March 9, 2005 4:30 PM PST

Newsmaker: A Gates reality check

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A Gates reality check
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Gates taking a seat in your den

January 5, 2005
In the business-software market, Microsoft is in an unaccustomed spot: It's a bit player in the shadow of much larger rivals.

If Gates & Co. have their way, Microsoft will become a force alongside Oracle and SAP in the multibillion-dollar business of selling human resources, financial planning and other software. The company has set lofty goals: Microsoft has said in the past that it hopes to rake in $10 billion per year in business software sales by 2010.

However, sales at the company's Business Solutions unit aren't growing as quickly as hoped. A new software platform intended to unify the company's disparate product lines won't be completed for at least three years. And there are questions about the overall demand for business software amid industry consolidation.

History shows that when it comes to new markets, Microsoft keeps trying until it gets it right--or it gets out. In this case, Gates is willing to bide his time. He spoke to CNET News.com about his strategy, ongoing efforts in security and how to get PCs into more hands across the globe.

Various Microsoft executives talked this week about how, long term, there are going to be four large players in the business-software arena: Oracle, SAP, IBM and you. How do you see that future?
Gates: I think it's an oversimplification to say there will just be the four players. You'll see some consolidation and you will see people who have built things from the ground up taking their special stuff and building it on top of, say, our platform. The more you have good tools and more extensibility hooks, then you will get people sharing what we already do for them so they don't have to try and duplicate that piece.

Year by year there will be consolidation. There will be people who decide to drop accounting or just do customization. This will always be a very complex market.

Are there customers that had built on top of Microsoft at the foundation level saying that, if Microsoft is a competitor on the application level, then they want to look at, say, Linux or Java?
Gates: There certainly has been a need to reach out to our ISVs (independent software vendors)...We're not going to do product bundles in a way that would be disadvantageous to them. We are not going to incent the sales force in some way that would be a big problem for them. We've needed to go out and talk that through. In most cases they already competed with the company we bought. It wasn't some new competitor but it was a competitor that would have the Microsoft name.

In our history as a company, on the Windows platform, we've always been both a platform provider and, in many of the key categories, a competitor of people building on Windows. That worked well for Windows. I don't think we've lost many, but boy, it means it's very important for Microsoft to be out there talking to people, explaining where we are going, what pieces go on the platform side, what pieces don't go on the platform side. I had a concern about that. So far it's turned out to be less of an issue than I expected.

Lots of people want Microsoft to do something on the antivirus front, and you guys have said you are going to do that. At the same time, the role of securing Windows as a platform is not something Microsoft wants to tackle on its own. The Symantecs of the world want partners, but that seems like a really tough relationship to balance as you enter those markets.
Gates: I don't think so. The history of Windows is that we do something in the platform and then there are some things missing that sell in high volume as add-ons. If a broad set of people want the thing, then in some future version (we add it). We're very clear; we show people, we tell them and then we build it in the system.

The history of Windows is that we do something in the platform and then there are some things missing that sell in high volume as add-ons.
People used to buy TCP/IP stacks. People used to buy basic backup software. People used to buy fonts. At least nominally, people paid for browsers...When you come into the world of software you know that if you are up at a higher level and you have something superimportant, it's going to move down, down, down and eventually be part of every copy of the operating system if it is something superimportant.

Security is a very broad topic. There are so many different pieces of security, which creates immense opportunity for people like Symantec--if they keep innovating. There will be some things that they do that will move into the platform. We're very open with those guys. We talk to them every day, massively....We will get the benefit of the platform getting better and those partners continuing to add value.

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94 comments

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Software NEEDS to be paid for?
We're in a time of knowledge and information, who says software ALWAYS needs to be paid for?
Students are designing their own processors, compilers, databases, and operating systems everyday in colleges all across the world.
It's inevitable that we have a science book called linux. That's the heart of Open Source.
Is it that hard to understand programming in terms of volunteer work??
M$ needs an attitude adjustment. That's their problem. that and their software is garbage.
Ever heard of an antivirus program taking over other OS's like OSX or linux?? I wonder why that is. :)
Posted by (31 comments )
Reply Link Flag
Buisness Solutions Department
Mr Gates
You need a big name created with your solutions program to market from.

