Microsoft’s Biggest Weakness
In many ways, Microsoft has little to worry about, at least not for now. Sure, they are losing market share steadily, but for their lead to be toppled it would take years and years, or would it?
Microsoft’s agreements with major OEMs (original equipment manufacturers) such as Dell and HP are highly confidential (which is a warning sign in itself), but by most accounts, the agreements give Microsoft a lot of power over these OEMs. This is part of what gives Microsoft so much power. As long as OEMs continue to sell Windows exclusively, which Microsoft essentially ensures with their agreements, they have a large part of the market all to themselves. These strangle-hold agreements may also be a weakness, though.
From the information we have, it appears that Microsoft controls OEMs not by making them love Microsoft, but by threatening them with increased licensing costs, something that could quickly kill any OEM. What this means is that most OEMs probably wish Microsoft has less of a monopoly. In fact, both Dell, by selling Ubuntu on some notebooks, and HP, with their rumored custom version of Linux, have indicated this.
It appears that Dell, HP, and others probably have two options: restrict their Linux stuff to remote areas of their businesses, or declare a revolution by offering Linux on all their computers. I suspect that any single OEM that tried this would get killed, but if several major OEMs did it together?
Let’s look at the pros and cons from the perspective of OEMs:
- PRO: Good chance of toppling Microsoft’s power, freeing them of restrictive licensing deals.
- PRO: Reduce costs by cutting out Windows licensing fees all together.
- CON: Potential technical problems and initial negative customer response.
- CON: Some possibility of getting absolutely crushed. In this case, the company in question could probably recover, but not without losses.
While we do not know exactly how bad the license with Microsoft is, it seems unlikey that any major company would take the risks involved. If I were Microsoft, I would, however, be somewhat concerned. If OEMs did “revolt,” Microsoft would be in deep trouble. Arguably, despite the low probability, this is Microsoft’s most immediate threat. Could it ever happen? Would it work?
September 13th, 2008 at 2:50 am
Microsoft is caught between a rock a hard place and a pointy thing. They’ve had their way for so long they can’t change even if they wanted to. If they show any sign of weakness to the manufactures they’ve been abusing for the last two decades, their kingdom will implode. They can only react with more pressure which will, of course, create more ill will. My prediction is: Don’t blink or you may miss the collapse of the mighty software empire.
September 14th, 2008 at 11:46 am
Actually there’s more to it:
So far there has been a prohibitive cost of moving hardware manufacturers and resellers to move to Linux, but once all the big players have entered the netbook market and every single one of them has launch a Linux version of their ‘nettop’ they suddenly gain both the technical and commercial expertise to sell Linux. Linux is no longer the alien of the computing industry.
MacOS X may be the flagship of usability, but its a closed garden, something in a showcase, inaccessible for hardware developers. It will just show OEMs what they can get by moving away from Microsoft software. Linux by itself may or may not be ready for consumers, but that’s where OEMs can put ‘added value’. If some Linux distro lacks some facilities there OEMs can make profits: they can provide solutions or provide a marketed experience to its customers.
It will take several years until this wave will make a difference for consumers, but I think and hope that this will happen even before the launch of the next version of Windows.
September 15th, 2008 at 9:20 am
I humbly (that word sounds as fake as a 30-dollar bill in my mouth) think that Microsoft isn’t going to keep up with the pressure GNU/Linux (and the FOSS in general) is having on them. You have to see the faces of people who take a look at my desktop running KDE4+compiz (on Kubuntu Hardy)… they just drool over it. ASUS with its idea of having a “pitty-weight” GNU/Linux embedded in their motherboards… boxes preloaded with GNU/Linux,… I can’t see how they will be able to hold it. Perhaps, the time to say “Free at last, free at last, Thank God Almighty, I’m free at last” is not so close from arriving.
September 15th, 2008 at 5:59 pm
I often suggest this “tipping point” as well, and usually get laughed at for doing so. And, hey, maybe there are so many factors that it won’t ever be a tipping point, perhaps it will be gradual though perhaps not linear. As Bogdan said, now that major OEMs have experience with Linux, it becomes easier and easier for them to push it. However, Microsoft can start lowering it’s costs for Windows. So, you may not get a tipping point but a somewhat linear or exponential takeover. They cannot get rid of Windows completely though for many customers. Don’t forget all the Windows software which exists which customers still want to use, and Wine isn’t perfected yet (would be really awesome if it was though), but selling to the consumers who just have basic needs and who don’t have massive geeky software collections of Windows stuff is the first step, and that’s the step being taken with the netbooks.
It will only continue to get worse for MS as Linux isn’t going anywhere but up, and there’s nothing they can do about it except try to pour honey on it and spread FUD and anything else they can think of, but sooner or later those beavers will topple them.
September 16th, 2008 at 9:10 am
Or, there could be new OEMs without an existing Microsoft account…