Hey Y'all,
No im not becoming a news delivery service -- however this sounds like
good news. This news is adapted from the IDG site, linuxworld.com.au
Chris D
Begin News{
Microsoft has confirmed it sees the open-source software movement as a
threat to its commercial business model, in a quarterly report filed
with the U.S. Securities and Exchange Commission (SEC).
The statement, which first appeared in Microsoft's annual report on its
2002 fiscal-year operations, amplifies comments by Microsoft Chief
Financial Officer John Connors recently about the threat of Linux to
Microsoft's server business.
"The popularization of the open source movement continues to pose a
significant challenge to the company's business model," Microsoft wrote
in its recent filing. "(This is) including recent efforts by proponents
of the Open Source model to convince governments worldwide to mandate
the use of Open Source software in their purchase and deployment of
software products."
Microsoft said it may have to reduce the prices it charges for its
products, and revenue and operating margins may consequently decline if
the open-source movement continues to gain market acceptance.
But an analyst who closely follows Microsoft said that while Microsoft
genuinely perceives the open-source software movement as a threat, it is
unlikely to adjust its pricing any time soon in response.
"Microsoft's response up until now (to the open-source movement) has
been nonmonetary," said Directions on Microsoft Inc. Research Director
Rob Helm. "It's loosened up access to source code, made more efforts to
support the government market, and created online communities that mimic
those that support open-source development projects."
With Microsoft's desktop operating-system market share at more than 90
percent and still growing, any threat to Windows from a system like
Linux remains a distant one, Helm said. Where Microsoft faces near-term
pressure is in the market for server software, where Microsoft hopes to
expand its Windows NT/2000 market share but finds itself fighting the
growing open-source groundswell, he said.
It also faces growth challenges in the acutely price-sensitive
government and educational markets, he said.
"Sometimes, Windows may be overkill for (those markets), and outside the
U.S., there's political pressure to not be too dependent on Microsoft
for government functions," Helm said. "There's a long-term threat
there."
In the SEC filing, Microsoft contrasted its commercial software
development (CSD) model with the open source movement. The financial
investment in software inherent in the CSD model benefits end users,
according to Microsoft.
"The company believes that the CSD model has had substantial benefits
for users of software, allowing them to rely on the expertise of the
company and other software developers that have powerful incentives to
develop innovative software that is useful, reliable and compatible with
other software and hardware," Microsoft wrote.
If Microsoft is to vanquish this threat and overcome challenges posed by
a weak global economy, it will have to offer users compelling reasons to
buy its software, the company said in its filing.
"The company's revenues would be unfavorably impacted if customers
reduce their purchases of new software products or upgrades to existing
products because new product offerings are not perceived as adding
significant new functionality or other value to prospective purchasers,"
Microsoft wrote in its filing.
Microsoft began adding the open-source risk disclosure to its quarterly
SEC filings because "it just seemed like an appropriate place to list
it, along with other uncertainties," according to a spokeswoman.
"Microsoft had been publicly acknowledging those concerns for quite a
while."
} End News
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