"Remove me from this land of slaves,
Where all are fools, and all are knaves,
Where every knave and fool is bought,
Yet kindly sells himself for nought.
-- Jonathan Swift
Microsoft has such a nice slogan. "Where do you want to go today?" But in truth Microsoft couldn't care less where you want to go. All they care about is inflating their revenue at your expense. They'll tell you where to go. And you will go along with it. You can go easy or you can go hard...
A good example is the enormous market share that has been conquered by Outlook and Internet Explorer. Well, of course these products are the most widely used in the world! It's practically impossible to buy a PC without Windows these days, and Windows comes with Outlook and IE. Setting up Windows for its initial use involves the procedure for entering account data in Outlook and the use of IE as the system's default browser. Switching from these defaults to alternative products involves a conscious effort on the part of the user, removing Outlook and IE is practically impossible. But coercing the user to stick with Microsoft-supplied Internet applications is only a start.
Microsoft's prices have always been rather steep, but Windows XP and Vista offer striking examples of Microsoft's price gouging policies. Windows XP comes in two flavors: the 'home edition' and the 'professional edition'. Of course they're essentially the same product: the same kernel, the same user interface and the same bundled applications. At least Windows NT and Windows 95 were products of an entirely different caliber. Microsoft had intended to sell Windows NT and 2000 to the corporate sector and Windows 95/98/ME to the home and SOHO markets, but many companies used Windows 9x in the office because they could not justify the much higher price of NT and 2000. So the home edition of Windows XP came without a few features that are required in an office environment, such as network client support, group policies and roaming profiles. You don't really get much more software for your money when you buy the professional edition, but the few parts that are missing from the home edition are exactly the parts you don't want to do without in a corporate environment. No matter how you look at it, Microsoft obviously has decided to remove these portions from the XP home edition deliberately, in order to force the corporate sector to use the professional edition of XP, at about twice the price of the home edition.
XP's successor Vista knows no less than six differently priced versions. For the home market there is Vista Home Basic, Vista Home Premium and Vista Home Ultimate, while the business market gets to choose from Vista Business and Vista Enterprise. For "upcoming markets" (read: impoverished countries, mainly in Africa and Asia) there is the Vista Starter Edition. In all cases the cheaper versions have had certain features (all minor ones from an OS design standpoint) removed to make them unattractive for business use, but the bulk of the core code is essentially the same in all versions. As per usual, Vista is more expensive than its predecessor, too: Vista Home Basic is priced similar to XP Home Edition but far less functional, while Vista Home Premium has functionality comparable to XP Home Edition but comes at a higher price. In the corporate segment Vista Ultimate Edition is significantly more expensive than XP Professional.
Imagine that your automobile dealer wants to sell you a new car. You tell him that you will use it to go to the office in the morning and perhaps to visit a few customers as well. He tells you that for professional use you must buy the professional version of the car you wanted, which is essentially the same car at twice the price but comes with a nice 'professional' sticker on the doors and, if you opt for the "enterprise" version, has perhaps an extra light or two on the dashboard. And you don't have any choice, because the "home edition" of the same car has been modified so that you cannot get into your office parking lot.
Would you do business with him?
And it gets even better. A fine example of Microsoft's policy of force-feeding their products to their customers, and a fair indication of what Microsoft has in store for us, is the latest initiative to "simplify" their upgrade policy. Instead of having to agonize over the decision when to upgrade and having to choose between CUP, VUP, PUP or other upgrade schemes, we are now reduced to only one simple option: we are required to buy and install an update whenever Microsoft tells us to.
Under the so-called "Software Assurance Program", which became the only game in town when it replaced all existing upgrade policies, users had to upgrade to Office XP before 1 October 2001 (notwithstanding the fact that Office XP didn't hit the market before 31 May 2001!) or else be charged the full price for a new license the next time they upgrade. (This included a necessary hardware upgrade in many cases, since the XP product line doesn't run well on pre-1999 hardware.) Existing upgrade agreements were terminated on 1 October 2001. Just like that.
In fact the new update policy is an enforced subscription model. Software Assurance is only available for 'current' versions of Microsoft products, and Office 2000 was NOT CONSIDERED TO BE A CURRENT VERSION as of 1 October 2001, since Office XP had been released on 31 May, four months earlier. Furthermore, Microsoft has carefully neglected to emphasize that this extortionist scheme applies to all Microsoft products and not just to MS-Office. As of 1 October 2001 all server products, all desktop products and all application software had to be made 'current' and maintained under the Software Assurance Program, at a price of 29% of the original software cost. Microsoft intended to "reevaluate" this percentage after two years, but apparently never did. (One exception: the enforcement of Software Assurance doesn't apply to operating system products -- yet.)
As a result, many corporate customers faced an unexpected upgrade expense (in many cases a large one) to avoid having to pay the full price for their next upgrades. They also had (and will have) to implement brand-new and barely tested "service pack zero" versions of Microsoft products, on only four months notice before Microsoft declared existing upgrade policies on mission-critical application software null and void.
In the summer of 2005 Microsoft announced that Software Assurance would be mandatory in order to obtain an Enterprise license for Windows Vista.
In a normal, healthy business model sales figures are generally a function of demand for the product which in turn reflects, among other things, its quality, value for money, performance in comparison to competing alternatives, and marketing. In Microsoft's case this obvously wouldn't be enough to keep up the sales of new product versions. Their product quality, or lack thereof, has already been discussed at length in this paper. Upgrades to new versions are strangely expensive but do not offer any new features that really pay for such an investment. Competing alternatives are scarce thanks to Microsoft's succesful anti-competitive tactics, but more and more major Open Source Software products owe their growing popularity to their excellent performance. And in spite of Microsoft's succesful marketing a large and growing number of their customers grumbles about never ending software glitches and expensive licenses, to the point where the company has become known for making bizarre profits by selling shoddy products.
