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Re: Ballmer Suddenly Pretends Linux Not a Threat

  • Subject: Re: Ballmer Suddenly Pretends Linux Not a Threat
  • From: "Rex Ballard" <rex.ballard@xxxxxxxxx>
  • Date: 19 Oct 2006 08:56:09 -0700
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Mark Kent wrote:
> begin  oe_protect.scr
> Rex Ballard <rex.ballard@xxxxxxxxx> espoused:
> > Oliver Wong wrote:
> >> "Roy Schestowitz" <newsgroups@xxxxxxxxxxxxxxx> wrote in message
> >> news:1161197374.052859.172780@xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
> >> > Steve Ballmer at EPS
> >> >
> >> > ,----[ Quote ]
> >> > | One question from the floor was answered in an interesting
> >> > | way. It concerned the threat of Linux, and the surprising
> >> > | (but in retrospect obvious) answer was that Linux wasn't
> >> > | the threat, it was new business models that were the threat.
> >> > `----
> >
> > This is actually a very accurate statement.
> I must dispute.  The statement is quite wrong, Linux /is/ the threat,
> but /so is/ the threat of open-source business models generally.  If
> he'd said "Linux isn't the only threat", then that would be correct.

Ballmer is probably sweating bullets over Linux, and he knew that this
question was going to come up.  He had to come up with a legally
factual statement, that could also minimize the impact of the question.

As of this exact moment, and probably for the next 30 days, Linux has
not had a direct impact on Microsoft's revenues.  The OEMs continue to
buy about the same number of OEM licenses, and the major corporations
still pay the same monthly rates they have paid for the last 3 years.

> > Linux doesn't even try to
> > stop people from using or purchasing Windows.  Linux has always been
> > willing to "play nice" with Windows, and has even provided the ability
> > to run Licensed versions of Windows as an application running under the
> > Linux kernel.

The problem at the moment is that Ballmer knows that a huge percentage
of the computers sold today, were sold at premium prices, not because
they ran Windows, but because they were designed to run Linux very
well.  Depending on how you slice the numbers, this number could be
anywhere from 30-50% of the market, and as much as 80% of the machines
sold to corporations.

Ballmer is also acutely aware that 200 million people have downloaded
and installed FireFox from recognized mirrors, but he also knows that
there are many corporations who have been having their employees load
custom configurations of FireFox from the corporate sites.

Ballmer is also acutely aware that over 100 million people have
downloaded and installed OpenOffice 2.0, again this is only counting
the audited downloads from reporting mirrors, and does not include
copies downloaded and installed by employees of major corporations.

He's not stupid.  He knows that, like it or not, Linux desktops could
very quickly capture a huge market share, and that this could adversely
effect Microsoft's revenues and unit volumes in the near future.

Microsoft executives appear ready to "bet the farm" on Vista, and have
published a EULA that expressly forbids deployment of Linux as the
primary operating system and using Windows as a "Client", for example a
VMWare, Xen, or Bochs client.

They have also shown that they are willing to offer a license to run
Windows as a Linux VM, but only if corporations sign long-term
agreements and pay triple their current rate for the right to do so.

Perhaps, if Microsoft had delivered everything they originally promised
in Longhorn, along with the features of Singularity, and had released
it in May or June of 2006, they might have been able to pull it off.

Instead, they seem fully prepared to tell corporations that they must
either "sign up or die" for a product which is known to be buggy, known
to be insecure, and known to be incompatible with quite a bit of 3rd
party software and numerous device drivers.  They know that these
companies would have to replace the machines they have to accommodate
the requirements of Vista vs XP, and they know that these corporate
custotmers aren't really keen on spending even MORE money to be roped
into yet another 3 years of WINDOWS ONLY.

If we see a sudden surge in PC sales before the release of Vista, it
may be that companies and users are preparing for the transition to a
Linux/XP solution or are preparing to get rid of Windows altogether.

In effect, with the current verson of the Vista EULA, Microsoft is
bidding for a "grand slam" and can't afford to give up even one trick.
If they can't get at least 300 of the Fortune 500 to sign 3 year
agreements to Windows-Only licenses within the next 2 months, the risk
is that most of these companies will flip to Linux and OSS within the
next 3-6 months.  If these companies go public with their success with
Linux and OSS, Microsoft will probably never recover.

There have been reports of corporate customers being "shut down"
because their VLM has expired.  They are being "locked out" of their
own computers.  It's possible that some of the really big companies may
even consider bringing in local law enforcement officials who will file
criminal charges at top executives at Microsoft, for extortion.

Ballmer didn't want to tip his hand at the conference where most of
these CEOs were looking for any kind of veiled threat.  He also knew
that none of these CEOs were willing to tip their hand by announcing
that they were prepared to switch to Linux immediately if Microsoft
doesn't give them a more flexible deal at lower prices.

The fact that the question was asked in this particular forum is a good
indicator of how sensitive the issue really is.  And the fact that
Steve had such a carefully worded response is a good indicator that
Microsoft is aware that Linux really COULD BE a threat, even in the
next few weeks or months.

> --
> | Mark Kent   --   mark at ellandroad dot demon dot co dot uk  |
> Department chairmen never die, they just lose their faculties.

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