[Gllug] Re: Is Microsoft too dominant?

[Alain Williams]

On Thu, Jul 25, 2002 at 02:58:00PM +0000, Charles Curran wrote:
> In today's (25th) Times business section, p27, Nic Hopkins has 2/3 page on 'Microsoft threatened by alternative ways' & 'The free software [Linux] that found its way into the big league'.
> He invites e-mails on 'is M. too dominant' > debate at thetimes.co.uk
> 
> {Perhaps someone can provide the URL for this article--I just have the paper copy in this cafe.}
> --Charles (sent from PDA via
> 	 mobile: +44 7973 231 870)
Show off :-)

3 URLs on related topics & the text behind them:

****
http://www.timesonline.co.uk/article/0,,630-364937,00.html

Software giant?s big customers are starting to look elsewhere
AS Britain basked in sunshine this week, the grounds of Microsoft?s campus in Reading would have been feeling more heat than usual.

Very rarely do the bean-counters that control the public sector?s purse strings raise a sweat on the brow of big business, and when it
comes to purchasing in the high-tech market the Government is famed for being subservient to corporations.

So it may have come as some surprise when on Monday the Office of Government Commerce (OGC), which controls all Whitehall?s procurement,
issued a statement that directed departments to consider alternatives to proprietary software such as Microsoft?s Windows operating
system when contracts come up for renewal.

The decree covers not just central government, but local councils and the wider public sector including the National Health Service.

?All levels of government are being encouraged no longer just to rubber stamp renewal of proprietary products such as Microsoft?s
Office, and not to buy those products without looking at the alternatives in the open source marketplace,? said a spokesman for the OGC
yesterday.

At stake for Microsoft is all the business it does with a Government boasting almost 500,000 public servants, worth at least #120
million a year.

But the impact of the Government?s statement could be much more severe for Microsoft, which dominates the global software landscape with
its Windows family of operating systems and Office suite of applications.

The timing of the statement could not have been worse. Little more than a week after Whitehall told the world it wanted to look beyond
Microsoft, the Seattle-based company will change to a controversial new method of selling its software to businesses and governments.

The new regime, named Software Assurance, has drawn a line in the sand for companies that use Microsoft products, and industry insiders
say it is acting as a catalyst for companies to begin scanning the market for alternatives, such as the Linux open-source operating
system and Sun Microsystems? new StarOffice software suite.

The Government?s announcement is seen as a huge display of confidence in open-source software such as Linux, which has already won the
backing of high-tech big guns such as IBM, Hewlett-Packard and Oracle.

IBM alone has committed $1 billion to marketing and development of open-source software. Companies and organisations that are using
Linux-based systems in part of their operations range from Shell, Boeing, Nokia, BMW and HSBC?s bank in Brazil, to China?s post office
and the Aberdeen council in Scotland.

Last month Germany?s Federal Ministry of the Interior signed a contract with IBM to move its administration to Linux and open software.

Adam Jollans, IBM?s worldwide head of Linux strategy, says: ?It is very early days, but we?ve seen Linux really make great strides.
Today, one in four servers is now running Linux.?

Gartner, the research firm, recently predicted that StarOffice, which runs on Windows and Linux as well as Sun?s Solaris operating
system, could win 10 per cent of the market dominated by Microsoft?s Office.

Microsoft denies suggestions by industry analysts that the new Software Assurance scheme will increase costs for all customers who sign
up before the July 31 deadline.

The plan is similar to an insurance policy for software. Companies pay a premium each year and receive rights to software upgrades
during the policy?s contract term.

Business and government customers buy an initial three-year licence to use Microsoft?s products and then renew it for another three
years or annually. Customers pay whether they want the new software or not, just for the right to keep using the software.

The annual premium is either 25 per cent or 29 per cent of the original cost of the software program, depending on the software?s
function.

Under the old system, customers who buy software licences from Microsoft get to use them ?perpetually? even after the initial term of
their licence expires.

They only pay for upgrades if they want the latest version of the software, but after July 31, instead of receiving a discount of up to
40 per cent on the upgrades they must pay the full price.

Microsoft?s argument for the change, which affects all customers who buy more than five software licences at a time, is that the new
scheme will provide a smoother income stream and lock in customers for longer periods.

George O?Connor, an analyst with Old Mutual Securities, says: ?Typically Microsoft sells more of its software at the end of its
reporting periods, which leads to a spiky revenue profile. This scheme creates a smoother revenue stream based on an annuity model . . .
It makes Microsoft a little bit more like a software bank.?

Microsoft is counting on Software Assurance becoming a success. Software licensing programs accounted for about 40 per cent of the
company?s $28.4 billion revenues in 2001.

The company originally planned to introduce Software Assurance late last year, but ran into a wall of negativity from customers and
delayed it to the end of this month. It has since spent $20 million worldwide on a marketing campaign to explain the changes.

Sue Page, Microsoft?s licensing manager in the UK, said: ?The one thing this has done is make companies look harder at their software
licensing. It has moved higher on the decision-making chain.?

Not all the people making those decisions appear happy to stay with Microsoft.

Officials at Sun Microsystems and IBM, both of which sell desktop and server-based alternatives to Microsoft, say they are receiving
more inquiries than ever before from existing Microsoft customers.

Jonathan Mills, Sun?s software products manager, says: ?To say it is a spike would imply that it has gone up and come down. It has
stayed up.?

