On March 12, I wrote an article called Life Without Microsoft that made these points:
- Vista is not selling well
- PCs and traditional software are a hassle to upgrade and maintain
- Tech support is so unhelpful that it’s non-existent
- Open source, free software such as Firefox, Thunderbird, Linux, and Open Office are better alternatives to traditional software
- Online-only software such as Google Apps is a better way to get work done with less hassle
At the end of that weekend’s letter, I asked for feedback from my subscribers. I received a great deal of thoughtful, detailed, informative responses which I’ve sifted and edited down to a real-world follow-up worthy of your time.
Each subject presents my commentary followed by thoughts sent by Kelly Letter subscribers.
Use An Apple Macintosh
This is a great suggestion, and one that I’m considering for my next round of office upgrades in a few years. Macs are elegant, and they may finally have a chance to grab more market share now that the internet is erasing the compatibility issue. Anything you can do online with a PC, you can do with a Mac. Same site addresses, same applications, same scripts getting work done.
The main Mac issue is cost. Apple hardware runs about twice as much as its PC equivalent. A new PC notebook with a 17-inch screen and the usual specs costs about $1,400. The 17-inch MacBook Pro costs $2,800.
However, cost is measured in more ways than money.
At the moment my office has a brand new 17-inch Hewlett-Packard (HPQ) Pavilion Notebook that is a glorified paperweight until the rescue CDs arrive from HP. It is literally useless at the moment because Windows XP blew up so drastically that a complete re-format and re-install was necessary, but the rescue disks are corrupted so the rescue won’t work! Turn it on, listen to it churn, get a corrupt data error message, repeat. That’s all we can do.
Having relied on PCs long enough to have back-up plans for our back-up plans for our back-up plans, work continues as usual. But it took time to switch to a different machine, recover data, and hook everything up.
This example illustrates lost productivity caused by PCs that, if Macs are as reliable as Apple and its users claim, might end up justifying the extra expense for Apple hardware.
The line that I can’t get out of my head is that Macs just work. So often in my life, PCs just don’t. That simple comparison says it all.
Who cares which company is at fault, which driver is missing, which file was mysteriously vaporized, which virus just landed, or which DLL is out of date? The end result is that the user is fighting computer problems instead of working and it happens every darned day with PCs.
Impact to investors: If my small office is considering making the switch to Apple after more than ten years of PC history, others probably are, too. Although Mac has been around for a long time, only since the internet’s recent advanced capabilities have broken compatibility barriers has it been a legitimate option. If more people and businesses switch to Apple products, it will harm Microsoft’s core Windows/Office business.
Nikolas in New York wrote:
Because I work in the photography and design world, I can tell you that there is only one platform of interest to its people, which is Apple. I wouldn’t be caught dead with a PC. I do use some Microsoft software on my computers, specifically Microsoft Office, which runs flawlessly on Apple. I travel a lot and do take notice of an increase in the number of men in suits sitting at airports with an Apple notebook.
Luigi wrote:
I’ve owned Microsoft for 12 years, and it’s easily been one of my worst investments. The funny part is that I’ve used a Mac since 1986. You really should consider it. Macs run OS X, Windows, and Linux, and they just work.
The learning curve on a Mac is nowhere near as steep as on Windows and, if you know any Unix at all, it is a piece of cake. More than anything else, the OS does not crash. Applications will crash, especially fly-by-night 3rd party, but they won’t take the system with them (the Windows blue screen).
Plus, at least for the foreseeable future, no viruses, worms, etc.
I have been waiting to see what Vista would do for Microsoft, but got more and more discouraged as I saw all the problems.
Organizations Won’t Switch From Microsoft
While we as individuals can make changes in our lives quickly, most large organizations can’t or, at least, won’t. This is an important point for us to consider as investors. Most of Microsoft’s income is from corporate licensing.
The same way McDonald’s (MCD) doesn’t make cuisine for gourmets, Microsoft doesn’t make software for discerning users. Both companies target the fat part of the bell curve, the bland middle where nothing is too courageous for fear of alienating potential customers. This same philosophy is to blame for cars having become so boring.
The approach doesn’t win many awards, but it does create a great business. The question in Microsoft’s case is whether or not alternatives have become safe enough for even risk-averse corporations to consider.
Impact to investors: In the immediate future, Microsoft can probably count on its traditional corporate licensing base for revenue. At some point, however, it will need to innovate and try a new model or else its competitors will end-run around it, as you’ll read in other entries below.
Michael in New York City wrote:
I usually wait one year for the bugs to get out before I try anything by Microsoft because I have had such bad experiences in the past.
I suggested to Johnson & Johnson (JNJ), a client with a lot of folks in Belgium, that they try Skype. I explained how easy it is to share your screen with someone overseas as you open documents relevant to whatever you’re talking about. It’s free and even includes a video image of who you’re talking to that isn’t too bad. They were up for it, and had all vaguely heard about Skype. I said I’d been using it for over a year and never once had a problem. The only thing you need to pay for is bandwidth.
