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Just A Thought
by Vern Seward

Is Microsoft Losing Its Grip?
January 23rd, 2004

If you own a small business then you know personally how tight your profits margins can get, and it never helps when the infrastructure you depend on to do business keeps costing you more and more each year. It's a classic cycle where you must stay competitive and keep your prices low, which leaves you less money to play with, while your own costs escalate.

Raising your costs alienate customers, even if you can show a modest return on investment. If you are depending on something less tangible or quantifiable, like the efficiency of your customer's workers, for instance, then it become even harder to justify your price increases. This is not news and any decent business person understands it; with the likely exception of Microsoft.

For years, being the only game in town has fattened Big Redmond's coffers appreciably. Where does the money come from? From Microsoft customers, of course, who pay often exorbitant licensing fees year after year with little return on their investment to show for it other than the notion that, in order to stay in the game, they have to wear the Big Redmond uniform.

Large companies can often hide the costs in large operating budgets, but smaller concerns cringe each year when the Microsoft licensing bill comes due, and there has been little else a business could do. Lately, however, more and more small businesses are deciding not to pay the bill, letting what they have ride. Often that means that they have no support from Microsoft if something goes wrong; worse, when the business does decide to upgrade, the cost to upgrade can be even higher then the yearly re-licensing fees.

Some businesses, at least, are becoming less willing to open their wallets to the Gates Gang. News reports of businesses complaining about Microsoft's licensing schemes have dotted the news for the last few years, and more than a few governments have actively sought alternatives to Microsoft solutions.

According to an article at C|Net, a recent survey shows that more small to medium sized businesses are also actively looking for alternatives to the Big Redmond Licensing treadmill. Here's a choice bit of the article, Study: Small businesses wary of Microsoft:

A report Boston-based The Yankee Group released Wednesday shows that some 43 percent of small and midsize businesses are "concerned" about becoming "overly reliant" on Microsoft's products and services. The study focused on information technology needs at 600 companies with fewer than 500 employees.

Microsoft did not immediately return calls seeking comment on the report.

Seventy-two percent of the surveyed companies said it is actively seeking to lessen the dominance of Microsoft's products in its operations by exploring alternative vendors.

"The reality is that (Microsoft) can only hit these...companies so many times with what are seen as exorbitant licensing fees before they start to look elsewhere," said Michael Lauricella, an analyst at Yankee Group. Small and midsize "companies are somewhat more willing to gamble than their larger counterparts, and (businesses) very well could head in a different direction, if they see a possibility to do so."

Stop by C|Net for the full article.

What's interesting here is that the very companies that one might think would not gamble on an infrastructure change are the very ones that are chancing it. It's only natural; by at least trying an alternative to Microsoft's offerings, a company can kill several birds with one stone. It loses much of its dependence on Microsoft and the high fees Bid Redmond charges, the company may experience a more stable, virus free environment, and the company gains greater control over its infrastructure and associated costs. While most of the reasons to seek alternatives are as intangible as the claim of increased worker efficiency, what is quite tangible is the increasing cost of doing business with Big Redmond.

Much of this seems lost on Microsoft, however. The Redmond Giant has made adjustments to its licensing schemes, but small businesses may see the changes as being far too little, far too late. This is especially true with the alternatives that becoming more interesting and usable by these small to medium concerns.

Linux and Apple's OS X Server offer choice alternatives to most, if not all of the functions offered by Windows Servers, and at a fraction of the costs. And, while Linux desktop solutions are far, far from perfect, some businesses can use what is currently available without reinvesting in hardware. When hardware investment is an option, Apple desktops offer something no other UNIX or Linux can, seamless operability with Microsoft's Office products. So, if you business depends on Word and PowerPoint, but you long to get from under Windows, you can on a Mac.

I believe this isn't a statistical hiccup, but more of a trend that will only become more pronounced in the next few years. As the economy struggles to get a decent foothold, business will have to find better and more cost effective ways to manage and maintain their infrastructure. More often, that means less Microsoft.

Should Microsoft worry?

Not yet. Windows and Office are still the most common denominator for business, and that's OK, for now' but all it will take is a killer business app that runs on Linux or OS X to loosen that Big Red stranglehold on the desktop, then Microsoft needs to worry.

is a writer who currently lives in Orlando, FL. He's been a Mac fan since Atari Computers folded, but has worked with computers of nearly every type for 20 years.

You can send your comments directly to me, or you can also post your comments below.

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