The "best" product doesnt always win since, given advantages of predatory pricing and clever marketing strategy, "good enough" is almost always good enough to carry the day.
Im talking, of course, about Microsoft, its software and its business practices, and if youre a fan of BeOS, OS/2 or another innovative software product that ended up mangled on the side of The Road Ahead, youve seen these sentiments expressed before and youve probably expressed them yourself.
This time, however, its Microsoft thats facing a pricing and distribution model that it cant seem to match, and its Microsoft thats beginning to have trouble explaining just how it adds enough value to keep users from spending their tech dollars elsewhere.
The threat that open-source software poses for Microsoft is real, and, as indicated by a recent SEC filing in which the Redmond software seller warned that swelling interest in open source may force the firm to lower prices, Microsoft knows it.
Whats less clear is whether Microsoft really understands what makes open source so dangerous to it. Addressing a group of Microsofts "Most Valuable Professionals" recently, Bill Gates acknowledged briefly the challenge of Linux and open source, but seemed content that fear of Linux incompatibilities will keep customers tied to a Microsoft monoculture.
Thats not going to happen. Open source enjoys too many advantages.
Its tough to compete with free
Microsoft Office is rather expensive, and its been years now since its basic functionality has changed. Still, the wide popularity of Office has made its proprietary document formats the de facto standard, which is why Microsoft makes so much money on Office.
Along comes OpenOffice.org, which, while arguably less polished than MS Office, can serve most users office productivity needs excellently. Also, its free—free of cost, freely downloadable and free for any company or individual to build upon.
Microsoft can make some of its products free of charge and freely downloadable, as it did while powering Internet Explorer to victory over Netscape Navigator during Browser War I. I employed the Roman numeral here because, thanks to open source, weve entered into a new browser battle, which, to the benefit of users, features a variety of players.
I suggested above that Microsofts open-source competition needs only to be good enough, but Mozilla, the open-source Web browser that rose from the ashes of Netscapes Navigator, is already superior to Microsofts Internet Explorer in many ways. Pop-up blocking and tabbed browsing are big parts of what make Mozilla my browser of choice when Im running Windows.
Moving forward, however, the biggest challenge for Microsoft will be that third type of freedom—the freedom that companies enjoy to repackage, improve and otherwise build upon it. Apples leveraging open-source components like Samba to provide OS X with Windows-compatible file sharing, and the KHTML rendering engine powers Apples Safari Web browser.
Novells starting to catch on as well, building support for open-source components like Apache and PHP into Netware.
This isnt to say that Microsoft must eventually scuttle off into obscurity, however. Owning software may cease to be a growth industry, but the growth potential for creating software is limitless.
As a former Microsoftie wrote recently on his weblog about the challenges posed by open source advised, "Useful software ... will command high margins for a long time to come. Stop looking over your shoulder and invent something!"
Senior Analyst Jason Brooks can be reached at email@example.com.