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March 30, 2009 8:27 AM PDT

Microsoft has more to fear than a $1,000 Mac

by Matt Asay
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Microsoft has a new advertising campaign and, as Gordon Haff of the CNET Blog Network argues, this one has the potential to nail Apple to the wall.

Even as Microsoft tells the open-source world to stop competing with it on price and instead focus on value, Microsoft is blitzing Apple with a new advertisement suggesting that your next laptop purchase should be all about cost.

Microsoft needs something. As recent data from Net Applications suggests, Apple is eating into Microsoft's market share in the operating-system market, even as Firefox chews into Microsoft in the browser market.

Browser Market Share Data, February 2009

(Credit: Net Applications)

The more market share Firefox takes from Internet Explorer, the worse things will be for Microsoft, and not merely in browsers. The browser is the key to operating-system independence: the more applications that one uses in the cloud, exposed through a browser, the less need for Windows, paving the way for Apple and Linux.

Apple's design aesthetic prevents it from putting its weight behind Firefox, but this is short-sighted. Apple needs Firefox to succeed, and it is unlikely to be able to drive as big a wedge in Microsoft's market share with Safari, which, while growing, lacks Firefox's potential.

Of course, what's bad for Microsoft is also bad for Apple. Someone needs to counter Microsoft's clever new ad with a shock to both Microsoft's and Apple's system: why pay $1,000 for a laptop at all when, for the price of a free Firefox download and super low-cost hardware running Linux ($100 or less), you can get all of the power of the desktop and the Web? Hardware and the operating system become afterthoughts, at that point.

But that's not really a marketing message about which either Apple or Microsoft want you to think.


Follow me on Twitter at mjasay.

Matt Asay brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure. You can follow Matt on Twitter @mjasay.
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by byl01 March 30, 2009 9:30 AM PDT
1. You mean "...why PAY $1,000 for a laptop"
2. Web-based applications come at a price. If you are a heavy user, it's a safe bet that you will waste at least 5 minutes a day on data upload/download. That's at least 20 hours a year. Multiply it by your salary (time-and-a-half if you are doing it after hours:) ) and you'll see that this is not really cost-effective.
3. As one character in a fiction book by Stanislaw Lem said, whatever a small program can do on a large computer, a large program can do on a small computer. Therefore, an infinitely long program should work without a computer. Guess he was the founding father of the Internet-as-a-platform concept...
Reply to this comment
by Mark_Anderson March 30, 2009 9:30 AM PDT
That's funny, Matt. The OS data appears to show Windows increasing in February and Mac OS decreasing.
Reply to this comment
by halfNakedPappy March 30, 2009 9:47 AM PDT
That's one month. What's more important is the trend.
by elgarak March 30, 2009 2:24 PM PDT
The general consensus explaining that is: Apple did not introduce updated product lines at the Macworld Expo early February as in previous years. Instead, updated iMacs and Mac minis were introduced independently in March. Many potential buyers hold off until then. At the same time, laptop buyers had already gotten their machines when Apple updated the MacBook and MacBook Pros before Christmas. In essence, February was a bad month to get a Mac. As others have said, the overall trend is more important. It pays off to look the the correct time interval to compare (let's say, the average growth over one year). Besides, Macs can run Windows, too. They may show up as Windows machines when you just look at the OS on the webz... ;)
by mattblairmail March 30, 2009 4:23 PM PDT
the trend you have noticed is correct but its for browsers not OS, I know that if you have IE your using windows and if your using safari you are likely to be using mac, but this is not always the case. Alt browsers such as firefox and others running on pc are great because as the stats show windows is the most popular browser (even if its because thats the browser out of the box) because its what most people use, its the most targeted by the low lifes and "security" hole finders. while windows is showen to only have 67% browser market share its OS share according to net applications for the same period as graphed is at 89.8%.
A major switch of os would need to happen in schools first and bussness for when the students leave school and expecet the same environment. untill then windows will contenue its domenace, IMHO.
by JuggerNaut March 30, 2009 9:55 AM PDT
Microsoft is being hypocritical here. They point the finger at Apple saying how expensive Macs are, when Microsoft's own operating system is WAY more expensive than Mac OS X and Linux. I can get 5 Mac OS X licenses for the price of 1 Windows (Home Basic) license. I can get near infinity of Linux licenses to that of Windows and Mac OS X licenses. The other counter I think is the added value Apple places in their software (even after the sale) bundles that comes with every Mac, which no PC maker can match. Add in the free developer tools that Apple provides and Microsoft sticks out like a sore thumb when it comes to price.