Planned obsolescence has been an important factor in Microsoft's continued sales. In short, whenever a new product is being released the previous one (which is generally cheaper both in licensing fees and hardware requirements) is taken off the market and support for it is discontinued a little later. Some ten years after their release, Windows '98 and Office '97 are still being used by small companies and private persons, because they have all the features these users need (and then some) and they run on older, cheaper hardware. The only thing that eventually forces these users to buy an expensive upgrade is the fact that these products are no longer supported, so drivers are no longer available and security updates are no longer being released.
The main reason why large companies are generally quicker to replace discontinued software is that it is cumbersome to have to maintain different versions. That generally means that the introduction of a new product version (which soon becomes the only one available) generally signals the end of previous versions. While Office '97 may still do everything these users need, having to maintain Office '97, Office 2000 and Office XP in a single corporate network becomes such a pain that eventually upgrading to the "current" version of Office becomes the lesser evil.
Windows Vista is a good example of how planned obsolescence works. Some six months after its initial release the market still largely ignored Vista due to its many driver issues, its hardware requirements, its expensive licenses, and lack of a first service pack. But many hardware suppliers (especially in the market for notebook computers) soon shipped their products only with a preloaded OEM version of Vista, and Microsoft announced that XP will no longer be available by the end of 2007. While XP will still be supported with critical security patches for some time, its days are numbered. This leaves the customer no choice. While the market has shown little interest in upgrading to Vista, the planned obsolescence of XP has made Vista the only game in town.
The increase in software cost in the next few years will typically be about 35 percent for companies who upgrade once every three years, and can be anywhere between 68 percent and more than 100 percent (!) for those with four year upgrade cycles, as marketing research bureau Gartner has calculated.
Since the maintenance agreement Microsoft wanted customers to purchase after the upgrade (before the October 1 2001 deadline) costs 29 percent of the full software price, you don't have to wait much more than a year to break even by not upgrading but putting the money in the bank instead of giving it to Microsoft.
The new scheme leads to ridiculous situations in which it is often cheaper to buy new software before the deadline and let it sit on the shelf for a few years instead of installing it, rather than to upgrade three years or so from now. Of course we'll eventually have to upgrade anyway, as new releases of Microsoft products introduce incompatibilities with the versions that are current today.
(Note: in an unprecedented response to pressure from large customers, Microsoft declared a 'transition period' from 1 October 2001 to 28 February 2002 to ease the pressure a bit. This gave users a bit more time to cough up the money for their mandatory upgrades. But apart from this minor delay, which is essentially nothing more than a nice gesture, the new scheme remained the same.)
At the time Gartner did the math, and their response didn't leave much doubt about the matter:
"Microsoft believes it has simplified its licensing; Gartner believes Microsoft confuses simplification with the elimination of options. Either way, most enterprises will pay much more. A typical enterprise with 5,000 desktops that upgrades Microsoft Office every four years will have its fees increase from $900,000 to $1.7 million."
Similarly, the 4,000-member Dutch Network Users Association calculated that 86% of its members face a price increase. NGN chairman Vincent Everts noted that companies will have to pay just to qualify for Software Assurance, because companies must be running the most current version of Windows or Office to get the maintenance agreement. "They are forced to buy this program [...] even though they don't want it, and that's what a lot of people are very angry about," Everts said. And with good reason: by the end of 2006 it was clear that, with a five year interval between the release dates of Windows XP and Vista, none of the updates that so many Software Assurance licencees had ostensibly been paying for, had materialized. Forrester Research concluded that Software Assurance had only driven up the cost of software licenses significantly without actually delivering any benefit whatsoever.
Yes, Your Honor, here we have Microsoft demanding a revenue spike solely for their own purposes and promising consequences if customers don't cough up on schedule. This policy will of course be enforced through product bundling, tight control of document formats, and the deliberate introduction of incompatibilities of new products with existing ones. No significant improvements in the way of products, services or functionality has been offered to justify such inflated prices. Yet Microsoft insists that this new scheme is intended to benefit users, that 80 percent of their customers won't pay more than they used to (even in the face of simple calculations that show this not to be true) and that they've come up with this extortion scheme in response to demands from their customers. Excuse me?
But it gets better. In the summer of 2005, Microsoft CEO Steve Ballmer told analysts that Microsoft will release new, more expensive versions of Windows and Office. After the current 'Professional' editions of Windows (which raked in a few extra billions already) Microsoft now considers a Windows 'Enterprise' edition and a 'Premium' version of Office. However Ballmer did not clarify what extra features, if any, these versions will offer in order to justify their inflated licensing costs.
Another good example of how Microsoft only wants to protect revenues rather than serve their customers is the licensing technology that will be incorporated in all new products, starting with Office XP. The software license is tied to the PC's hardware, which is identified through the unique characteristics of ten hardware components, e.g. the MAC address of the network interface and the serial numbers of IDE harddisks. Licenses need to be 'activated' (for which you have to contact Microsoft). Licenses automatically become void (read: the software shuts down) after certain hardware modifications. In other words, if you replace a malfunctioning network card or hard disk you have to to contact Microsoft and kindly request that they 'reactivate' your license so that you may continue with your work. The license verification code also contains bugs that may result in Office suddenly shutting down and asking for an original CD for re-activation, which essentially leaves you without a functioning set of Office applications. How's that for enhanced productivity?
Microsoft doesn't care where you want to go today. You'll go wherever Microsoft tells you to go, period.
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