Microsoft's business model is done

John C. Dvorak shoots for controversial but pulls a Michael Moore and gets his facts wrong:

I've been playing with one of many new systems that are hitting the market which allow the user to quickly boot the machine and go directly to a small version of Linux rather than wait to load Windows.

HyperSpace is a compact Linux that loads almost instantly and gives the user a browser, word processor and a few other useful goodies that can easily be accessed in a pinch.

I cannot wait forever for a computer to boot just to go on the Web to look up the number. The instant-on feature of these new systems lets me get on and get off the computer in less than a minute. I'm on my way.

This is just pure convenience, and Microsoft has got to be taking notice, since this entire subsystem is a Trojan Horse (like the original one, not the computer virus type). What it is doing is introducing people to Linux and its desktop capabilities.

If people are using Linux like this routinely, how long will it be before they can be convinced that Linux is just as good as Windows?

And it's free.

With the advent of the small, inexpensive computer and the Netbooks that sell for around $299, the appeal of Linux becomes greater and greater because it costs nothing.

Right now, for example, I can get a complete Intel motherboard with an Atom processor, ready to install in a box, for about $100. All I need is a $30 memory module, an inexpensive hard disk ($50) and a case/power supply ($75). For $255, I can have a pretty nice cheap machine. Now I have to add the most basic version of Windows for $199? And Office for another $399 (standard no-frills edition)?

Let's add this up: Hot little computer: $255. Basic low-end Microsoft software: $598.

What's wrong with this picture?

Your math, for starters.

The most popular version of Office, by far, is the Home and Student edition. You can get this version of Office for $125 usually (it's on sale at Amazon right now for $87.50)--not $399--and unlike the so-called "standard no-frills edition" you mention, it can be installed on THREE computers. This is a tremendous bargain. And let's not forget that Office is actually decent software, unlike, say, OpenOffice.org or Google Docs.

Second, "the most basic version of Windows" does not cost $199. Windows Vista Home Basic costs $90 for the Upgrade version, or $160 for the Full version, assuming you're one of the few people on earth that doesn't qualify for an upgrade. Or you could simply get Windows XP for next to nothing with a lost-cost netbook. (This will change to Windows 7 later this year; same pricing.) Which, by the way, is what 90 percent of netbook owners already do, according to Microsoft.

Compare prices on Office 2007 Home and Student and Windows Vista Home Basic Upgrade (as cheap as $60) and Full (as cheap as $95) editions at shopper.com for more pricing ...

The actual cost of this software could be as low as $150. It's certainly nowhere near the $600 that Dvorak claims.

OK, that's that. But here's the thing.

Ultimately, his message is right. Sort of. But I'd put it this way, because John is also conveniently ignoring the fact that Microsoft is evolving its software lineup to include electronic distribution models and cloud computing initiatives: Microsoft's traditional software business model is ending. Someday. Maybe someday soon. But not today.

Looked at in that light, well, duh. That's pretty obvious. And it's certainly not as controversial as presented. So you're saying is that we can get free software that replaces what Microsoft sells?

Hey, John. 1995 is calling. They'd like your commentary back.

