March 20, 2003

What if Microsoft decides to go Open Source?

- By Donald K. Rosenberg -
People often speculate about Microsoft's bringing out a Linux version of
Office, but everyone assumes that they would never try to Open Source
their products -- after all, Microsoft is the acme of proprietary software. But they have begun to twirl the seven veils lately. While Microsoft's
critics denounce Shared Source as a sham, at least it's a move away from
binary-only, and although its rule is "look, don't touch" and limited to a
privileged few, Shared Source is a concession to the power of Open Source
in the current software industry.

Someone at Microsoft must realize that
Office will eventually be cloned (OpenOffice is a start), ruining their
market; if IBM can speculate that someday AIX may be dropped because Linux
has grown up, wouldn't it be better for Microsoft to enter the Open Source
software industry and survive?

They wouldn't do it all at once. No one there will bet the grand cash cow
Office, let alone the operating systems that are offered as secure because
their source code is secret. They will pick an important product, one not
in the Office suite but instead one used by many people in many offices.
It might very well be Microsoft Project.

From what we see in the Open Source software market, we can expect five
results:


1. The retail price drops.

It would be more bad publicity for Microsoft to follow the GNU GPL to the
letter and give the source code away only on the binary-code CDs it sells.
Anyway, someone would immediately put the source code on the Web, and
Microsoft would have egg on its face as geeks jeered.

So Microsoft will put both binaries and source code on the Web so that
anyone can download them. The sort of customer who prefers to buy a box
with a disk and a manual will still buy the box, but the free alternative
will make a lot of them think twice, and so the price will fall. To
stimulate sales of the boxed product and to try to maintain its price,
Microsoft will add proprietary features/plug-ins to increase its usefulness
over the free product. Remember that Sun sells StarOffice in a box
containing Adabase, which does not come free with OpenOffice.

2. Microsoft Project achieves greater market penetration.

Most people who need to use Project have it already, but this number does
not include those who merely want it, or cannot afford it. Somewhat
price-sensitive users will take advantage of the retail price drop in 1.
above and adopt Microsoft Project, and the free downloadable binaries will
convert even the most price-sensitive into Microsoft Project users. In
addition many people will download the free Windows binaries, either to use
casually or just to play with or to familiarize themselves with the
software. This increased number of users will give MS Project greater
market penetration, making it more of a standard. Competing products can
expect their sales to drop.

3. Someone will fork it.

The fork project will start about twenty minutes after the source code hits
the Web. It might just be exuberant geeks, but it might also be serious
Project users who at last have a chance to fix what has been bothering
them. But these will probably be just bug fixes. And because the fork
will not initially have the expertise and experience of the Microsoft
development/marketing team, the project's credibility will be low. The
fork will succeed only if it offers something that users want and can't get
from Microsoft, and this something also attracts additional developers.
This something might be a cloned version of the proprietary features in 1..
above, provided no patents apply. Remember that if the fork is really
good, Microsoft can simply pick up the fork's code and put it into the
Microsoft tree. In the case of accepting cloned proprietary features,
Microsoft must then continue to innovate for the boxed version, or accept
parity with the fork. If the boxed price is low enough, the fork is
unlikely to clone the proprietary features. The most likely scenario is
that Microsoft remains in charge of the Open Source version of Project;
bug-fixers are more likely to send their patches to Microsoft than to the
fork. Microsoft will learn to work cooperatively with the developer
community and be responsive to its customers and users -- or suffer falling
revenues.

The competing project management software (2. above) will not benefit
immediately from access to Project source code. If they adopt any of it,
they must also put their products under the GPL. Microsoft will
specifically choose the GNU GPL rather than the BSD license for this very
reason. And before the competitors work up their nerve to open their
source code in response to Microsoft, they may even have vanished (see 2.
above
).

4. Microsoft welcomes outside contributors.

Faced with lower product margins (see 1. above), Microsoft must leverage
outside contributions to help cut development costs. This will be the
hardest part of Open Source to implement. The contributions are more
likely to be bug fixes rather than feature adds, and if the code is at all
complex and especially if it is not modular, outside developers are
unlikely to become involved. And it is probable that the source code will
take a year to clean up before it can be posted for others to work on.

5. Microsoft Project will grow a services organization.

Microsoft must accept the lower price and lower margins mentioned in 1.
above
, and build an MS Project service organization. It might do
installation and customization, and it will probably move into the online
hosting of Project currently offered by third parties such as EPI and MS Project Hosting.com.

Although Microsoft is losing its proprietary advantage over competing
firms, as a large company Microsoft will still be in a good position to
deal with top companies for lucrative service/support contracts. Smaller
service firms will emerge to deal with the lower end of the market, and any
of these might eventually grow to a size to compete with Microsoft. In any
case, competing service organizations will help keep the price of
Microsoft's services lower than they would otherwise be.

All of the foregoing depends on two assumptions: that Microsoft sees that
Open Source may offer a means of survival for some Microsoft products, and
that the code of Microsoft Project is not so intertwined with Office or its
operating systems that they cannot be separated. The five developments
sketched above are merely the results of sensible Open Source planning
(which will include the anticipated fork in 3. above).

Donald K. Rosenberg is president of Stromian Technologies, a marketing
consulting firm, and author of Open Source: The Unauthorized White Papers,
(Wiley), a book taking a business approach to Open Source software. Don
has twenty years of marketing experience and has worked with companies
large and small in the U.S. and Europe, both in Open Source and proprietary
software licensing and marketing. Besides consulting on these issues, Don
has given talks about them at USENIX, ALS, LinuxWorld (San Francisco,
Frankfurt/M), Wizards of OS (Berlin), CeBIT (Istanbul),and Comdex (Las
Vegas, Basel). See Rosenberg's Corner at ConsultingTimes.com for his
column on Linux and business/government user issues.

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