A Conversation on Bigotry

“You sure are an anti Microsoft Bigot. Congratulations.” from Ricky Datta

bigot, noun bigut – a prejudiced person who is intolerant of any opinions differing from his own.

This was the only line from Ricky in his email to me – but I responded because I believe some of the tough coverage of Microsoft in this weblog deserves exploring. Here is that letter, Rickys response in italics and then my rebuttal. This item is open for comments from anyone though I have shutdown comments elsewhere because there has been a huge tide of poker, meds, and mortgage spam being sent to the weblog.

The Conversation:

Now I have seen two good friends see their companies go under because Redmond took over the markets with zero pricing – these were companies built up by long and hard work and responding to Microsofts “call for action”. Their reward for being good partners ?… zero pricing, bankruptcy

Same with open source – it results in lower pay and less available job for me and you. So, MS or other big companies (which all need to expand market as stock will go up Only when there is growth – as demanded by public markets) will always expand markets.
Ricky I agree with you on both points. The markets are demanding growth while the IT industry industry stagnates in many sectors (but certainly not all – data integration and BI are two that are growing very fast). Many IT markets are reaching maturity and/or commodity pricing. Those factors make it very hard for companies like Microsoft, Oracle, and Dell which have grown very fast in the recent past, sustain their historical rates of growth.

Now these companies should make the transition to maturity gracefully – being a major player in a market is challenge enough. There are good examples in the oil and gas industry or chemicals or autos (see what is happening to GM and Ford). The only thing that could prevent this orderly transition is if a company has “built in” high growth into its cost structure. One of the three companies above has done exactly that (and we warned them back in 2000 that they could ill afford to do so). I leave it as an exercise for readers to discover which one of Microsoft, Oracle or Dell has done the Ponzi-scheme deed with its employees.

But the other core issue you raise is open source contributing to lower pay, fewer jobs. I say open source is in great part a reaction to the unchecked Microsoft monopoly. Yes, the DOJ got the goods on Redmond and so they had to payout $5-7billion in civil suits (a pittance to what they earned through ill gotten gains)and got slapped on the hands by the Bush administration. But let there be no doubt that for the last 5-7 years Venture Capital has absolutely dried up in any PC arena, both hardware and software, especially any that remotely touches on sectors or markets “of interest to Microsoft”. So the only entry into these substantial markets is to go the freeware route – a long established tradition not just in software but general markets. Give away part or a complete but time-limited application away for free – get the user to upgrade. But this freeware/Open Source route is a tough row to hoe to gain market entry and certainly would not be a companies first choice. And for every Jasc PaintShop Pro or NikoMak Winzip there are a lot of crganizations that have made close to zip in the freeware/open source approach.

And that is because Open Source really serves more than a low/no cost of entry need in a mature market. Open Source is also a reaction to EULA and the drastically limited liability and lowered levels of reliability, security and support that permeate the IT software industry. This is by no means an exclusive-to-Microsoft phenomenon. Some argue that very early in the PC evolution Microsoft lead the charge to a “no fault, no warranties whatsoever” EULA agreement – but there were an awful lot of other software vendors that preceded and supported that approach.

But the bottom line is this – many IT organizations are unhappy with the support and services they get from their “proprietary vendors”; so they are investing in Open Source companies (like JBoss, MySQL, RedHat, Daffodil, Suse, Zend, etc) whose major way of making money is better support, training , timely updates and services. But also, Open Source is just getting its feet underneath it as both traditionally proprietary (think BEA Beehive, IBM Derby, Actuate BIRT as a few examples)and new start-ups use Open Source with new licensing and complimentary product options. Systnet gives away a substantial SOA client hoping to make it up with sales of a complimentary server.

Note how different this is from the BI giveaway model being exploited by Microsoft, Oracle, and IBM . All 3 vendors give away substantial BI stacks but you must buy their databases to get the freebie BI software(not entirely true, in IBMs case you can buy more advanced editions of some of their free giveaway BI stack). But all 3 vendors know that their BI competitors like Actuate, Business Objects, Cognos, Hyperion, MicroStrategy and dozens of others cant match the giveaway offers because these BI vendors dont have a database to charge for and make up the lost revenues of free open source software.

Now some would argue this is just Economist Joseph Schumpeters “creative destruction” phase of maturing economic markets. I would argue that the DOJ and the Federal government have had an opportunity to push this phase closer to the creative side by curbing these predatory pricing excesses – but so far only the EU appears ready to take up the issue..

Microsoft is its own worst enemy – doing in good partners with zero-sum tactics as in the BI industry right now. Why doesnt Microsoft charge $20K for OLAP and $30K for Analytics like it charges for its Content Management System or its BizTalk Server . Why give them away for free ?

All I have to do is lay out the facts – and Microsofts own actions like “cutting off the oxygen to Netscape” speak for themselves. And this zero-sum, lets tilt the playing field to our advantage comes directly from the top.

I believe many of the employees on [the Redmond] campus are good and fair minded – but not enough. And certainly not strong enough to stop Bill and Steve and other top managers from their dirty tricks, free give-away tactics. When I see the current “cut off the revenue lifeblood to BI” tactics by giving away all BI software for free – I see that Steve and Bills promises to be “better corporate citizens” are just empty words.

And this has had deep consequences for the US IT industry. Venture capital has dried up in almost all software and hardware markets where Microsoft might even be remotely involved as a competitor. I have seen great ideas for tablet-like PCs and Voice-OS extensions bite the dust because they are “privileged Microsoft arenas”. So PC innovation just does not happen at the rate and excitement of the late 80s and early 90s.

So if I am a “bigot” for saying this – so be it. Just make sure you clear the sand out.