Heres my reality check:

We are in a situation where I believe I have shown that :
1) the planet will shift its rotation to achieve a new position of
dynamic balance when the Polar Ice Caps melt.
2) the Shift in rotation will include gravitational fluctions that way
well leed to the extinction of humans.
3) Human Excrement + Nuclear waste = Hydrogen is a viable exportable
technology that may well be the only option to prevent #1 and #2.


So lets get a representative of your end, meet with me and see if we
can not do what is in the interest of all humans.

Dennis Baker
Posted by dennisbaker2003 (6 comments )
Reply Link Flag
Please, "incent" is not a word
"...We are not going to incent the sales force in some way that would be a big problem for them..."

Please, "incent" is not a word, neither is "incentivize". Do a Google search on "define:incent". Just because Dick Gephardt and Bill Gates use it, does not make it a word, admittedly it is creeping into everyone's vocabulary. Can't we just say "motivate"?
Posted by (7 comments )
Reply Link Flag
Proprietary vs. True Science
If M$ would put more of its money into complying with science instead of trying to make its own proprietary system, maybe they'd be in a better place than they are now.
Examples: ActiveX, .NET, NetBIOS, etc.
You can't forget that they broke Java with XP.
They should rebuild their OS with C instead of C++ and Java. Or wait, UNIX already did that. If you're going to invent your own protocol or design language, at least make it secure. M$ has been digging its own grave since NetBIOS.
Posted by (31 comments )
Reply Link Flag
MicroSoft's plans
Are WAY behind the rest of the industry. Linux (aka rip-off of unix) is gaining a lot of ground through government facilities, small businesses, and the only thing Linux is really useful for-the server market.

OS X is an OS of the Gods. The next release (10.4) is going to be phenominal and I can guarantee Apple's next move in software will be a push on the business side. Why not? Microsoft is already failing at its own promises.

Hell, there must be THOUSANDS of full-featured apps for the OS X platfrom that ARE free, I went to ZDNET and couldn't find a SINGLE ONE for XP to enhance Net Send. Ol' Bill and his programming cohorts need to start developing free stuff, methinks.
Posted by (464 comments )
Reply Link Flag
Ignorant comment
I'm a Microsoft fan! To say that Windows or Office is junt is plain ignorant! Wordperfect did not innovate. They were complacent and satisfied with their market dominace. Microsoft has continued to innovate and offer high quality user friendly products. Why are there so many security issues? Simple, when you are number one people will be gunning for you. If linux becomes number one how long would it be before virues pop out of nowhere?
Posted by ajaikarran (10 comments )
Reply Link Flag
idiot
If Microsoft products are garbage it would not be number one. You are saying that people who buy Microsoft are dumb. Consumers are smart. If they don't like a product they will not buy it.
Posted by ajaikarran (10 comments )
Reply Link Flag
point taken
However, you miss the point. Microsoft may have a "legit" monopoly but it does not sit on it's behind and enjoy the profits. They INNOVATE! Consumers have lost in ake of the goverment suit against Microsoft. I just an HP machine. Office 2003 came as a trial version. Wordperfect is offered for free. I have to pay fot Office. When I bought a Dell 5 years ago offcie was bundled and no additonal cost. INTEROPERABIITYis the key to OpenOffice. It is compatible w/Office. However, consumers overall find Microsoft products better. Windows updates...or course yoi have to release updates now and them. Revamping XP into longhorn is needed. Microsoft is not perfect. Hackers have proven that. MORE IMPORTANTLY why are we not blaming hackers for our Windows woes...they commit criminal acts. No one should ever forget that!!!!!
Posted by ajaikarran (10 comments )
Reply Link Flag
how 'bout this...
Blame the ciminals who created the virus!
Posted by ajaikarran (10 comments )
Reply Link Flag
comparison...
I am driving my new car out of the dealer. At the certain point a hole road destroy my suspension. A small stone crashes my windshield. Yes right I should blame the road administration! Oh wait, cars from different manifacturers work fine in the same road! It must be my car then. So the manifacturer is responsible for it, and the warranty should take care of it. Oh wait, I need to wait few months because the fixes for my suspensions are not ready yet. They will included in a future "service pack". In the meantime If I want to drive safely I need to go for "non-original" parts, or not drive at all.