In short, Apple makes money on hardware and Microsoft makes money on software. You will pay a premium for Microsoft software (Windows, MS Office, Vistual Studio, etc...), just as you would with Apple hardware. The person making the actual purchase has to decide which of the two is more important and how it fits their purchase (hence budget) requirements!
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by CrashPad63 March 30, 2009 1:38 PM PDT
WimpNaut check your facts, Vista cost me 89.00 full version Home Premium.
by bosox723 March 31, 2009 6:03 AM PDT
CrashPad, I'm guessing you bought an OEM version. Since this is technically only made for computer builders it legally has to be sold along with a hardware item (although that doesn't necessarily have to be a computer). It also limits you to clean installs of the OS while reformatting your hard drive. The real price of a FULLY FUNCTIONAL copy of Windows is closer to $300...
by sachanta1 March 30, 2009 10:10 AM PDT
"why buy $1,000 for a laptop at all when for the price of a free Firefox download you can get all of the power of the desktop and the Web. "

you make it sound like firefox runs in a vaccum... does that not need hardware as well?
Reply to this comment
by dumbspammers March 30, 2009 11:20 AM PDT
Firefox needs some sore of hardware, that's true; but I have an old thin client (Maxterm Maxspeed 8300b) picked up on eBay for $35, with a new CF card and an install of Ubuntu and Firefox, that works perfectly well. If the heavy lifting is being done in the cloud, my sub-$100 desktop PC is vastly superior to the $700 HP laptop in terms of value-for-dollar, even when you add in a pretty nice LCD monitor and keyboard (being generous, say $200 more).
by Seaspray0 March 31, 2009 9:50 AM PDT
@dumbspammers. What you describe is similar to the old web boxes that compaq tried to sell years ago (and alot cheaper than your prices, they even tried to give them away). They flopped. People wanted more than a dumb terminal that could browse the internet, no matter how cheap it was.
by Marshnt March 30, 2009 11:30 AM PDT
This article is compairing apples to oranges, microsoft's market share isn't determined by a single browser. Macs are expensive because ppl pay for "the look" all a mac is a PC plain and simple. Ohh and haha its finally nice to see a good ad put out by microsoft.
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by pj4614 March 30, 2009 2:28 PM PDT
Marshnt - If you think people buy Macs merely for the looks you are ignorant of the facts. I switched 2 years ago after finally having had enough MS BS. My Mac is easy to maintain - no viruses or malware, no IT people required. The OS is much more stable and my productivity is much higher. The quality of software on the Mac has largely been exceptional. And you get much more for your dollar. There is tremendous value with the Mac. If my choice was a free PC with Vista that I had to use for a year or a Mac purchased with my own sweat and blood, I'd go with the Mac - the OS is that much better. My new hire now has my 2 year old MacBook Pro and I moved all my work over to my new MacBook Pro using Migration Assistant. Go visit the Apple store and also spend some time with someone that actually uses a Mac and you'll probably want to switch too. At least you won't be ignorant of the facts.
by seven7dust March 31, 2009 4:57 AM PDT
no it isnt Macs run a different O.S simple as that
thats the single reason why people pay more they get a superior O.S
now if Apple were selling a windows computer then that statement would be true
infact they are lot of Pc brands that sell on sticker price {looks at sony,alienware}
So don't be spreading the Ballmer ******** logic casue it makes no sense
just like the MS ads !

Infact If I pay for the Look I woudn't have bought a unibody Macbook
cause I dont like how it looks !
but I did so because I get a O.S thats 10 times better than vista
by bbbbrian March 30, 2009 11:57 AM PDT
This article overlooks all of the stuff that just plain sucks on a linux desktop box - ever try to plug one into a projector during a business meeting (odds are it won't work)? What about playing music - no iTunes, and likely your sound card will do things like continue playing music through the speakers even when headphones are plugged in. This kind of stuff is just unacceptable to most people and it will prevent linux from ever getting a serious piece of the desktop.

The article also fails to point out that while PCs often cost less up front, you will be nickled and dimed to death once you begin to use the thing. MS Office (required in the real world) is several hundred dollars, antivirus software (definitely required for a Windows PC) requires yearly subscription fees. Want to make a movie or compose some music? The Mac has world-class software for these things installed free from the get-go - Windows requires you to pay for inferior alternatives.

And when it comes time to upgrade you can actually sell your old mac which retains value better than any other computer.

What Mac users know and others are learning is that the Mac is actually cheaper in the long run and delivers a much better experience. Don't be fooled - people who think Macs are just pretty PCs are just plain wrong. The software at the heart of the Mac makes it a totally different computer even though the chips inside are the same.
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by telic March 30, 2009 5:47 PM PDT
@bbbbrian:

That's typical disinformation from a clueless fanboi.