But rather than a mass exodus from Microsoft, many customers are choosing alternatives as pilots with small groups of users. The absence
of a universal alternative to Windows and Office, and concerns over compatability with other products, remain strong obstacles.

Ashim Pal, an analyst at Meta Group, says: ?If you ask what percentage of companies would like to jump away from Microsoft it would be
30 or 40 per cent. Ask which of them will actually leave, it might be 1 per cent.?

Is Microsoft too dominant?
Send your e-mails to debate at thetimes.co.uk 


****
http://www.timesonline.co.uk/article/0,,630-364733,00.html

The free software that found its way into the big league
by Nic Hopkins
IF THERE is an opposite to Bill Gates, it is likely to be found in the form of Linus Torvalds, the young Finnish creator of Linux.

Torvalds may yet emerge as a rival to the world?s richest man but he will make relatively little from his most celebrated achievement to
date. He is the flagbearer of the free ?open source? software that began as a key driver of the internet but is now breaking into the
mainstream.

The birth of Linux has become legend among computer geeks. The system dates back to 1991 when Torvalds was a student at the University
of Helsinki and versions of Unix, the operating system best loved by hackers, were costly and difficult to find.

Torvalds was toying with Minix, a small Unix system, and decided to develop a system that exceeded the Minix standards. He began his
work in 1991 when he released version 0.02 and worked steadily for three years until version 1.0 of the Linux Kernel was released in
1994. Linux was not the original name ? Torvalds had first called it Freax.

He made the pivotal decision to post code for Linux on the internet, allowing other programmers to download it freely. The system became
a cause clbre for the anti-Microsoft movement and eventually tens of thousands of developers lent their efforts to the project.

Crucially, Linux fitted perfectly into the foundation for a Unix clone that had been previously developed by Richard Stallman, one of
the most famous hackers of all time.

Linux remained a niche product for many years, most often used to run websites. But it has now hit the big time.

Tony Lock, senior analyst at Bloor Research, says: ?The high-tech world doesn?t change on revolution, it changes on evolution and the
biggest trigger for an evolutionary change is confidence.?

He adds: ?The catalyst for Linux becoming credible was the decision in the past 18 months by huge companies such as IBM and
Hewlett-Packard to actively support it. From then on Linux was no longer a toy. You can buy an IBM mainframe, the biggest machine they
make, and run Linux on it with round-the-clock support.?

Linux?s source code remains freely available to everyone who wants to play with it. Companies are allowed to charge money for Linux and
its assorted distributions so long as the source code remains available.

If Linus Torvalds had cashed in on Linux he might now be a billionaire. But, still in his early thirties, he may yet strike it seriously
rich, having turned his attention to Transmeta, designer and manufacturer of the Crusoe microchip.

Ironically, the man who headed Transmeta until October last year was Mark Allen, who became a billionaire by helping Bill Gates to found Microsoft.

****
http://www.timesonline.co.uk/article/0,,630-364736,00.html

PC-makers feel the pain as market starts to mature
by nic hopkins
THE world?s computer industry is suffering from severe growing pains. Having moved on from the heady times of the 1980s and 1990s,
makers of personal computers are being confronted with a market that has finally reached adulthood.

Thought to be an impossibility during the high-tech boom, the PC industry has matured.

Karine Paoli, an analyst with the research firm IDC, says: ?The market for desktop PCs in Europe has reached a point that could almost
be described as saturation. There is arguably little room to grow.?

Makers of PCs have endured the worst trading conditions of their short lives over the past two years. The deteriorating economic
environment and the collapse of the high-tech bubble brought a sudden halt to the explosive growth typical of the late 1990s. The
terrorist attacks on September 11 saw corporations, which account for more than two thirds of all PC sales, slash spending on IT as they
braced for even further declines in the trading environment.

In the US, where consumer sentiment was worst hit, sales fell by about 11 per cent in 2001, marking the industry?s worst year on record.
Worldwide sales were down by 4.6 per cent.

The only major PC maker to boost both sales and market share was Dell of the US, which accounts for 14 per cent of the global market.
Rivals such as the recently merged HP-Compaq, Fujitsu-Siemens, Toshiba and IBM all suffered falls in sales.

Profit margins have been undermined as prices have been driven down by fierce competition but components have become more expensive.
Even notebook computers can no longer be relied on to prop up company profits, as they initially did when the desktop market went into
decline.

Makers of PCs have universally blamed the poor trading environment, but analysts say that beneath the economic downturn and the
uncertainty following September 11 there is a fundamental change to the market.

Ms Paoli says: ?Computer companies have had it easy in comparison with other companies. Technology has been something that people have
been hungry for and would buy just for the sake of it.

?But there?s been a integral change in the market in that everybody who was going to buy a PC now has one, so they are now dealing in
the replacement market rather than the initial buyers market.?

The replacement market has existed ever since people started buying desktop computers. In the late 1990s the typical upgrade cycle was
around three years, but as companies have tightened their purse strings that cycle has extended to four years and beyond.

In Europe, IDC says, one in three adults owns a computer, against 50 per cent in the US. Thanks to improvements in computing power, even
basic PCs can perform beyond most users? requirements.

The outlook remains bleak, with no clear turnaround on the horizon. PC shipments declined by 2.2 per cent across Europe, the Middle East
and Africa during the second quarter of 2002. Ms Paoli says: ?No one can say the situation is getting better. No one.?

-- 
Alain Williams

#include <std_disclaimer.h>

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