How Microsoft wastes its money on anything but software

"Windows Server System outperforms Linux on TCO, reliability, security, and indemnification." No, your Linux News editor in the Netherlands is not joking, it is really true. I read it on MS' "Get the Facts" page, so it has to be. On the other hand, Windows bla bla also outperforms Linux on indirect costs for marketing FUD and paying people to create studies, etc. They also outperform Linux in getting lawyers to do their bidding, fixing software bugs which tie customers to them, and money going to political parties in the US.

Infoworld, March 3, 2006. "Microsoft seeks U.S. court intervention in EU". Microsoft asks several companies "to produce documents pertaining to the European Union's (EU's) antitrust case against the software vendor."

Already fined for €497 million, paying more to appeal the verdict, and threatened by daily fines of up to €2 million, Microsoft still isn't spending its money on better software. Instead, it pays more legal fees and asks for more documentation from other companies, hoping it won't have to pay €2 million a day. This raises an interesting question, what would be more profitable:

• Complying with the rules of the European Competition Law and spending your time and money on making better software, or
• Leave your software as it is, and spend your time and money going to court, screaming fire in the media, asking Uncle Sam to influence the EU, shouting about the 'biggest offer MS can make; revealing its source code' (while the EC never ever asked for it), and compiling an 87 page complaint, while hiring four professors to show that another professor isn't accurate.

As all computer-minded people ought to know: Security isn't reached by obscurity. Well, the same is true for value, I'm afraid for MS: Value isn't reached by obscurity. What does that mean in the EU Competition Case?

Lets take another example: The OpenDocument Format. Anyone who has used Microsoft Office and OpenOffice2 lately, knows, Microsoft Office isn't that much much better than OpenOffice2. OK, the database may be better. But for writing letters, there isn't that much difference. When reading letters Microsoft Office can go back to old *.doc files, while OpenOffice can screw up the format.

So, the only added value MS Office gives you is being able to read old MS Office files. People without elaborate office needs don't require MS Office. If the organization does, then it could keep a few copies of MS Office around. But not every user has to pay high license fees. By the way, that's how companies used to function. When mainframes where phasing out, people kept a few terminals around or wrote programs to do transforms of IBM formats to PC formats.

Microsoft fears the same for its network software: If their SMB protocol isn't obscure and made unusable by patents any more, what value does Windows have over Linux, which is also capable of using the same protocol through Samba?

So, one might conclude that if Windows and MS Office don't add that much value above their free counterparts now, then Microsoft will invest in creating more valuable products and make their software better.

Then, guess again, because that's not the case: MS chooses to spend their money on keeping the formats obscure, and on lobbying with the EU to make software patents enforceable - thereby making it more difficult for others to "reverse engineer" their protocols and create compatible products.

Considering simple probability, Microsoft's actions are fairly foolish. For example, if the odds are 50-50 that you can make software patents in the EU enforceable, the chances are 50-50 you can't. If you spend $50 million on lobbying to make them enforceable, the expected losses are $25 million, because the chances are a 50-50 you lose, and if you lose, you can consider your money lost. On the other hand, if you spend that $50 million innovation, the chances revenue recovery is greater. In other words, the Return On Investment for making better software, is higher than spending that money on lobbying the EU.

Now, take the "Get the Facts" campaign. If it was a fact that Windows was more secure, more managable and had a lower TCO than Linux, than everybody would probably know, and nobody would use Linux. But that is not the reality, just look at our LXer migration list, and you see many, many companies and governments working with Linux. A lot of them migrated from proprietary Unices, that's true, but the point is, they chose to migrate to Linux instead of to Windows. Linux might provide some benefits Windows cannot. So, what would you do if you were Microsoft?
"Hey, that's simple!" I can almost hear you say. "I'd just use my funds to make all my products more secure, easier to use and more reliable!" Indeed, if MS did, in a short time, Windows would be easier to manage, more secure, and so on, than it is now.

However, Microsoft decided to spend their money differently. they chose to educate the consumer because the consumer was misinformed. Microsoft needed to spend hundreds of millions to inform the consumer of the Microsoft truth.

Again, we can use probability to show this not the best approach: If you think the consumer is misinformed, and you are going to change his mind, there is always the risk the consumer will not believe you. Especially, when you are using non-independent research firms which produce non-scientific reports. You're risking your money. Since the quality of the reporting is low, one report comparing Linux on a mainframe with Windows on a cheap Intel box( Remember Bill Gates is a shareholder of Gartner and SI is a certified Microsoft partner and peole may know that) chances are rather good the customer will laugh at your "Get the facts" campaign. So, lets estimate the campaign costed $100 million, and the chances the consumer will not believe you are ~75%, you will have lost $75 million. You could have spend that money to make the TCO of Windows lower, make Windows more manageable etc.

With the same reasoning, we can think about the big Microsoft ad campaigns. A good chance exists that people don't watch your ads on TV. They go drink some coffee or they simply use an adblocker.

Microsoft knows that they're only buying name recognition and that they do not reach decision makers with their ad campaigns. Do they really need more branding? I think their brand is well established.

The Microsoft money which went via Baystar to SCO: Here, we are >95% sure the money is wasted, since, from a leaked SCO memo, we know the people at SCO knew in advance, Linux code didn't infringe any of their copyrights. Moreover, if the court finds an illegal link from MS to SCO, it is going to cost MS huge.

One of the exceptions in my argument may have to do with 'political' expenditures. Looking from across the pond, it seems to me like the Microsoft has friends in high places in the US government. But over here, software patents in the EU are generally not enforceable. Windows can be bought without their Media Player in the EU (though nobody buys it, so that's a point for MS) and the European Commission still wants MS to reveal its protocols. In South America and China, things look even worse for MS. I'd say, not all governments are ready to buy Microsoft products as the US.

Now, lets compare what I see as a waste of money to Free Software. How much money originally went into the free software? I'd say "not much" in today's dollars. Microsoft has spent alot and Windows is only marginally better than Linux at some things.

In short, the problem boils down to this: Microsoft's software unit is rusted. It is not adding significantly to its core business. It's primarily protecting market share it already has.

Compare this to their other units like the Xbox360, Microsoft Music players, etc. and you wonder why Microsoft bothers to create new lines of business outside their "core business". I even compare Microsoft with a nuclear explosion: The core (software: Windows and MS Office) is becoming a vacuum, while the outside is becoming bigger, more elaborate and less dense, till nothing is left but smoke, wind and dirty waste. At the moment, they're throwing their money a vacuum because Bill Gates didn't like to lose in monopoly as a kid with his grandmother looking over his shoulder.

"So what's the problem here?" Do you wonder? It's about efficiency, and waste of labour. With the money we, consumers, pay to MS, we are bothered with FUD-campaigns we don't believe, our politicians which we don't trust are paid, we are harassed with ads - as well on TV as on the Internet, the judiciary department is kept running producing not much more then tons of paper documents, and all we get in return is a free spyware-remover we wouldn't need in first place if MS' money was spent efficiently: on better software.

In brief, the money is used to produce things we don't want, without anyone asking us, and to keep people busy without all that labour leading to something we didn't neccessarily want in the first place, like Vista.

Is this a rant? Maybe it is. But the only thing I want you to do is, consider where we (and the Western economy) would be today if investment in infrastrucute and labour had gone to different, more productive endeavors. That's all.