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Why Microsoft Shouldn't Worry About Cannibalizing Their Userbases 180

New submitter coyote_oww writes "A ComputerWorld analysis article suggests that Microsoft should stop worrying about one product cutting into another product's sales, and concentrate on putting their best foot foward regardless of the impact on product lines. The big impact would be the price of Windows: '... Microsoft must, at least in the main, sell devices based on lower prices. And the only significant component of a Windows-powered device that can be cut further — hardware margins are at or very near the bone, and have been for years — is the Windows license.' It's still possible they could sell Windows versions at different rates for different devices, but that could get hard to justify to consumers over the long haul."
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Why Microsoft Shouldn't Worry About Cannibalizing Their Userbases

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  • by Anonymous Coward
    Release windows for free, and we will finally see how it competes.
    • by c0lo ( 1497653 )

      Release windows for free, and we will finally see how it competes.

      TFT (the fine title) suggests that they can still charge for windows as long as they keep eating the windows users (or only their bases?) without worry - and this "without worry" is somehow the miraculous key to the solution.

      • by niftymitch ( 1625721 ) on Wednesday July 17, 2013 @07:40PM (#44313245)

        Release windows for free, and we will finally see how it competes.

        TFT (the fine title) suggests that they can still charge for windows as long as they keep eating the windows users (or only their bases?) without worry - and this "without worry" is somehow the miraculous key to the solution.

        Not for free but they need to understand that as you suck harder and harder on the udder of a cash cow the less friendly that cow will be to you and will dry up or kick you in the head.

        At this point it is difficult to believe that MS has not realized an honest profit from the honest investments it has made. They have done a lot of service but there is a point when the business model must change.

        Worthy computers can be had for yuppiy pocket change and free software has gotten well beyond the experimental stages. Especially in server land.

        The home computer model has changed, and there will be less and less need for WindowZ. My smart TV has more compute power than my early on desktops. Which were well beyond my 6502, MC14500 and 8080 processor based projects. It is a new day, MS and many others need to take stock or see their financial models fall apart.

        Servers and server farms will grow.... but be in the hands of a small number of companies. In the price range of a UPS delivery van small companies will have local computer resources than can be installed and serviced by folk at an equivalent level of a USP van driver. Yes the Brown UPS vans are a marvel of technology but they make money delivering packages shipped for sub $10... that is astounding.

        Chromebooks and the new XO tablet are showing that the old models are fragile and new ideas are welcome.

        Raspberry-Pi and project boards like the pandaboard and Beaglebone Black are showing that sufficiently interesting hardware need not cost a lot of $$. Invest $100 in these school and development boards and revisit your education.

        The future is at hand -- yet again.

        • I think it's important to point out that you're missing Microsoft's hugest market, the business market. Tablets can take over at home, and Microsoft never really got much traction in the server space, but the business market is where they've dominated. And you're not going to use a tablet there.
          • I think it's important to point out that you're missing Microsoft's hugest market, the business market. Tablets can take over at home, and Microsoft never really got much traction in the server space, but the business market is where they've dominated. And you're not going to use a tablet there.

            Decent point.

            I did not miss it. I only went part way down that rat hole with my udderly bad pun.

            Businesses that pay attention will resort to pure text in email when they discover how much rich content is costing them.

            Way back in /. there was a discussion on how much BS rich text loaded up a message just to say "I agree". When the message itself jumps from 9 characters to +1K the hit on storage and bandwidth is real.

            Too many managers are simply ignorant but challenge them to work via a 300 baud mode

  • by ArcadeMan ( 2766669 ) on Wednesday July 17, 2013 @04:51PM (#44311781)

    You know what I want? A lower-cost Windows targeted at gamers. I don't need drivers for scanners, printers, fax and other unnecessary crap if all I do is play games on it.

    A Windows with less processes running would also mean a faster computer able to dedicate more resources to the games instead of crap I don't need.

    • by Your.Master ( 1088569 ) on Wednesday July 17, 2013 @04:54PM (#44311825)

      That's basically what an xbox is.

      I guess the implication is that you want something that compromises between Windows PCs and XBox on some points. Which raises the question of what is the right compromise position?

      • That's basically what an xbox is.

        Yeah it's an XBox which can also run Linux, EVE Online, Neverwinter, Firefall, World of Tanks, WoW, Path of Exile and so on, and so forth.

        You seem to confuse a stripped down Windows (which is essentially an OS) with the hardware behind it.