Discuss this Article 53

robertsjoe
on Mar 8, 2009
@subzerohitman721: "That story is so totally made up. Any assault by an IT profession while on the job in ANY STATE IN THE UNITED STATES is grounds for automatic termination and arrest." "Assault while on the job?" Did you not read anything? It was a couple of guys filling up at a gas station. I guess we can take all you say as having no value, since you can't read.
robertsjoe
on Mar 8, 2009
Windows Vista Home Basic costs $199.95 is you buy it from the maker (Microsoft). So that is NOT an incorrect fact. It is correct. It also costs something else elsewhere. But if you bought it from Microsoft, that's what it costs. http://store.microsoft.com/microsoft/Windows-Vista/category/101
robertsjoe
on Mar 8, 2009
"conveniently ignoring the fact[s]" It's something you and John have in common.
hamiltonstallings
on Mar 8, 2009
Why do I have a feeling robertsjoe and Lindy are married and homeless?
steve.syfuhs
on Mar 8, 2009
My god. I was only 7 in 1995. I wasn't even old enough to know the facts. The only thing I knew was that linux was a pain to install back then. I'd be interested to know how easy (hard?) it is to install this instant-on OS now. BTW, my desktop at work takes 30 seconds to load, including logging in, and loading Outlook 2007. And we all know 25 seconds of that is Outlooks fault ;). People are complaining about the wrong thing here.
yert
on Mar 8, 2009
You also might as well not include the price for Office either; most people running a netbook right now have another computer at home, and if you already are running Home and Student at home, there is no point in buying another copy since the license will cover more. Still, I wish Microsoft would lower the prices AND/OR allow bulk buying of copies at discount rates; not everyone has just three computers at home or computers in multiples of three.
shark47
on Mar 8, 2009
"John C. Dvorak shoots for controversial but pulls a Michael Moore and gets his facts wrong" Haha. That's funny!
puzder
on Mar 8, 2009
Who the hell shuts down their machine these days? I only reboot when an update requires it. My laptops just go to sleep. C'com Dvorak.
Lindy
on Mar 8, 2009
There are assumptions by both Paul and John. Both assume that people are going to run office by default. I know plenty of home users that NEVER fire up office. The home user is vastly different today than it ever has been. Web surfing, email, chat, photos, finance programs and lots of other NON office usage on a computer. I can VPN into my company via any web browser (IE, FF, Safari) + my RSA device. From there I can launch RDP or Office applications via Citrix. I can do this from Windows, Linux or OS X. I dont need a Windows PC is my point and I dont need office. Honestly I dont use Office for anything but work. There is simply no reason for me to. If I were is school I would need it and probably at least Office 2003 to be compatible.
scarper
on Mar 8, 2009
Everyone screaming about the demise of Microsoft because of Linux, including Dvorak, are delusional. The real world looks nothing like the world of online tech enthusiasts and they seem to forget that. Linux netbooks are returned at a rate 4 times higher than Windows netbooks. The average Joe isn't flocking to Linux anytime soon. http://tinyurl.com/4dloo3 "We have done a lot of studies on the return rates and haven't really talked about it much until now. Our internal research has shown that the return of netbooks is higher than regular notebooks, but the main cause of that is Linux. People would love to pay $299 or $399 but they don't know what they get until they open the box. They start playing around with Linux and start realizing that it's not what they are used to. They don't want to spend time to learn it so they bring it back to the store. The return rate is at least four times higher for Linux netbooks than Windows XP netbooks. - Andy Tung, MSI's director of US Sales'"
Waethorn
on Mar 8, 2009
@robertsjoe: ....and RAM upgrades from Apple cost upteen-bajillion dollars. They may cost less from others, but Apple is gouging customers, as usual. "I know plenty of home users that NEVER fire up office. The home user is vastly different today than it ever has been. Web surfing, email, chat, photos, finance programs and lots of other NON office usage on a computer." I get a lot of customers that are home users coming into my store looking for a new home computer. The number one piece of application software they ask for is Office. Not necessarily for them, but for their kids that need it for school. The schools around here all use Microsoft Office. Not OpenOffice. Not StarOffice or Google Docs (they aren't allowed to use cloud computing apps for storage, but that's a regulatory matter), and certainly not iWork. It's Microsoft Office. I dunno if your local schools are underfunded or whatever, but there are 4th graders that are