This was the reason people bought Japanese cars. This is the reason people shouldn't buy MS products.

P.S. I wonder what Nader thinks about this issues
Posted by feranick (211 comments )
Reply Link Flag
But, It Isn't a CHOICE if---
Boy, some people really ARE, ...BLISSFULLY IGNORANT.

For those that really don't know any better... Microsoft has been REPEATEDLY FOUND GUILTY of ILLEGALLY-SUPPRESSING this so-called, "...free choice" (...in American State-Courts, ...in American Federal-Courts, ...and in numerous Foreign-Courts).

Microsoft has always done everything in their 'power' (legal, or NOT) to ELIMINATE such, alleged, 'CHOICES'. Towards this end, Microsoft has even gone so far as to publicly, FALSELY, claim that...

-selling a computer without an 'operating system' is "ILLEGAL",

-using a "non-Microsoft Operating System" is most "probably-ILLEGAL",

-replacing a "pre-installed Microsoft Operating System" is "ILLEGAL",

-and even that, ...simply 'communicating with a "Microsoft Operating System-component", without their [Microsoft's] permission, is "ILLEGAL".

Furthermore, Microsoft HAS flat out THREATENED 'computer manufacturers', 'government agencies', and even 'consumers', with numerous "...disincentives" (I.E. illegal PUNISHMENTS), if they "...choose" to produce/use non-Microsoft products.

And, this doesn't even begin to address Microsoft's repeatedly creating intentionally-exclusionary 'proprietary-standards' (and willfully "...polluting" established 'standards'), ...solely to FORCE the use of 'Microsoft-products'.

...In the military there is a saying... "They can't MAKE you do something. But, They can SURE MAKE you WISH you HAD".

Some CHOICE...
Posted by Gayle-Edwards (30 comments )
Reply Link Flag
Free Software is an oxymoron
English is an evolving language and dictionaries only enter words when the word is used often enough to actually be defined. Did the word 'google' exist 10 years ago.. i.e. google n. internet search engine v. to seach the internet using a search engine preferably google.com's search engine.

Science is free.. balderdash.. tuition was only 1/3 of my total education budget.. 2/3's was for books! Which in most cases had to be purchased new from the bookstore (not used the previous semester) and the bookstore would not buy them back as not being used by the 'next' course.

Why unix/linux is more secure than windows. Simply because in windows most users run at the 'root' level of access.
Apple did not invent the gui.. sort of believe that the palo alto project (xerox) had a hand in there before Team Macintosh..

The best will rise to the surface.. not neccessarily true.. Beta vs VHS... MCI vs PCI.. OS/2 vs MS Windows..

A virus writer usually goes after the largest audience.. who would know if someone wrote a virus/worm that attacked only sparc workstations that ran a proprietary O/S.

Point of fact. ATM's are switching from OS/2 to Windows XP (going from a non supported software to a larger supported software base) and use a form of VPN to connect to the bank (maybe using the internet as a transport layer) vice a more expensive dedicated line.. banks have to look at the bottom line..

As far as the hosted software issue goes.. gadzooks, that reminds me of the old mainframe/dumb terminal days with a twist.

Software is one of the few items that can be purchased that you NEVER own. You only own a license to use said sofware depending upon the EULA (end user licensing agreement)

People can't see the trees because of the forest..