        Explained differently:
        Let's assume I own a powerful PC. Has a Haswell platform with a potent GPU and lots of RAM. My main OS is Linux. But I also game a lot, mostly Windows games. Wouldn't it be awesome to be able to buy a Windows "gaming edition" for 15 bucks and load it

        • by AmiMoJo ( 196126 ) *

          Anything called "gamer edition" tends to be more expensive, not less. Which OEM was charging people to remove bloatware pre-installed on their systems? Might have been a Dell option.

    • by tapspace ( 2368622 ) on Wednesday July 17, 2013 @04:55PM (#44311837)

      What would happen is the "gamer" version would be one of the (fragmented) premium versions, so you'd end up paying more for less. Plus, who wants a computer that you can't connect to a printer in a pinch if need be, just because you don't have the right windoze license?

      • If Windows Gamer Edition only cost 20$ I guess people wouldn't complain much about things like printers.

      • Re: (Score:3, Funny)

        by intermodal ( 534361 )

        The cool thing about this is inevitably somebody would hack CUPS into Windows...

      • by ADRA ( 37398 )

        Yes, if you think about cost distribution, I imagine the Windows team spends significantly more for adding new Gaming features than they do in adding more business productivity features, but I bet the productivity features end up costing more in the end. Don't wish too hard for this, or gaming platforms WILL cost twice as much.

    • Re: (Score:2, Troll)

      by rahvin112 ( 446269 )

      What I want is a Linux that games as well as Windows. That just might come to be because of Valve. I could finally get rid of Windows if I can game on Linux reliably.

    • by realmolo ( 574068 ) on Wednesday July 17, 2013 @05:31PM (#44312163)

      You don't know what you are talking about.

      When a game runs on Windows, it ALREADY gets all the resources it wants.

      A stripped-down version fo Windows wouldn't make your games run faster. Modern games are mostly video-card limited. And since there is no standard hardware platform for a PC, programmers can only do so much optimization before they break compatibility.

    • Currently, when I run games, they typically use less than 20% of my CPU, and I bet if I disabled all my unused services that I don't need to run the current game, I could get that down to, oh... 19.95% CPU usage, so I could have one more core sitting idle for .05% longer.

    • by hairyfeet ( 841228 ) <> on Wednesday July 17, 2013 @08:15PM (#44313487) Journal

      The sad part? The pirates have had it for a fricking decade now and it kicks MAJOR ass, in fact it makes Linux look like a beached whale in August by comparison.

      I'm of course talking about the "Tiny" Windows builds that have been going on since Tiny2K, came out around 2001. The TinyXP used just 48Mb of memory on the desktop, Tiny 2K3 Workstation just 63Mb, and Tiny 7 uses as little as 256Mb for a full desktop but of course with superfetch any extra RAM will be used to speed up the system. The one exception would be Tiny Vista which took 512Mb for the desktop but hey, they're gamers not miracle workers.

      So anybody that wants to give them a try I'm sure can find a copy easily enough, but why MSFT don't hire these guys I'll never know as frankly their builds kick the shit out of WinFLP and Embedded as far as footprint and CPU usage goes while letting you run all your Windows software, its truly crazy how little those builds use while giving you everything you need to make a kick ass gaming PC OS that uses less than the consoles do to run the OS.

    • by jbolden ( 176878 )

      They don't want to support that. Some gamers want to be able to do some of those things. like print. Everyone doesn't need 95% of what Windows does, they just differ on the 5% they want. As far as less process running, that's what service manager is for.

    • Go to "Services" and disable the print spooler : you've had your 0.1 second gain on boot and didn't need a separate Windows version.
      I find your suggestion to be a bit horrific, Windows is already crippled too much. Want to connect a thin client to your incredibly powerful desktop PC? (even a low end one is more than capable enough). That will be $1000 in licensing costs.

  • Suspicious article (Score:5, Informative)

    by schneidafunk ( 795759 ) on Wednesday July 17, 2013 @04:53PM (#44311813)
    The article is on ComputerWorld, which is owned by IDG. They are quoting a research analyst from IDC, which is also owned by IDG. What's the motivation for writing this article?
  • Yes. (Score:5, Funny)

    by ackthpt ( 218170 ) on Wednesday July 17, 2013 @04:54PM (#44311817) Homepage Journal

    Steve should consider throwing his best chair forward.

  • synergy (Score:3, Insightful)

    by Anonymous Coward on Wednesday July 17, 2013 @04:55PM (#44311839)

    from the article: "As part of the reorganization, Microsoft will consolidate all of its client OSes, including Windows 8, Windows RT, Windows Phone 8, Windows Embedded and Xbox, into a single engineering group [...] The Windows desktop client and mobile have a lot of common functionality, and a combined group could have a lot of synergy".
    I fully agree, that's a good strategy (and it was about time)... oh, and one o the few times the word "synergy" makes sense!