doing PowerPoint slideshows for almost all oral presentations. That's just the way it is around here. It's a necessity. Even out of those that don't ask for Office up front, my records show over an 80% customer return rate for Office after trying the 60-day trial on a new system. "I can VPN into my company via any web browser (IE, FF, Safari) + my RSA device. From there I can launch RDP or Office applications via Citrix. I can do this from Windows, Linux or OS X. I dont need a Windows PC is my point and I dont need office." Um, what? You don't need Office, but you're making the argument that you can remote in and use Office on your work computer? That's the silliest argument I've heard all day. Anyway, I'd like to see how many home users have VPN access to their work computer with RSA encryption anyway....There are many more small businesses in the world than there are enterprise companies. And, you know, perish the thought that someone at home might actually want to use their computer for something productive for a change.
Ocean
on Mar 8, 2009
>>Office is actually decent software, unlike, say, OpenOffice.org<< I don't understand this...my wife and I both use the spreadsheet and the word proc. in OOO.org, and have found it beyond decent. It just works. Paul, where is your OOO review at?
Waethorn
on Mar 8, 2009
@scarper: It's also the reason why Asus starting installing Windows on Eee PC's and why Intel Classmate PC's and OLPC are including Windows. Just FYI though: the return rate has nothing to do with any learning curve of Linux.
Lindy
on Mar 8, 2009
My point is I only need Office for Work. I finished school over 20 years ago, so personally if I did not work, I would hardly, if ever use Office. My retired parents and in laws dont as an example. They use a computer for Web 50%+, email which is mostly web or some free Windows email client, Quicken, iTunes, various photo apps, simple games. I think my monster n law, used to dabble in writing something for some horticulture group she belonged to 5 years ago so she used Word once a month. I would not VPN in just to use Office, as I have it on my work noetbook. However I could get by with a cheap non-Windows computer and do that since I only need office for work, if I had to. My kids are to young right now to use office but their Catholic school uses it, so they will soon enough.
Lindy
on Mar 8, 2009
Linux will only ever move into main stream when cloud computing is the norm (if ever). At that point the OS will be insignificant, and its main purpose will be to give you software to access the cloud. Linux does not have popular software support and that is the single biggest reason its held back. Today's distro's are mature enough, Ubuntu and SUSE are as easy to use as Windows or OS X. There is just not any popular software ported over to it. Things like Office, Adobe products, Intuit products....etc.
subzerohitman721
on Mar 8, 2009
Poor Dvorak. The guy doesn't give up. I'll give him credit for tenacity, but he doesn't get it. As long as the Linux Distros are all battling among each other along with Apple and Microsoft, they will never gain sigificant ground against the established Duopoly of Microsoft and Apple. @robertsjoe 'I explained to him that I was also a Director of a charity that provided computers to disadvantaged kids. He seemed truly interested and while I didn't have any business cards with me, I gave him our website and blog address." The gentleman identifed himself as a professional in the story. Regardless of him pumping gas, once you identify yourself as a professional, it can be construed as a professional contact. Ever heard the understood rule of becareful how you represent yourself when off the clock? You could be misunderstood as representing a business. My comments stand. Since you've got nothing better to do, since you can't win an argument with me,why don't you buy yourself a copy of Windows Vista for Dummies or do Paul a favor and buy his Windows Vista Secrets. Its pretty clear you have no idea how professional contacts works or any understanding of Windows. Then again, I bet you haven't work a day or an hour in the IT field.
benjwah
on Mar 8, 2009
Dvorak loves controversy. He's like a cranky old uncle that gets drunk at family parties and starts yelling "I shot Kennedy!". He just wants some attention. Also, to subzerohitman & Waethorn and everyone who keeps responding to robertsjoe: Don't feed the troll! You're not arguing with a rational person, you're feeding a troll. He shall keep returning until you refuse to feed him.
RunTimeError
on Mar 8, 2009
Nobody gives a rats nuts about Linux except server admins and hippies. Jeeze I wish all this "Linux is better than everything and will topple the world crap" would just go away.
whiplash55
on Mar 8, 2009