Now you would think this is a good idea that business would jump on. It creates better personal relationships and communications, causes fewer disruptions due to flights and jet lag and time away from families, and reduces travel costs. But noooo.
The way biz gets structured, as you must have seen at IBM, is that they seem more interested in minimizing risk than in being more efficient. Allowing users to load Skype onto their computers represents too much potential support headaches for IT, so it’s not allowed. Same with Firefox. Our company just mandated we have to use IE. And I had to remove Skype. So I can’t even demo my idea to the company president unless I bring in a personal laptop to do it.
Vista Is Not Necessary
Even if Microsoft continues focusing on large organizations with its traditional licensing arrangements, it’s going to need software more compelling than Vista to succeed.
Organizations want to get their work done as cheaply as possible. They don’t want to unnecessarily upgrade software and deal with all the hassles that go with doing so. That’s probably why so many are opting to stick with Windows XP or switch to Linux.
On March 6, Information Week reported that the Commerce Department’s National Institute of Standards and Technology barred its staff from installing Vista on any agency computer. The NIST technology te
am will meet on April 10 to air their concerns about Vista.
Previously, the Department of Transportation issued a similar ban. DOT CIO Daniel Mintz issued “an indefinite moratorium” on upgrades to Vista, Office 2007, and Internet Explorer 7. He explained that “there appears to be no compelling technical or business case for upgrading to these new Microsoft software products.”
Impact to investors: If Microsoft doesn’t create software that organizations want and/or need, it will wither away.
Tony in Houston wrote:
To most people Vista is just another OS. The people and businesses I’ve talked to aren’t too excited about upgrading at this time.
I work for WesternGeco and our facilities contain several rooms filled with IBM servers. The latest talk of upgrades was about ridding ourselves of Windows and switching to Red Hat (RHT) Linux. There’s no telling if Vista sales will pick up in the future to where business may decide to carry along Vista, but currently, I do not feel that Microsoft will make the impact it was expecting.
As for myself, I don’t see the need to upgrade to Vista. I have either XP or Media Center varied on four different computers in my home. Frankly, I don’t see the need for Vista.
Charles in Pennsylvania wrote:
I was just chatting with my friend about your switching to Linux. He thinks that’s a great idea, and told me that the religious organization that he works with has been running Linux for a number of years.
Bob in Pennsylvania wrote:
I have XP and am using a 98 Microsoft Office package. I have been using Firefox and Thunderbird for the past two years. I have no desire to update to Vista as my current system does everything I need and more. I will probably get Vista with my next computer but that event is years away.
Microsoft needs to learn to put out a quality product that works immediately. Their customers should not have to help them get the kinks out.
Charles wrote:
Where I work, we just switched over to XP a short time ago, having had 98 for a long time. It was doing the job so we thought, why update?
Google Apps Is Closer To Prime Time Than You Think
I wrote on March 12 that Google Apps took us just 15 minutes to set up, gets around the need for data back ups, never needs installing or upgrading, makes our work available and usable from any internet connected computer in the world, and is cheaper than Microsoft’s products.
What I discovered, thanks to subscribers, is that Google Apps is not as experimental as I thought. It’s a real alternative right now, and entire companies exist that do nothing but help organizations change from traditional software over to the Web 2.0 framework of Google’s applications.
This is a big deal because of the speed at which Google has proven it can change all the rules. Consider that Google didn’t even exist ten years ago. For the first two years of its life, it provided only quick searches. Then, just seven years ago, it started its famous AdWords system that was the foundation of its current $137 billion market capitalization.
Google Apps was barely an idea one year ago. Today, you can run your business with it. What about two years from now? It took Microsoft five years to develop Vista, and few people appear to want it.
Sam Johnston is a Kelly Letter subscriber and the CTO of Microcost, a company that delivers complete enterprise Web 2.0 solutions based on Google Enterprise technologies such as Google Apps and Google Search Appliance.
He was amused by my proud claim to have set up Google Apps for my company in 15 minutes, and sent me a link to a Microcost video showing a user getting set up on Google Apps in just 60 seconds!
I looked at the video, and was impressed. I wrote back to Sam in our defense, pointing out that most of our set-up time was consumed by needing to create a CNAME for docs.jasonkelly.com at our site host. Even that was simple to do, and 15 minutes is hardly a lot of time. It’s more than one minute, though, so I wanted to explain.
I share all of this not to endorse Microcost’s product — I’ve never used it — but to reveal that an enterprise support industry is already on the rise around Google’s alternatives to Microsoft’s products.
How long will it be before companies are able to feel comfortable making the switch? Perhaps not as long as Microsoft would like to think.