  • by whoever57 ( 658626 ) on Wednesday July 17, 2013 @05:05PM (#44311921) Journal
    The motto of the CEO at a company I worked for many years ago.
    • by macromorgan ( 2020426 ) on Wednesday July 17, 2013 @05:11PM (#44311971)
      The important thing to remember is in a competitive economy, someone is going to disrupt your business. It might as well be you. Fighting against it only postpones the inevitable.
      • by ADRA ( 37398 )

        You are soo right. That coke thing is hanging by a thread. I bet their dev teams are about to jump ship any day to design the new new new new new coke.

      • What about a version of Windows called "Windows: What We Didn't Change"? During the install or first boot, after a brief mention of how many tweaks & minor improvements were made, it would bring up a video showing all of the interface changes they rejected as being worse than useless. And make the video unskippable. People would be writing donation checks to thank Microsoft for their kindness. Programmers would name their first born "Windows: What We Didn't Change". And slashdotters? Slashdotters
      • by jbolden ( 176878 )

        Yes but postponing the inevitable can be quite profitable.

        Let's say a company has a $1b a year in profits from market X. If they get disrupted there will $100m in profits available from X2. Getting 2 more years out of X is probably worth more than getting 100% of X2. It is better postpone then to win by being early.

  • by msobkow ( 48369 ) on Wednesday July 17, 2013 @05:14PM (#44311999) Homepage Journal

    Windows is a product. When you buy it pre-installed on a machine, prices are already cut to the bone with volume discounts to the manufacturer. Someone has to pay for the security updates, the patches, and so on when it's run by a monolithic corporation instead of an open source community.

    I've no beef with the price I paid for my Win7 laptop -- and I know that maybe $50-100 of that purchase price was for the Windows license. Perfectly reasonable.

    I use Ubuntu LTS on my "main" machine, but that's because I like Linux, not because Windows is "too expensive."

    Furthermore, precisely what product line would be cannibalized by cutting Windows prices further? WinPhone (which no one wants and is a different code base)? WinRT (which no one wants because it's a piece of incompatible crap)? XBox (which doesn't even have an installable OS)?

    This article is essentially flamebait to spark discussion, and nothing more. There is nothing pragmatic or realistic about it.

    • by jbengt ( 874751 )

      Windows is a product.

      Are you sure? Last time I checked, I can only license it, not buy it like I buy products. Also, if it is a product, how come, from the best I can tell by reading the license, product liability doesn't cover it?

    • by jbengt ( 874751 )

      . . . what product line would be cannibalized by cutting Windows prices . . .

      I believe they meant that Windows would be "cannibalized" by MS making and selling devices.

    • The thing is, when it comes to inexpensive devices, say under the $300 mark, that $50-100 fee is a very significant expense, as opposed to "free" Android or in-house iOS.

  • Easy for us to say (Score:5, Insightful)

    by paiute ( 550198 ) on Wednesday July 17, 2013 @05:24PM (#44312087)
    Cannibalize your own product line before the competition does is an obvious necessity, yet it is the hardest thing for managers to actually do.
  • by Anonymous Coward on Wednesday July 17, 2013 @05:25PM (#44312095)

    the introduction of Windows Genuine Advantage.

    Before WGA was introduced, most people thought windows came free when they purchased a new computer. The rather high price for the OS was completely obfuscated. The cost was hidden because there was no impediment to installing a copy onto any machine so they thought it was free. All you needed was a copy. Well, MS decided they wanted to get paid for all of those installs. So, they introduced WGA. So, what happened... Well, people still bought new machines... But, when they went to use the new OS version on their old machines it didn't work because it could only be validated on one machine... Now, people still wanted the new OS so they went to see how much it cost and they were horrified by how much a copy of windows cost.

    This left people with four choices:
    1. Don't upgrade... (Look at how long it has taken to get people to stop using Win XP.)
    2. Pay the high price. (Probably not)
    3. Bootleg a copy. (Bit-torrent has lots of copies)
    4. Look someplace else. (Have you noticed how well Apple has been doing lately)

    Notice, in all but one unlikely scenario, MS doesn't make anymore money than they did before the introduction of WGA. But what they have done is enlighten people to the true cost of MS windows. Additionally, when someone doesn't upgrade or goes with an alternative to Windows, then third party applications suffer because the installed base of the current windows is diminished...

    MS quite simply destroyed their own monopoly by trying to get people to pay for something they would never pay for.

    Every time MS releases a new OS I keep thinking they would figure this out and drop WGA but they keep on striving for a smaller and smaller market share.

