Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: johnd who wrote (29158)	9/5/1999 11:14:00 AM
From: Just_Observing	Read Replies (2) \| Respond to of 74651

I cannot but conclude that StarOffice is a major threat to MSFT despite all the comments pointing out that MS Office killed SmartSuite and WP Office to garner 100 million users and 90+% of the Office suite market. Let's take a look at the facts from a worst case scenario perspective. MSFT gets 40% of revenues from Office but what fraction of profits? I would guess that the profit fraction from MS office is more than 40% and, perhaps, as high as 50%. Thus, possibly, 50% of the $500 billion market cap of MSFT is supported by a product which has now become free. As many have pointed out earlier, MS Office steamrolled IBM's Smart Suite and Corel's WordPerfect Office in the past. But there are at least 6 differences between MS Office versus SmartSuite and WP Office in the past and the new challenges of Sun's StarOffice 1. MS Office is no longer able to change file formats to render them incompatible with the competition. The ability to keep the competition incompatible is an important driver in diminishing their market share. Now, the installed base is too large to change file formats. Thus, MS Office is much more of a sitting duck. So much so that a company such as Star can develop a clone with just 135 people (costing $15 to $25 million a year). What will happen when Sun releases the source code allowing virtually anyone to add value to StarOffice? 2. Lotus SmartSuite and WP Office were never quite free. You had to pay some fraction of the price of MS Office. Whenever, a product is completely free, you will attract significant number of users. The users will be initially among those who are the most price sensitive. These will include millions of users in developing countries, students, small businesses, and people needing Office for their second or third computers or their portable computers. 3. StarOffice works on a broader range of platforms including Linux and Solaris. Thus, it will be much easier for the users of StarOffice to reach critical mass. If the number of users does not reach critical mass, its penetration rate will be much slower. Besides, predominantly Solaris and Linux users when required to use the Windows platform will naturally use StarOffice versus MS Office. 4. The net-enable version of StarOffice will allow ISPs such as AOL to provide free Office software to their 18 million users. Of course, the speed of using the applications will be abysmally slow. However, users who need to use MS Office only occasionally will no longer need to buy it. And, of course, AOL will hype the fact that it is saving users $100 to $200 per year with the its online applications. And millions of CD loaded with StarOffice will be arriving in mailboxes in the near future. People will load this software in the their second and third computers that they may have at home. This was never the case with SmartSuite or WP Office. 5. Computers and computer devices are getting cheaper all the time. It is extremely difficult to hold pricing constant for applications when the hardware prices are falling rapidly. So charging $200 for a MS Office upgrade is increasingly difficult when the computer is just $500. Or charging for web-based applications when the device used for accessing the application is only $100 to $200. So holding the price line on MS Office is getting to be extremely challenging. But if MSFT does not hold its prices to some degree, it cannot get the 20 to 30% annual revenue growth expected of the company. 6. For a variety of reasons, MSFT's image has been getting worse. Perhaps, it is the stupendous success of this company (the most valuable company in the world by far) or it is Ralph Nader pointing out that while software prices are falling 12% a year for the last several years, MSFT product prices have stayed stable. New surveys show extremely high dissatisfaction with MSFT. If it is true that 40% of revenues are coming from MSFT Office, then MSFT is going to collect at least $8 billion from Office revenues in the next year (revenue for the next 12 months should be considerably more than $20 billion). Once companies and individuals realize the sheer amount of money that they are doling out for MS Office, I think that there will be strong sentiment against MS Office. This strong anti-MSFT sentiment was not present in the earlier choices between MS Office and SmartSuite. I have been a long term MSFT bull for years. But I don't see how MSFT can continue to charge premium prices when it is losing its ability to set standards, public sentiment is turning negative, competition to Windows OS is heating up, its cash cows are under attack, and Internet-based applications threaten to rewrite the rules of the game. MSFT may have the best people on the planet working for them, but the will of the majority cannot be denied. MSFT prospered when it reduced the costs of computing and empowered individual users. Now, MSFT is on the other side of reducing costs and liberating individual users. There are even allegations that MSFT has been enabling the NSA to spy on individuals. I cannot but think that the interests of MSFT and those of hundreds of millions of individual users are diametrically opposed now. And it is only a matter of time before MSFT's stock price will reflect this new reality.

To: johnd who wrote (29158)	9/5/1999 5:24:00 PM
From: Teflon	Respond to of 74651

jd, sorry about that, I was just "toying" with you :) You are a respected member of this forum in my eyes. And I know in your heart you are "long". <g> Teflon

To: johnd who wrote (29158)	9/5/1999 8:47:00 PM
From: blankmind	Read Replies (1) \| Respond to of 74651

Don't start me with the DOJ/Clintonista scandal against MSFT. - The Clintonistas & DOJ practically slaughtered 81 people; including women & children at a Texas church. Then lied about it. Covered it up. - Today on Fox News, the FBI guy in charge said they had to do it because they were guilty of federal gun laws. - My question is, is bringing down & harassing America's #1 company justified? I hope the people on these boards & the American people remember this trial next November.