[AUUG-Talk]: MEDIA RELEASE: Ballmer Agrees With OSIA: Microsoft Software Too Expensive

[Con Zymaris]

(Feel free to disseminate further)

FOR IMMEDIATE RELEASE

Ballmer Agrees With OSIA: Microsoft Software Too Expensive

Australia -- 20th October, 2004

Microsoft CEO Steve Ballmer recently declared that a $100 PC was needed
to combat piracy in the emerging economies. Ballmer was quoted as
stating that "There has to be...a $100 computer to go down-market in
some of these countries. We have to engineer (PCs) to be lighter and
cheaper." [1]
                                                                                
OSIA agrees with Microsoft on this point. However, hardware prices have
already dropped rapidly in recent years due to fierce competition. The
biggest single cost remaining in new PCs is the software which it needs
to run to do anything useful; an operating system and an office
productivity suite. And here lies the problem. 

Microsoft Windows & Office XP combined, retail for almost US$1000, which
could equate to many months of wages for consumers in emerging economic
regions like Africa and Southern and South-Eastern Asia. This cost is
300% more than the cost of the entire PC hardware, and 10 times more
than the price that Steve Ballmer wants PCs to cost.
                                                                                
"The Microsoft software in the average user's PC is the most expensive
part of the computer, and is the reason why it will never be possible to
create a US$100 computer when using Microsoft products," said OSIA
spokesperson Mike Williams. "Hardware suppliers are already struggling
on margins of a few percent, while Microsoft makes a profit of almost
80% on its core franchises of Office and Windows. We find it refreshing
that Mr Ballmer is acknowledging that this level of price gouging can't
continue, not if he is serious about a US$100 PC. The only way to make
that happen is to use commodity products like Linux and OpenOffice.org,
which have comparable or better facilities for the markets in question 
anyway."
                                                                                
"We understand that Microsoft prides itself on the high level of service
and support it gives its customers. With the growing popularity of free
and open source software, Microsoft clearly can't charge US$1000 for 
the software that a PC requires to be minimally useful, if it is serious
about making the US$100 PC a reality. Ballmer has therefore recognised
that Microsoft has to look towards becoming a services company or a
company which adds real value to minimal-cost products. This is what
many of the firms successfully operating in the open source industry do
now," continued Williams. "Speaking on behalf of the open source
industry, we are looking forward to Microsoft joining us in the brave
new commodity world. We know we can survive and thrive here. Let's see
if Microsoft can too."


References:

 [1] http://news.zdnet.com/2100-3513_22-5419179.html

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About Open Source Industry Australia Limited.

OSIA is the industry body for Open Source within Australia. We exist to
further the cause of Free and Open Source software (FOSS) in Australia
and to help our members to improve their business success in this
growing sector of the global Information and Communication Technology
(ICT) market.

http://www.osia.net.au/

Spokesperson/Contact: Mike Williams
Phone: 03 9621 2377
Email: media at osia.net.au

-- 
___________________________________________________________________________
Con Zymaris <conz at cyber.com.au> Level 4, 10 Queen St, Melbourne, Australia 
Cybersource: Australia's Leading Linux and Open Source Solutions Company 
Web: http://www.cyber.com.au/  Phone: 03 9621 2377   Fax: 03 9621 2477