The iPod is plug-and-play on today's Linux.

As Bright Hub blog observes, "Linux has become so good at detecting and auto-mounting devices like iPods, you might think you were using OS X or Windows instead ... And not only is connecting and disconnecting the device easy, you will be surprised how much more you can do with your iPod in Linux than you ever could in OS X or Windows."

http://www.brighthub.com/computing/linux/articles/22601.aspx

http://tinyurl.com/5fnhv2
by seven7dust March 31, 2009 5:01 AM PDT
@telic
it's funny how you ignore his entire argument about better software
and talk about Linux compatability with iTunes etc.

Can I run OSX apps on linux ?
software written for every major platform {OSX windows and Linux} and that alone is worth the Money you invest on a Mac !
by Seaspray0 March 31, 2009 10:57 AM PDT
@seven7dust. While the hardware is capable of running the apps, osx is not. You would have to run multiple operating systems to do that. In other words, the software at the heart of the mac is not capable of doing what you imply it will do. With a lindows interface, linux is capable of running both linux and windows apps which, alongside windows, is capable of running several orders of magnitude greater numbers of applications. While I prefer windows, in my judgement, linux is vastly superior as an operating system to osx. Now if you want to fork out all that $$$ for an apple and have to deal with running multiple OS's, that's your choice. I'll be happy with a single OS that suits my needs and runs so much more.
by seven7dust March 31, 2009 11:21 AM PDT
@seaspray
it's not just the apps but the way they work too
also you wont be saying that if you have used OSX apps
I use apps from all platforms but the majority of them run on OSX
from my experience the apps written for OSX are vastly superior to windows apps in terms of UI and simplicity
when I download a OSx app Most of them are so elegantly designed that I can figure out how to use it without reading websites or help files

There's just more you can do with a Mac which is why I people will continue to buy them ! plus they are quality products too !
by pentest April 1, 2009 8:20 AM PDT
Wow total ignorance. There are much better apps than iTunes for Linux: Amarok and VLC to name 2. headphones work just fine idiot. If the VGA adapter does work well that is the fault of the video card driver not Linux. I wouldn't expect someone who could write what you did to make that distinction.
by flatrock19 March 30, 2009 12:18 PM PDT
"The more market share Firefox takes from Internet Explorer, the worse things will be for Microsoft, and not merely in browsers. The browser is the key to operating-system independence: the more applications that one uses in the cloud, exposed through a browser, the less need for Windows, paving the way for Apple and Linux."

So we are renewing Anderson's predictions from the early days of Netscape where he said they were going to make the OS irrelevant? Of course, shortly after that he cashed out a huge portion of his stock and then went running to the DOJ to complain about Microsoft when they couldn't deliver on that boast, and Miscrosoft spent billions improving IE and eliminating Netscape's lead in browsers.

Maybe the cloud's time has finally come. Back then people didn't have the bandwidth to make web based computing viable.

However, for quite a while there is going to be a good market for products that provide a good trade off between price and functionality.

You can get some surplus hardware and slap together a Ubuntu box for with a monitor for less than $300, but you'll be pretty limited in functionality. It's a great value as long as it's functionality covers the things you want to do with it. However paying an extra $100 for a more functional Windows desktop that can also run Ubuntu, or $500 for a low end laptop does gain you significant functionality for a relatively low price.

$230 will buy you an iPod Touch, which can do an impressive number of things for the price. Is it a better value per dollar than a windows laptop? It is if I just want to check Facebook or download a song off iTunes. However, if falls short very quickly on general computing. It also locks up considerably more than my Windows PC does that I use considerably more.
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by venkss March 30, 2009 2:29 PM PDT
"why pay $1,000 for a laptop at all when, for the price of a free Firefox download and super low-cost hardware running Linux ($100 or less), you can get all of the power of the desktop and the Web?"

This is a totally dumb sentence using misleading and dumb words like "hardware running linux for $100 or less" and "ALL the power of the desktop and the web". I wonder if cnet.com and his article will come up on this less than $100 desktop running linux and firefox. PC or Mac, people generally use their desktop for other things as well and have other hardware like printer, etc to get "ALL the power of a desktop".
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by venkss March 30, 2009 2:30 PM PDT
"why pay $1,000 for a laptop at all when, for the price of a free Firefox download and super low-cost hardware running Linux ($100 or less), you can get all of the power of the desktop and the Web?"