Impact to investors: Google and other companies are working hard to create superior alternatives to Microsoft’s products. Because they are online, these alternatives face few compatibility issues and are cheaper than traditional licensing. What’s more, they are rapidly gaining acceptance and industry support. If Microsoft doesn’t adapt soon, it will lose a significant portion of its revenue base.
Sam Johnston, CTO of Microcost, wrote:
Nice article about Google Apps. You wrote that “it took 15 minutes to set up.” You might be interested to know that it can be done in under a minute, which is an impressive milestone for setting up an organization’s IT infrastructure! Look at this video made by my company.
Your explanation about the CNAME set-up is typical. Getting the DNS set up is often far more difficult than it needs to be. Realizing the effort involved, we built a Google Apps optimized DNS infrastructure which takes only a single command to create all the records for the domain including the CNAME. The result is that within a few minutes you’re up and running.
We take care of all this, plus provide training and support in our QuickStart product. There are a number of Google Enterprise Professional partners showcasing similar services alongside ours in the Google Enterprise Solutions Gallery.
Linux Is Not Yet Ready For Ordinary Users
Although Linux looks good for organizations with a professional technology staff, it’s not yet a viable alternative for ordinary users.
It only takes a moment online to find this out for yourself. Try searching on Linux with the intent of installing it on your computer. You’ll find:
- There are countless versions of it from countless sources.
- There’s no one place that clearly explains what to do.
- You need to gather notes yourself from bulletin boards, company FAQs, and other sources to create instructions.
- You need to download what’s called a distribution of Linux, many variations of which are out there, and you can choose whether to install it or run a “Live CD” version of it to boot directly from the CD.
I submit that we’ve already lost the typical person who just wants to sit down and check email before dinner. Yes, if you put in some time you can get your computer going on Linux, but few will put in the time.
I haven’t personally found Linux to be terribly difficult to grasp or get going, but I also haven’t felt yet that it’s the way to go. It still feels like a curiosity to me, something that I can make my computer do but not really a place where I get work done. Maybe comfort will come with more exposure.
Impact to investors: While professional technology specialists can consider Linux as an alternative to Windows, most casual users cannot. For now, Apple appears to be a bigger threat to Microsoft in the individual user market than Linux.
Vannarith wrote:
I moved from a Windows operating system to Linux about a year ago.
Although I do use Linux as my everyday OS, every now and then I have to boot back into Windows. I’ve set up a dual boot system. The reason for this is that some programs don’t exist in Linux or some drivers won’t work with my hardware in Linux
(webcam, printer). This is the reason I think Windows will remain dominant in most people’s computers. All manufacturers make Windows drivers, but not all make Linux Drivers.Overall, Linux is a great OS, but there is a learning curve, which is steep. You can’t just double click to install stuff. I think the learning curve and the plug/play issues will prevent your average computer user from switching.
That said, there’s lots of great open source software even for Windows such as VLC Media Player, PDF Creator, and Filezilla. Your readers should check out www.theopencd.org for more free and open source software.
Conclusion
Microsoft had better get cracking. It’s taking too long to deliver software that:
- People don’t need
- Is too expensive
- Is a hassle to install and maintain
- Is no longer necessary due to compatibility issues
Organizations with IT departments are considering Linux instead of Windows or are keeping with older versions of Windows instead of upgrading.
While organizations can’t yet change whole hog to Google Apps or other alternatives, the barriers to doing so get smaller by the day. Companies like Microcost do nothing more than help organizations get their work done faster, cheaper, and safer with Google Apps than with Microsoft products.
Linux is not yet a threat to Microsoft among individual users, but Apple is. Apple finally has a shot at previously PC-shackled users because the internet’s recent advanced capabilities have erased compatibility barriers. Whatever you can do online with a PC, you can do with a Mac. Not only that, Macs just work, which means a lot to anybody who’s ever lost a day of work fighting PC troubles. One drawback with Macs is that they’re expensive, but their benefits may justify the extra expense.
Thank you to everybody who took the time to send in their comments. As I wrote last week, we’ll continue to hold Microsoft as I think it will do well in the medium term. Remember that sales and earnings are going to get a big boost as the deferred revenue from Vista and Office 2007 get booked this quarter.
That’s not a future vision, though, and Microsoft is in need of one. The keep of its castle is under tremendous pressure as innovation spreads around the planet and fluid new business models immune to its strong arm tactics rise.
There may come a day when all of your work sits online, all of your applications are online, and you don’t know or care how anything works or when software is upgraded.
You’ll just buy a keyboard that works with any monitor hanging on your wall, connected to the internet. Go to a friend’s home or office and use their keyboard. There won’t be an operating system per se, any more than there’s an operating system on your telephone.
Everything will be online and, at this rate, odds are not much of it will be at microsoft.com.