A computer is only a tool.. if it does what you want then it is good.. otherwise change it. But also remember another cliche 'a carpenter never blames his tools for a bad job!'
Posted by davidj7738 (8 comments )
Reply Link Flag
Free Software is donated time
First of all, the books you speak of are *mostly* written by college professors, who simply explain pre-existing and open technology in there own words. You're paying for the "features" of the book, not the technology itself which is described. The best analogy to the situation, is obviously paying for feature-rich software. The idea of booting and commands and configuration files is obviously common and open technology.
Therefore, I think your analogy is inacurrate.
Also, you say you can't ever "own" the software if you didn't personally write it. This is wrong too, because you can download source code and do whatever you want with it within your own network. It's at the point that you make it available to the public in some form, free or not, that you have to deal with licenses.
Innovation DOES NOT always cost money.
Posted by (31 comments )
Reply Link Flag
Free Linux with every Windows !
Torrents at <a class="jive-link-external" href="http://home.btconnect.com/chrisandcarolyn/torrents/" target="_newWindow">http://home.btconnect.com/chrisandcarolyn/torrents/</a>
do things like <a class="jive-link-external" href="http://home.btconnect.com/chrisandcarolyn/suse-for-windows.png" target="_newWindow">http://home.btconnect.com/chrisandcarolyn/suse-for-windows.png</a>
or <a class="jive-link-external" href="http://home.btconnect.com/chrisandcarolyn/knosci.png" target="_newWindow">http://home.btconnect.com/chrisandcarolyn/knosci.png</a>
or
<a class="jive-link-external" href="http://home.btconnect.com/chrisandcarolyn/ubuntu-hoary/virtual-warty.png" target="_newWindow">http://home.btconnect.com/chrisandcarolyn/ubuntu-hoary/virtual-warty.png</a>
. Some people have reasons other than 'sell the zeros and ones' for providing software; in my case it's 'teach my children' and 'be in a position to take responsibility for it'.
Make me some better ones, feed back, and I will thank you.
In the one corner, the kid with PlayStation, LookingGlass 3D, OpenOffice.org, and the idea that you should replicate your DNA whenever you choose. In the other, the grown-up with the worm, the virus, the lawyer, and the idea that the Penguin should go the way of the Dodo. The problem is, the kid can program computers, and the lawyer can't.
It's a bit one-sided :-)
Posted by (1 comment )
Reply Link Flag
watch; anybody wanna buy a watch
Here Microsoft is: selling OSes and making a good penny at it.

Next we see them hawking everything from T-shirts to game systems to development platforms.

Enough already, get back to work on OSes.
Posted by (88 comments )
Reply Link Flag
Why does MS complain about Linux...
when BG says "People used to buy TCP/IP stacks. People used to buy basic backup software. People used to buy fonts. At least nominally, people paid for browsers...When you come into the world of software you know that if you are up at a higher level and you have something superimportant, it's going to move down, down, down and eventually be part of every copy of the operating system if it is something superimportant."

The FOSS people can just reply "People *used* to by the OS; when you start at a very higher level, and you have something superimportant, it's going to move down, down, down and eventually become a no-charge utility..."
Posted by fmcgowan (43 comments )
Reply Link Flag
Both sides are right !
Hey Guys,

I took the time to read most of the posts on this article and I am here to say your both right. Open source is a valuable resource with the main idea that the more programmers involved with perfecting source codes that better the end results, which is true. Microsoft is also a valuable resource to so many people but more focused on the user and application, keeping the code to be used exclusively by their programmers and thats ok. The idea of hackable code can be debated from both sides of the fence till the cows come home

Now to the conversation on cracked versions of Microsoft software by end users, I read just the other day an article that went on to say that illegal copies of Microsoft XP are being installed on new computer systems imported from foreign countries. Most of our computer giants have exported our jobs of building their systems to achieve what they call their end result, that being $$$$. Maybe that end result isnt what it seems&lol.

I think the bigger question with Microsoft asking what it feels is a fair price for its use of the software, is what can the end user afford? Corporate America has shipped the majority of the jobs out of the U.S. to countries where workers are paid wages that are a fraction of the price sought after here in the states.

The idea is to bring this product back into the states to make a profit with lower costs goods. Its actually boils down to common sense, if you take a worker that is employed, he or she will spend that money back into the economy buying goods. Now take that same worker that is now unemployed or working at a minimum wage now becomes faced with trying to just make ends meet, with little extra to buy any product.

OK Corporate America, I hate to be the gloom and doom person to tell you that you have basically taken a course of wiping out your market share of people having the ability to purchase your product here in the states. Even the ability to come up with new ideas (R&#38;D) is being farmed out. Short term&money maker for you, long term& better look for market shares from other countries in order to continue operations.

End result is the average users including educational students are now faced with the dilemma of where to come up with the extra money to purchase the software. If we continue in this direction, I feel Open source will win out only because its affordable (free).
Posted by (18 comments )
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