Dvorak strikes again, he love's saying shit like this. I remember when he said Apple was going to abandon OSX and start running Windows on their lousy hardware. He hasn't been getting to much press lately I guess. I heard him pan this instant on Linux recently, now it's the end of Microsoft. Whatever.
mikegalos@msn.com
on Mar 8, 2009
benjwah "He's like a cranky old uncle that gets drunk at family parties and starts yelling "I shot Kennedy!". " Hmmm. Now that I think about it, I've never seen a picture of Dvorak and Lee Harvey Oswald together. Where was Dvorak on November 22, 1963? Sure, he'll say he was in his 6th grade classroom but can he prove it?
Mum
on Mar 8, 2009
I wonder why Paul's reply only concentrates on prices. As someone already said: the whole point of Dvorak's post, and what also makes it so 90's, is computers being instant-on-capable - which is actually something they've done for years.
stimshady
on Mar 8, 2009
i'm surprised you all keep responding to robertsjoe... i would have thought that (by now) ignoring would be the best option... contant replying to trolls is food for more... it's like telling a kid to stop doing something, what do you think they'll do!?!
richardfrisch
on Mar 8, 2009
The DIY is a minuscule market. Dvorak's "calculus" does not apply in the general market where people buy complete systems. They do not assemble their own desktop computers. Microsoft does not charge HP, Dell, Acer, Lenovo, ASUS the same price for the OS as they charge at retail. Microsoft Office is expensive, but it is becoming increasingly irrelevant. I find myself rarely using anything besides Outlook and I am pondering whether or not it is time to retire it. More-and-more, people spend their time on their computers in their browsers where Office is of no use. This non-Office computing experience is reinforced by smartphone use where spreadsheets, word processors and presentation tools are non used.
shark47
on Mar 9, 2009
"And let's not forget that Office is actually decent software, unlike, say, OpenOffice.org or Google Docs." Let's also not forget that you can install OOO on Windows too.
DRWAM
on Mar 9, 2009
Jeez, he never heard of my $400 Vista SP1 ACER laptop? It was preloaded with MS Works for free. He never heard of BestBuy? Here's a $299 desktop [eMachine] with much more, and has a warranty as well, for $299. Did I mention it was $299 while was slow junk was $255, and you can still DL freeware? http://www.bestbuy.com/site/olspage.jsp?skuId=9170835&type=product&id=12...
WebGuy3000
on Mar 9, 2009
Dvorak has been irrelevant for years.
gfryesc1
on Mar 9, 2009
I suppose I should point out the obvious that Paul is saying Dvorak's math is 'wrong' by using Microsoft list pricing for its software. And yet he decries MobileMe as overpriced routinely using its $99 figure from apple's online store to support his case. Yet Amazon sells it for $63.45... Paul never mentions this. So Thurrott likes to play with the numbers to support whatever argument he's making, just like Dvorak has done. Just noting the hypocrisy.
Waethorn
on Mar 9, 2009
"The real world looks nothing like the world of online tech enthusiasts and they seem to forget that." I've panned Paul on a few occasions because he just doesn't seem to know, whether from ignorance, or just ego. This is one of them: "Second, "the most basic version of Windows" does not cost $199. Windows Vista Home Basic costs $90 for the Upgrade version, or $160 for the Full version, assuming you're one of the few people on earth that doesn't qualify for an upgrade." That's not the argument Paul. You don't qualify for an upgrade version with another full version that's running on a different computer. The upgrade version is for upgrading the OS, ON THE SAME HARDWARE - not just because you might have a full version laying around being used on another computer. Otherwise, the computer isn't properly licensed. An upgrade version is not a full license by itself - you are required to have a full license for the same computer already. "Or you could simply get Windows XP for next to nothing with a lost-cost netbook." ALSO not the argument John was making. You can't take a license off a low-cost netbook and put it on a DIY system.
Waethorn
on Mar 9, 2009
"And yet he decries MobileMe as overpriced routinely using its $99 figure from apple's online store to support his case. Yet Amazon sells it for $63.45..." MobileMe is a joke at any price.
tayme
on Mar 9, 2009
Official Microsoft announcement -- John C. Dvorak did not shoot either Kennedy. You heard it here first... ;-) --tayme
Waethorn
on Mar 9, 2009
