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

To: dybdahl who wrote (66527)	3/30/2002 3:42:31 PM
From: Rusty Johnson	Read Replies (1) \| Respond to of 74651

Eric Raymond: Linux will rule the desktop zdnet.com.com Q: Red Hat's Bob Young argues that Linux will never take over the desktop, but that it will make the desktop largely irrelevant by controlling the Internet back-end. What are your views on the desktop debate? A: I think Linux will take over the desktop, and I think the reason it will doesn't have much to do with whether we clean up and polish our interfaces or not. Linux will take over the desktop because as the price of desktop machines drops, the Microsoft tax represents a larger and larger piece of OEM margin. There's going to come a point at which that's not sustainable, and at which OEMs have to bail out of the Microsoft camp in order to continue making any money at all. At that point, Linux wins even if the UI sucks. And frankly, the UI doesn't suck. It's not perfect, it's got a few sharp edges and a few spikes on it, but so does Windows. We broke through the $1,000 (£700) floor some years back. But my threshold figure for when Microsoft isn't viable anymore is when the average desktop configuration drops below $350. I got that figure by looking at the position of Microsoft in the market for PDAs and handhelds. Above $350, Windows CE has some presence, largely because Microsoft is heavily subsidizing it, but below $350, Microsoft is nowhere. And the reason is very clear: if your unit price is that low, you can't pay the Microsoft tax and make any money. We're heading toward the point where consumer desktops are available at that price. Some of the low-end PC integrators are already there, outfits like E-machines and so forth. Q: Bill Gates said as much in his famous 1995 e-mail saying the Internet was the future. A: They have a strategic problem, which is that somehow they have to make the transition to a Passport and .Net business model before Wall Street figures out that their current business model is screwed. If the investors figure that out before they've changed horses, then they're going to discount the future value of the stock, and the whole financial pyramid that Microsoft is built on will just collapse. I wouldn't be sleeping too well if I was a Microsoft strategist right now, because that's a really hard job, especially considering that they don't even have the technology in place for the new business model yet. Even if they had the technology in place, they would have a very hard job persuading corporate managers to buy into this, simply because of the control issue. If I have all my business processes farmed out to an ASP, I don't control them any more. It's not just a matter of being dependent on somebody else's downtime as well as my own. How do I know that my core business secrets are still protected? Thanks to slashdot.org