Life Without Microsoft Is Possible 20 comments
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Wrapping up last week's look at why Microsoft's (MSFT) business has grown while its stock price has not, CJ sent along the story of how Mike Kavis worked for one year without Microsoft products in a Microsoft office environment. He has "not used a single Microsoft product at work. It has been one year now and I have survived with Thunderbird and Evolution, Open Office, Firefox, and many other open source replacements for Microsoft products."
The open source experiment was a success, "nearly flawless" in his words. He was especially enthusiastic about Open Office, which "worked remarkably well both receiving Microsoft Office files and creating files in Office format. I exchanged literally thousands of documents between Microsoft Office and Open Office. I never encountered a single issue with Word and Excel and occasionally encountered minor formatting issues with Power Point files. The formatting issues were nothing more then [sic] some minor placement issues which probably occurred less than 5% of the time."
That led CJ to say that, more than Google Docs (GOOG), "the compelling threat to MS Office's revenues to me is your argument that users can easily convert between file formats these days."
CJ is not worried about Google Docs yet:
My first inclination is to think that until Google Docs has a strong off-line story, they will not put much of a dent in MS Office's revenues. Licenses with businesses is where the MS Office suite makes its recurring income, and I don't believe many businesses are going to get on board with the cloud computing concept anytime soon. Many businesses have their own in-house variations of cloud computing using a VPN connection. I have a hard time understanding how businesses will justify trusting third-party vendors with their vital data when they can do it themselves.
That last point is probably valid, but notice the hints at the idea that it might change in the future. This is not a criticism of CJ's point, just a confirmation in my mind that what investors are unsure of is Microsoft's future -- and have been for the past eight years. Its currently installed base of products is still growing revenue and profits, but the what-ifs are adding up:
- What if cloud computing keeps growing in popularity and becomes as accepted as online shopping and online payments? I remember when people hesitated to buy from Amazon.com because it required using a credit card online. Then people said PayPal had no future because it wasn't a real bank. Online money? Who would ever trust that? How quaint those early concerns seem in retrospect, and we're only talking ten years ago. Now that Amazon.com has been hassle-free for so long and PayPal is bigger than American Express, nobody talks that way anymore. It could well go the same way for cloud computing. If so, the MS Office franchise looks shaky indeed.
- What if people realize that they're finally free to use any operating system they want because they can use any applications they want online or freely downloadable ones offline? What if Mike's one-year experiment becomes the norm, not the interesting case study? Then, the Windows franchise looks shaky.
- What if Google really does have the internet permanently locked up? It could keep growing revenues as its search share grows and leave Microsoft with no online business model because it has no serious advertisers to tap for an ad-supported online application environment and can't charge because all its competitors make their apps available to users for free.
This week has been a search for the reason investors have refused to pay up for Microsoft's growing earnings, a trend that has left the price of MSFT stock flat for the past eight years. I think the best answer is that Microsoft's business model is still working, so it hasn't changed. Pro-Microsoft investors would say, "Don't fix it if it ain't broke." Doubters would say, "It is broke but you just don't know it yet."
For the past eight years, the doubters have dominated in the market. We'll see down the road whether the pro-Microsoft gang is right that the company's business model is not broken.
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This article has 20 comments:
Isn't this supposed to be a stock site with interesting articles about stocks?
I wean myself off Windows when I got my MacBook Air. I still use Office, however. I found Openoffice too slow on the Mac. If it keeps getting better, I will use it.
In 2 years, MS either has to drastically slash price on its Office products or has to come up with some nifty innovations there.
If the Office franchise is lost, so goes one of Microsoft's two biggest revenue streams.
If you hate MS Office put OpenOffice on, it's a far better solution that bypasses these issues.
Seeking alpha is churning out rubbish for eyeballs
What you're saying about GOOG is a similar narrative to what drove MSFT's multiple so high 8 years ago that it is has taken 8 years for the growth to catch up.
