The second part of a two-part BBC report on Microsoft outlines the company's strategy to deal with the increasing level of competition it's facing on a number of fronts. Probably as a direct result of its own ability to keep the price of desktop PC software more or less constant while the price of the hardware side has plummeted, the free, open-source software (FOSS) community has emerged as Microsoft's chief competition. That community worked silently for years, building a remarkable distributed development and collaboration infrastructure that is now bearing such sweet fruit as the Firefox browser, the excellent OpenOffice.org productivity suite and, of course, Linux, the OS kernel of the People. We make heavy use of all those products here at CafeID and couldn't be more pleased with them.

The Beeb reports that Microsoft intends to confront these challenges in a disturbingly familiar way. Twelve billion dollars can buy a lot of Fear, Uncertainty and Doubt.

What Is FUD And Why Should You Care?

The fifth of the five key battles, according to the BBC article, is over "serious software" and the competition Microsoft faces from the Open Source community, described above. The company has only recently begun to even acknowledge this threat, for fear, no doubt, of legitimizing it. But Chairman Gates is rolling out the same tired arguments against OSS that he's rolled out before. He warns of "interoperability" issues as if some other company is responsible for the tendency Microsoft has to intentionally break interoperability in order to remain exclusive. There are standards for interoperability, and the Open Source community embraces standards. Microsoft can take its file formats and go home, obviously; but any attempt to portray "interoperability" as a lack of quality, dedication or competence on the part of OSS developers is absurd.

Gates also refers to the supposed advantage Microsoft has in terms of total cost of ownership (TCO), at least "if you look at the entire software stack." It's true enough that Microsoft enjoys a certain level of inertia that keeps it moving forward in the absence of innovation and quality. The cost for a large enterprise to execute a switch, even to a free software platform, outweighs the cost of simply upgrading its Windows installations. It's also true that the few companies providing the level of support, training, warranties and indemnification that businesses need charge a premium. But for smaller organizations without a large existing investment in Microsoft technology, switching or starting out with Linux and other OSS alternatives makes perfect sense from a financial standpoint.

Alistair Baker of Microsoft UK chimed in with more FUD, asking "do you really want to have your security issues discussed by the Linux developer community on a public bulletin board?" I suppose most businesses would say "no," but how attractive is the alternative -- having them ignored for years only to be finally offered a security solution on a subscription basis? Gates and Co. have long held up OSS development as insecure because vulnerabilities are exposed to the public; but, by the same token, vulnerabilities are more readily discovered and fixed and the fixes distributed than in the closed world of proprietary commercial software, which isn't exactly a paragon of security.

The arguments that Microsoft makes to scare people away from its rivals are insidious; but it's the ability the company has to stifle competitive development in new markets, combined with the bait-and-switch tactics it uses to gain customers, that is more worrisome. I'll call it the "Wal-Mart Effect." For example: You know Wal-Mart is building a big-box down the street, so your own business options, if you deal in a product that Wal-Mart carries (and who doesn't, really?), are severely curtailed. The store opens, people flock there for the low, low prices until the places they used to buy groceries, hardware, clothes and toys all shutter their doors. At that point, Wal-Mart switches its customers to a new pricing model and they have little recourse.

A New Pricing Model for Microsoft?

In the software world, the "Wal-Mart Effect" might take the following form: Microsoft buys the premier maker of anti-spyware protection software and gives the product away free. Customers find the product valuable (never mind that the inherent insecurity of Windows made the product necessary in the first place) and they use it, even rejoicing when Microsoft announces that the product will remain free to legitimate Windows users. Microsoft then announces that it will enter the highly-competitive anti-virus market and will deploy its AV product on a subscription basis. Or maybe it just rolls both of these security enhancements directly into Windows, calls it "Windows OneCare" and there you are, a Microsoft "subscriber" with attendant disincentives to switching to non-MS products.

It may sound a little bit far-fetched, but the company-wide trial of Windows OneCare starts next week, and Microsoft plans to offer it as a commercial service next year, using an annual subscription model. Some are speculating that the subscription model would be extended to cover all of Windows or possibly all Microsoft software. MS already uses such a model in its high-dollar Enterprise Agreements with large installations, so the idea that it would like to move to subscriptions for all its software at all levels is not unreasonable.

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One might argue that the current situation, in which OS upgrades are a practical necessity, is already a subscription model, and I'd agree. The problem seems to be that Microsoft is having trouble meeting its end of the bargain, as the woeful tardiness of the next update to Windows, code-named "Longhorn", illustrates. It's increasingly apparent that Microsoft will have to ship some of Longhorn's features (like IE7) in an interim release of Windows XP that will actually provide at least some kind of upgrade to those "subscribers" who bought the XP upgrade rights.

So Is This Good Or Bad?

There have been positive developments in recent weeks. Among them was the announcement that IE7 would finally be fixing some of its longstanding problems with regard to standards-compliance so that we can all get back to concentrating on our content and design without having to worry about the browser choices of the target audience. Whether this is in response to the success of the open-source Firefox browser or out of respect to the World Wide Web Consortium doesn't really matter. What matters is that it could have been step in the right direction for Microsoft.

Unfortunately, however, it appears that Microsoft is trying to talk interoperability and standards while the company walks the other way. Money can't buy what the Open Source community has built, and with the explosion of interest in Linux and other open-source alternatives, including interest among national governments in China, Brazil and Germany in moving away from reliance on a single American company, the subscription model may not make much difference anyway.

Microsoft's tendency to turn first to the spread of fear, uncertainty and doubt is growing weaker and weaker by the day, as open-source alternatives gather momentum. It would seem that a company with tens of thousands of talented employees, billions of dollars of cash in the bank and access to virtually every personal computer on the planet could do better; but, unfortunately, it's not clear after all these years that Microsoft can.

About The Author
Trevor Bauknight is a web designer and writer with over 15 years of experience on the Internet. He specializes in the creation and maintenance of business and personal identity online and can be reached at trevor@tryid.com. Stop by CafeID.com for a free tryout of the revolutionary SiteBuildingSystem and check out our Flash-based website and IMAP e-mail hosting solutions, complete with live support.

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