"I suppose I should point out the obvious that Paul is saying Dvorak's math is 'wrong' by using Microsoft list pricing for its software." John is still wrong about Office though. Office Home & Student 2007 is $149.95 on the Microsoft Store. That's what DIY'ers would buy, since they're just home users. Total software price: ~$350, not ~$600 like John says. If you think it's unusual to have commercial software cost more than hardware then you haven't been paying attention to the computer industry for the past, well....since it began. Of course, it's cheaper to have someone in a computer store professionally build it for you since you can get them to install OEM versions of the software* for you, set up the computer properly, and give you a single point of contact for support. *OEM versions of Office Home & Student 2007 don't include the 3 PC licensing. Instead, ask for the "Tech Bench Edition" - it does, but it has to be installed for you and costs the same as the OEM version, which is a bit cheaper than the retail copy (not as big a delta compared to the business versions of Office), and includes a CD, unlike the OEM version.
DRWAM
on Mar 9, 2009
Often, rebates can make stuff cheaper as well. My friend bought MS Office 2004 for $25 after an MS rebate. It was the student version with 3 licenses and gave him a free upgrade to ANY version of Office 2008. For $25 he got 4 to 6 licenses, depending on the upgrade version that he chose.
Waethorn
on Mar 9, 2009
"It was the student version with 3 licenses and gave him a free upgrade to ANY version of Office 2008. For $25 he got 4 to 6 licenses, depending on the upgrade version that he chose" See that's not right either. He has 3 licenses. The upgrade version doesn't count as a licensable product. It just replaces an already-present software product with new bits.
gfryesc1
on Mar 9, 2009
waethorn, can I get a response about the obvious hypocrisy? I just want the same standards on pricing applied across the board from thurrott, just not flipped around depending on the topic. That's the point.
DRWAM
on Mar 9, 2009
You're correct Wae. I wrote 'upgrade' as that is what was advertised, but they actually sent full retail versions. They actually meant a free 'upgrade' to a retail 2008 version when it becomes available. I got then too, but I bought them at the Apple store for $50 after rebate since I had Apple credit. I posted this before, but the online site had a glitch that did not allow you to choose between the media and student version, so they sent a letter with the disc instructing you to call MS customer support if you got the wrong version, then they would send you the correct version, refund the $10 shipping for the wrong version, and allow you to keep both. So I got 7 retail licenses for $50. The customer service rep was in Canada!
Waethorn
on Mar 9, 2009
"can I get a response about the obvious hypocrisy?" My response would be that MobileMe is expensive considering there are better data sync alternatives out there for free. Apple is just at it again with their price gouging on their own platform.
Waethorn
on Mar 9, 2009
"they actually sent full retail versions" That's how upgrades are sold - only in retail. (Or in the case of client versions of Windows - volume licenses are upgrades ONLY) When it involves a future-proof upgrade from Microsoft (you buy something within X # of days of the new version coming out), they *sometimes* mail out full license media instead, since you'd be buying the new version anyway if you waited. That's not true for Windows Express Upgrades though - the license is clearly spelled out as being only for the existing computer that the old version of Windows is on. They are often full versions on disc too. Standard retail upgrades are not the same as that though. My point is: check your license. Even if the media contains a full version that doesn't require the standard upgrade procedure, your license is the agreement that legally regulates your usage of the software. If the license says it's an upgrade, it's an upgrade, and it's not a full license, so you need a pre-existing full license for that system. An upgrade on an upgrade still isn't a full license either.
DRWAM
on Mar 9, 2009
Thanks Wae, I will check when I'm done lifting.
lotsamystuff
on Mar 9, 2009
"waethorn": "MobileMe is expensive considering there are better data sync alternatives out there for free." "waethorn": "MobileMe is a joke at any price." MobileMe is more than a "data sync alternative", Wae. For instance, I ask you to compare MobileMe to DilbertFiles.com ("Send files beyond the limitations of regular e-mail and without the hassle of complicated software"). MobileMe offers this same service for less money. At ten bucks a month for the "privilege" of sending e-mail attachments up to 2GB, "DilbertFiles" is way overpriced compared to MobileMe. If you're consistent, you'll start ranting about how Scott Adams is clearly ripping off his customers. Then again, consistency isn't something I expect from you, "Waethorn". @benjawah: "Dvorak loves controversy. He's like a cranky old uncle that gets drunk at family parties and starts yelling "I shot Kennedy!". He just wants some attention." True, that. The holy trinity of link-baiting-attention-grabbing tech pundits includes Dvorak, Thurrott and Enderle. They're like Hannity, Limbaugh and Savage. Once in a while they hit something spot-on, but for the most part, they're worth begins and ends as entertainers.