I have to point out to fellow commenter cockytraveler that there's quite another way to read the significance of the "experiment" discussed here:
"Do people really care what OS or office apps they use? My experience as an IT manager tells me no...[Most people] say to the experiment that spawned this article... SO WHAT?"
Your read on "most people" is correct, sir, I'd say - and that's where the *danger* to MS lies. Despite investors' confidence that MS products will stay on top because they're "the standard" brand, the truth is that people don't care about the name. More and more, they won't care if their OS or office apps aren't from MS.
As cloud computing, open-source apps, and machines running open-source OSes continue to grow, MS will have to tout increasingly trivial benefits of its pricey products, or shout self-important slogans like "Genuine Windows" - and people will respond with a yawn and a "SO WHAT?".
That's the possible future danger that Mr Kelly rightly addresses, I believe.
That's a very stupid remark. It is my experience that certain Office apps (usually Microsoft's) cause me MUCH frustration because it is difficult to figure out how to turn off un-helpful "help" features.
As for OpenOffice: the word processor and spreadsheet are free and of high quality and are, perhaps, easier to use than the corresponding MS-Office versions. The Powerpoint clone, however, sucks, at least in MY version of OpenOffice (maybe it's been fixed). The slide sorting is too fussy.
The best presentation software BY FAR is what Al Gore used for his movie: Keynote. It is very easy to learn and to use. It is feature rich, and sorting slides is easy. It exports easily and ACCURATELY to either Powerpoint or Adobe PDF. I recommend PDF, because Adobe and Apple have a far superior grasp of fonts than MSFT has; your slides will look prettier. Of course, if you have the option, you can give your presentation right from your Mac, but often, one ends up at somebody else's Board Room with a thumbdrive....
That's a very stupid remark. It is my experience that certain Office apps (usually Microsoft's) cause me MUCH frustration because it is difficult to figure out how to turn off un-helpful "help" features.
As for OpenOffice: the word processor and spreadsheet are free and of high quality and are, perhaps, easier to use than the corresponding MS-Office versions. The Powerpoint clone, however, sucks, at least in MY version of OpenOffice (maybe it's been fixed). The slide sorting is too fussy.
The best presentation software BY FAR is what Al Gore used for his movie: Keynote. It is very easy to learn and to use. It is feature rich, and sorting slides is easy. It exports easily and ACCURATELY to either Powerpoint or Adobe PDF. I recommend PDF, because Adobe and Apple have a far superior grasp of fonts than MSFT has; your slides will look prettier. Of course, if you have the option, you can give your presentation right from your Mac, but often, one ends up at somebody else's Board Room with a thumbdrive....
Fact: Every possible avenue in which Microsoft hopes to make inroads such as "on line advertising", "gaming", etc has established competitors, ie. Google, Sony, etc. Fact: Microsoft threatens its competitors with litigation for infringement of its patents, yet refuses to publish or go to court with its source codes to prove that its patents have been infringed upon! FACT: The OEM computers with its cheaper prices were initially shunned and ignored by Microsoft as "unprofitable" but were sold to Linux are now one of the biggest sources of revenue. More and more business are purchasing them rather than individual consumers! FACT: Microsoft is being turned down by many countries who prefer to go the "Open Source" route for their schools/universities. Brazil is the latest country to decline Microsoft's offer....remember, strings are attached later on! Fact: Many competitors such as IBM, Novel, Sun Systems, Cisco, etc are consolidating their legal resources to negate the PR and possible legal claims of Microsoft with regards to patent infringement. The list goes on.....But one thing is for sure! All the EULA agreements, all the bloated software, all the "sweetheart deals with other software vendors" is now common news in the internet and is beginning to have a "boomerang" effect on Microsoft. The arrogance of this company to both its customers and its competitors is mind-boggling! I have always remembered this saying, "Be careful of how you treat people (or companies, for that matter!) because the same people you meet going up will probably be the same people you meet going down!