This is a totally dumb sentence using misleading and dumb words like "hardware running linux for $100 or less" and "ALL the power of the desktop and the web". I wonder if cnet.com and his article will come up on this less than $100 desktop running linux and firefox. PC or Mac, people generally use their desktop for other things as well and have other hardware like printer, etc to get "ALL the power of a desktop".
Reply to this comment
by SkateNY March 30, 2009 8:39 PM PDT
You people need to stop bickering about things like "trends", "Apple vs. Microsoft", and "Linux vs. the world", and focus instead on what's both working and selling.

The iPhone/iPod is outselling every competitor, and not by a little bit. Their app store has spawned dozens of competitors and copy-cats. Why? Because it's failing, or because it's bringing in millions of dollars in revenue. If Microsoft weren't threatened by Apple, they would never have spent millions of dollars on an ad campaign to advance the notion that, "We may not be sexy; we may not be better; we may even suck; but we're cheaper."

You people need to grow up.

Apple doesn't care that you hate them or like them. They don't care if you like their products or loathe them. The have almost as much money in the bank as Google and Microsoft, and with no debt. Why do you think that is? Because they made fortunate errors?

Why, with all their money and resources, does Microsoft continue to compete against a company like Apple.

You're all very silly people with trivial concerns and adolescent arguments. Then again, that's what makes the Internet run.

Keep on doing what you're doing. You provide sideshow entertainment for the rest of us.
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by telic March 31, 2009 12:49 AM PDT
@SkateNY:

Guess what? The ad campaign in question isn't about smart-phones or music players. The ad campaign in question is about personal computers.

Ironically, the ad's focus on price can come back to bite Microsoft, later this year, when Windows XP is orphaned and Windows 7 must compete against economy netbooks preloaded with Linux.

Microsoft boasts of how Windows runs 70% of netbooks, but that means Linux has 30% (a percentage affirmed by several top OEMs). That's a remarkable share of a booming market where most consumers have been brainwashed to equate "PC" with "Windows."

Note that Microsoft CEO Steve Ballmer recently publicized Linux as a bigger competitor to Windows than Apple...

http://tinyurl.com/debyky
by Seaspray0 March 31, 2009 11:01 AM PDT
I agree, telic. Linux is very well suited to netbooks.
by shootthecops March 31, 2009 12:04 AM PDT
"Apple's design aesthetic prevents it from putting its weight behind Firefox"

yeah its called apple's need to control everything. they are worse than microsoft
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by obvio-capitao March 31, 2009 8:59 AM PDT
Matt,

I just read this on netbookchoice.com and thought you'd be interested:

Mark Croft, the Director of OEM Worldwide Marketing said: ?We have a couple of the OEMs continuing down a path to be very aggressive on price. It puts the pressure on everyone. We?re anticipating opening price points to reach about $200 at least in the US market this holiday season, and another $50 maybe for Nvidia Ion machines.?

?Some of them are trying to make $10 on this device or $20, and some are just trying to sell a unit and break even. Some of the OEMs absolutely have an opening price point but they really have the objective of persuading the customer that if they pay a little bit more, they get significant extra functionality, whether it?s in the hardware specification or the software and experience. No two are the same.?

http://www.netbookchoice.com/2009/03/31/windows-7-to-herald-the-200-netbook/comment-page-1/#comment-114

Do you think these figures are accurate? How can Microsoft expect manufacturers struggling to make $20 on a device to pay $50 for Windows?
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by Seaspray0 March 31, 2009 11:06 AM PDT
obvio-capitao, they will offer a choice. One with linux, and one with windows at a higher price (they will pass that cost onto the consumer). The consumer will decide which one they want. It's a win-win situation for the consumer who will be getting a choice.
by danielszabo1981 March 31, 2009 5:05 PM PDT
I want someone to run a statistic on how much data storage is burned every year on Mac vs Windows discussions.
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by SkateNY March 31, 2009 10:46 PM PDT
The point is moot. People who like using Macs will continue to do so. People who like using Windows PCs will continue to do so.

The debate has come down to this: Which company will aliante their customers to the extent that they'll be willing to switch to an alternate OS?

Microsoft appears to be leading in this competition. Otherwise, why tell us that Apple is better, but we're cheaper?
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About The Open Road

Matt Asay brings a decade of in-the-trenches open-source business and legal experience to the Open Road, with an emphasis on emerging open-source business strategies and opportunities. Matt is general manager of the Americas division and vice president of business development at Alfresco, a company that develops open-source software for content management. He is a member of the CNET Blog Network and is not an employee of CNET. Disclosure.

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