microsoft admits vista failure - the inquirer

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Week to date Chips Hardware Software Communications

Sat Apr 21 2007, 13:20

Microsoft admits Vista failure

Actions speak louder than PR

By Charlie Demerjian in Beijing

WITH TWO OVERLAPPING events, Microsoft admitted what we have been saying

all along, Vista, aka Windows Me Two (Me II), is a joke that no one wants.

It did two unprecedented things this week that frankly stunned us.

Dell announced that it would be offering XP again on home PCs. The second that

Vista came out, Microsoft makes it veryhard for you to sell anything other than Me

II. It can't do this on the business side because it would be laughed out the door,

but for the walking sheep class, well, you take what you are shovelled.

This is classic abusive monopoly behaviour, Microsoft wrote the modern book on it.

It pulled all the major OEMs in by twisting their arms with the usual methods, andthey again all fell into line. Never before has anyone backpedalled on this, to do so

would earn you the wrath of Microsoft.

But Dell just did. This means that Me II sales are at least as bad as we think, the

software and driver situation is just as miserable, and Dell had no choice but to

buck the trend. If anyone thinks this is an act of atonement for foisting such a

steaming pile on us, think again, it doesn't care about the consumer.

What happened is, the OEMs revolted in the background and forced Microsoft's

hand. This is a big neon sign above Me II saying 'FAILURE'. Blink blink blink. OK, Me

II won't fail, Microsoft has OEMs whipped and threatened into a corner, it will sell,

but you can almost hear the defectors marching toward Linux. This is a watershed.

The other equally monumental Me II failure? Gates in China launching a $3 version

of bundled XP. Why is this not altruism? Well, it goes back to piracy and how it

helped enforce the MS monopoly. If you can easily pirate Windows, Linux has no

price advantage, they both cost zero.

With Me II, Microsoft made it very hard to pirate. It is do-able, you can use theBIOS hack and probably a host of others, but the point is, it raised the bar enough

so lots of people have to buy it. Want to bet that in a country with $100 average

monthly salary, people aren't going to shell out $299 for Me II Broken Edition?

What did MS do? It dropped the price about 100x or so. I can't say this is

unprecedented, when it made Office 2003 hard to pirate it had to backpedal with

the student edition for about $150. This time though, things are much more

desperate.

If you fit Microsoft's somewhat convoluted definition of poor, it still wants to lock

you in, you might get rich enough to afford the full-priced stuff someday. It is at a

dangerous crossroads, if its software bumps up the price of a computer by 100 per

cent, people might look to alternatives.

That means no Me II DRM infection lock in, no mass migration to the newer Office

obfuscated and patented file formats, and worse yet, people might utter the W

word. Yes, you guessed it, 'why'. People might ask why it is sticking with the MS

lock in, and at that point, it is in deep trouble.

So, it did the unthinkable, and dropped the price. I won't bother to hunt down all

the exec quotes saying how people can't afford clean water would be overjoyed to

sell kidneys to upgrade to the new version of Office, but they are out there. This

was a sacred cow, and it is now hamburger backed up against the wall.

These two actions by Microsoft are proof ofwhat I suggested three years ago.

Microsoft has lost its ability to twist arms, and now it is going to die. It can't

compete on level ground, so is left with backpedalling and discounts of almost 100

times.

What we are seeing is an unprecedented shift of power. It is also an unprecedented

admission of failure. And the funniest part about the moves made? They are the

Software

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