Fwd: Fw: Microsoft warns of open source threat

[technomage]

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just thought you guys would want to see this...


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Subject: Fw: Microsoft warns of open source threat
Date: Sun, 16 Feb 2003 08:59:04 -0500
From: David Poehlman <poehlman1@comcast.net>
To: blinux list <blinux-list@redhat.com>

Microsoft warns of open source threat
By
Ian Fried
Special to ZDNet News
February 5, 2003, 4:34 AM PT
URL:
http://zdnet.com.com/2100-1104-983398.html

Microsoft is warning that the success of the open-source movement could hurt
its sales, potentially forcing the software giant to cut prices and
sacrifice
both revenue and profits.

"To the extent the open-source model gains increasing market acceptance,
sales of the company's products may decline, the company may have to reduce
the
prices it charges for its products, and revenues and operating margins may
consequently decline," Microsoft said in a filing last week with the
Securities
and Exchange Commission.

In the filing, the Redmond, Wash.-based company paints a picture of two
contrasting business models--its commercial software development model, in
which
a single company bears the costs of developing software and reaps the
financial benefits of the work; and the open-source model, in which, says
Microsoft,
"software is produced by global 'communities' of programmers, and the
resulting software and the intellectual property contained therein is
licensed to
end users at little or no cost."

A Microsoft representative was not immediately available for comment.

Companies often include cautionary language in their regulatory filings
about potential risk factors. Other threats listed by Microsoft include
potential
litigation, the fact that many of the company's newer products are
unprofitable, and "General Economic and Geo-Political Risks."

However, Microsoft has long criticized the economic underpinnings of the
open-source movement.

In the regulatory filing, Microsoft specifically calls out the threat that
some government agencies may switch to open-source software.
South Africa
is promoting the concept, and Germany is
paying
companies to build equivalents to Microsoft's Outlook e-mail software and
Exchange communications software.

The pressure from the open-source movement is not just financial, as the
availability of open-source software puts pressure on Microsoft to open up
the
code that underlies its own products.

The company has already agreed to open its usually secret source code to the
British government.

News.com's Stephen Shankland contributed to this report.




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