    Simply put, having a solid monopoly is MUCH more valuable than the few sales they have made as a result of WGA...
    Oh and lets not forget, WGA just pisses people off so as a paying customer... You get punished... Great business model if you want to shrink your market share.

    • (Look at how long it has taken to get people to stop using Win XP.)

      part of that was software other part low end hardware that was to low end for vista / 7

    • by Dr. Evil ( 3501 ) on Wednesday July 17, 2013 @07:27PM (#44313155)

      WGA stopped the wholesale OEM piracy from the organized crime shops. They were even producing holograms, shiny boxes, "certificates of authenticity" etc. Palates of this counterfeit software would be shipped through quasi-legit channels into serious software retailers for realistic prices.

      Casual piracy of Windows doesn't affect MS. Your PC probably shipped with the OS anyway. The high volume of XP licenses out there are businesses who were hoping for something better than Win7 before XP began to disappear. Few people are running machines old enough to have shipped with original XP licenses. Who wants a 256MB of RAM, 20GB HDD machine from 2002 anyway?

      MS is dying because Ballmer is an f-ing idiot.

  • by 140Mandak262Jamuna ( 970587 ) on Wednesday July 17, 2013 @05:56PM (#44312411) Journal
    The article talks as though Microsoft is a monolithic entity that will like a single intent. Like any large organization there it is a conglomeration of parts and they mostly act in their self interest than the interest of the whole organization. Most of the time there is a large overlap between the self interest and interest of the larger body. But Microsoft has some perverse incentives like giving part of the revenue stream from a product line as compensation to the top managers of that line. Sounds great in theory as a motivation factor but it can backfire too. These people in top management well versed in the palace intrigues have to let some other part cannibalize their revenue stream for the interest of the organization as a whole. The track record is they won't. Only when the "partner level" managers' bonuses (or is it bonii?) are tied to the over all performance of the company, not the individual parts under their control, they will let internal cannibalization. But letting their bonii depend on large parts of the company they have no control over is a tough sell too. It is a problem that developed over a long time. It won't be solved in short time.
    • Good stuff, man; interesting read. Thanks for posting.

      And someone mod this guy up for coining the term "bonii"!
  • "That shift is the corporate reorganization unveiled last week to support a radical strategy of retreating from decades of selling packaged software and advancing on sustainable services and potentially-lucrative devices".

    Nice spin on what is essentially Microsoft cutting into their own reseller channel ..
  • by Tough Love ( 215404 ) on Wednesday July 17, 2013 @08:36PM (#44313629)

    Don't interfere with your enemy while they are busy making a mistake. Got it? Whose side are you on, anyway.

  • It has always made me angry that manufacturers have had to cut prices so much that for basic consumer machines 100% of their profits come from the trial/bloat ware that they stuff their machines with. Yet Microsoft still keeps charging a ~$100 tax on every machine. This is $100 on a machine selling for maybe $300-$400.

    What I wish would happen is some daring company like Staples would start selling some machines with Linux on them and have their sales people show that you can browse, watch Youtube, and ed
    • by cpghost ( 719344 )

      Yet Microsoft still keeps charging a ~$100 tax on every machine.

      In many countries in the world, you can get a refund by non accepting the Windows EULA, and installing something else on that machine. People are just too lazy to jump through the administrative hoops to get that refund. OTOH, some stores in Europe sell PCs without operating system, and offer strictly optional cheap OEM licenses.

  • by knorthern knight ( 513660 ) on Wednesday July 17, 2013 @10:37PM (#44314357)

    Showing my age. The original IBM PC was at first too weak to compete with IBM's higher-end offerings. But the AT with 6mhz chip was getting close. People started overclocking their cpus. IBM responded by tweaking the BIOS to not boot if the cpu was faster than 6 mhz (assholes).

    This affected a lot of people who ran into problems with the original 20 mb drive, and took their machine in to be serviced. IBM "upgraded" the BIOS when replacing the bad hard drives (assholes).

    The modders responded with a "turbo-switch". It was a a manual toggle. The cpu ran at 6 mhz when booting, to pass the boot-time checking. Then you could flip it to 10 mhz or whatever. IBM eventually came out with faster ATs, but the clone makers had eaten up a lot of the PC market by then.

  • This is so obvious, and yet it is the downfall of so many successful companies. IBM lost control of the computer hardware business because it was worried about mid range cannibalizing mainframes, then PCs cannibalizing mid-range.

    Hey CEOs: If you don't let your own new products cannibalize your current products, your competitors will do it for you. And then you'll be left with no sales for the old product and no new product to take its place.

  • I hate it when articles give Microsoft advice because they might just listen and I would prefer to see Microsoft go under.

All laws are simulations of reality. -- John C. Lilly