, which could take me away
from windows long enough until I got a Mac. Or even then I'd consider buying a
Linux version from Dell and install OS X (it'd probably still be cheaper than
going with pre-install windows).

~~~
lallysingh
Making OS X support that much hardware is just as hard as Linux supporting
that much hardware, only with significantly fewer engineers available to do
the task.

~~~
electromagnetic
My Dell laptop has identical components to most MacBooks, so I'd say 90% of
the drivers OS X already supports would be involved in my Laptop.

It doesn't necessarily have to support _every_ variant. I just mean it would
be amazing if Apple struck a deal with Dell so that OS X could run on their
laptops. However, I think Apples decision to support outside hardware will
likely be an image thing over a cash thing. If Apple compromises its image
then it could potentially compromise their entire business.

------
known
I hope ESR spends some time in <http://linuxhaters.blogspot.com/>