lotsamystuff
on Mar 9, 2009
"server admins and hippies" There's a difference?
WebGuy3000
on Mar 9, 2009
@gfryesc1 Check the URL. This is a Windows support and advocacy site. It makes no logical sense to expect "unbiased" Apple coverage here, any more than you'd expect unbiased Windows coverage at MacDailyNews. Paul Thurrott is who he is, and this blog is purely reflective of his views, and yes, biases. And that's okay. If you want to read "fair" coverage of the Yankees you don't go to a Red Sox fan site.
shark47
on Mar 9, 2009
"True, that. The holy trinity of link-baiting-attention-grabbing tech pundits includes Dvorak, Thurrott and Enderle. They're like Hannity, Limbaugh and Savage. " I agree. In a world of objective journalism from the likes of RoughlyDrafted.com and DaringFireball.net, these people are an embarrassment. Oh, and not to forget the Pogues and Mossbergs. Come to think of it, I'm not even being sarcastic there. Objectivity is measured by how biased towards Apple you are these days.
tayme
on Mar 9, 2009
"They're like Hannity, Limbaugh and Savage" I'd agree with that, but would add to that list the likes of Al Franken and Chris "thrill up my leg" Matthews. I am a conservative, but I feel that Hannity and Limbaugh are over the top; and Michael Savage...he should be considered an embarassment to all Americans. Glenn Beck is my favorite conservative commentator. --tayme
Waethorn
on Mar 9, 2009
"If you're consistent, you'll start ranting about how Scott Adams is clearly ripping off his customers." LOL! Apple is just better at it since they have accumulated a base of droolers and persistant bed-wetters - half of whom are probably swinging from your family tree alone. Scott Adams doesn't even run the site, and it's not even the same thing as MobileMe, sorry. Leave it to you, losta, for comparing Apple's to oranges and then b!tching about it to back up a poorly executed argument. If you want a real comparison, there's Apple MobileMe, and then there's Microsoft Live Mesh or MyPhone. Both of Microsoft's offerings are free and offer better functionality.
meason
on Mar 9, 2009
Did Dvorak's page hit and or readership fall or something and he needed more visits?
DRWAM
on Mar 9, 2009
gfryesc1, I was about to refute your comment, but I read that you definitely can use the Amazon purchase to renew a MobileMe subscription. If that were not true, then the $63 would have been a one time deal, which averages closer to Apples price over several years. But you can buy it from Amazon every year at 63 bucks and just keep renewing. Personally, I use Exchange for my iPhone and Windows Live or Mesh to keep files accessible at work [as well as files on a USB flash drive]
gfryesc1
on Mar 9, 2009
@WebGuy3000. oh, I fully understand the bias AND the hypocrisy. I just want it acknowledged when it's done. Thurrott never owns up to his own, probably because his credibility is at stake. At least Dvorak seems to equally hate everything so at least there's no impropriety. That's what makes waethorn so hilarious. He took the example of contrasting paul's use of pricing to defend his arguments and construed it as a hit against the MobileMe offering. The question isn't if it or MS's products are worth the money [obviously they are to the people who buy them] ,the question is why doesn't Thurrott play it down the middle when he talks dollars. By searching the internet for heavily discounted Microsoft pricing to promote the cost-to-value ratio while going in the exact opposite direction for non MS products in order to make them look worse than they are is quite unfair. Is it really too much to ask, to get the same metrics applied across the board?
DRWAM
on Mar 9, 2009
Holy crap Wae, Microsoft sent me the full retail versions [licenses] for Office 2008, both the Student and Media version!!!! Shipped them free too!
lotsamystuff
on Mar 9, 2009
"Scott Adams doesn't even run the site, and it's not even the same thing as MobileMe, sorry." Adams has lent his credibility and his character to the service, even promoting it in the Dilbert strip. But you're right in that "Dilbert Files" offers a very small subset of the functionality offered by MobileMe, making it even less compelling for the price point. Thanks for agreeing with me, "Waethorn".
Avro
on Mar 9, 2009
@ scarper Don't get too excited about those return stories. Outside of the US Linux netbooks are getting a pretty good reception. The Guardian reports that 40% of world netbook production is going to Linux (the rest to XP). 40% is a pretty impressive figure for Linux. Americans may have problems coming to terms with Linux but it is not a big problem for most of the rest of the world and that is where the major markets for netbooks are.

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