Price hike

The market for alternative desktop systems to Microsoft’s Windows environment was given fresh impetus on 31 July 2002 when the US software giant switched over to its controversial ‘Licensing 6.0’ scheme.

This new subscription-based charging policy is expected to push up prices of Microsoft’s software for most of its customers. At the core of the new policy is ‘Software Assurance’, an upgrade scheme that grants users of Windows 2000 and XP access to desktop and server software updates as soon as they are released. But there is a catch. On average, customers will pay an additional 29% on top of their desktop licenses to cover desktop software, and about 25% on top of their server licenses to cover server upgrades, according to Gartner, the IT research company.

Companies that did not sign-up for the new deal before the deadline will have to buy completely new licenses when they wish to upgrade to, say, the next version of Windows or Microsoft Office. At the time of the change over to 6.0, AMR Research claimed that 40% of clients decided not to sign-up outright, and 30% had yet to decide whether they would sign-up in the future.

Microsoft policy: the rationale

What lies behind Microsoft’s seemingly foolhardy tactic of raising its desktop licence fees in the midst of the technology industry’s worst recession?

There is certainly one overriding reason: however much intelligence might be incorporated within the proliferating number of client devices, ultimate technical control will be exercised at the managed, infrastructure level. And that power will translate into wealth.

For Microsoft – and, for that matter, Sun, IBM, Hewlett-Packard, Oracle and perhaps even BEA Systems – the most important strategic objective is to take and hold a central position in the supply of key parts of a server-based infrastructure.

Essentially, Microsoft introduced ‘Software Assurance’ to covert its corporate desktop customers into subscribers of Office services, who will then become potential customers of other .Net services and applications that extend far beyond Office.

Client-server: Two-tier and three-tier client-server architectures consist of application logic stored on the client device, accessing data from a central database, sometimes with a third layer of centralised processing for more demanding applications. Although it provides fast local processing of applications, the client-server architecture is expensive to maintain on the client side as maintenance must be done on each PC.

Server-based: Reduces support burden by placing all application logic and data onto central servers, so that client devices are managed centrally. Can be deployed in three ways: Thin-client – uses a very small piece of client software to receive and display applications based on a server, transmitted using proprietary compression techniques over a variety of different network protocols; Web-based, similar to thin-client but using a web browser as the client to view applications based on web servers which are transmitted through the standard Internet protocols; Dumb terminals, which carry no client, have no processing power and no storage, but can display applications in graphical user interface format transmitted directly from the server over proprietary protocols.

Rich-client: This attempts to provide the local processing and personalisation of client-server architectures, with the central management and maintenance associated with server-based architectures. It uses the client platform to store chunks of business logic and data, such as role-specific settings, to enhance and speed up the delivery of logic and data on the server. Client software is maintained by downloading new versions from the server in each instance of use.

Quotes

“Microsoft has lost a lot of friends. If another technology solution became viable at the desktop level then people will take their revenge.” John Handby, CEO of IT director forum CIO Connect, reflects on Microsoft’s new licence fee structure.

“Microsoft Office is part of the basic IT infrastructure of the enterprise, and cannot be eliminated or easily replaced.” Michael Silver, Gartner analyst.

	Andy Bovingdon, Tarantella

“No one wants a dumb terminal. They have got used to all the extra applications, such as games and media players, and the ability to personalise their desktops, which is included in client operating systems.” Andy Bovingdon, UK director of product marketing, Tarantella.

The Borg fights back

Microsoft may have given its competitors hope by raising prices for some. But it plans to take that hope away again.

Over the next five years, Microsoft plans to spend $3 billion on Office, its desktop suite. That bill will cover working over the software to include web services (.Net) capabilities; working on specialist new versions for vertical markets (such as lawyers or publishers); and on extending Office functions to non-desktop devices. This software will also be sold in conjunction with application software from Microsoft’s newly acquired subsidiaries, Great Plains and Navision.

Microsoft believes that this strategy will enable it to double the size of its applications software business, from $10 billion to $20 billion by 2010. Microsoft is also employing 400 ‘sales advisors’ who will go out and work with corporate customers, watching for new opportunities and advising them on how to get more out of the latest versions of Office.

The players

Not every desktop has to be a Windows machine running Microsoft Office. Ask the suppliers below.

Apple: Alternative desktop software and hardware manufacturer, popular in media, design and science industries. www.apple.com

Citrix: Dominant dedicated vendor of thin-client architectures for the Windows operating system. www.citrix.com

CodeWeavers: Provides a suite of tools, such as CrossOver Office, which enable Windows applications to run on a Linux operating system. www.codeweavers.com

Corel: Sells office productivity tool WordPerfect and spreadsheet product Quattro Pro, among other applications, for the Windows operating system. Two leading computer makers, HP and Dell, recently selected WordPerfect and Quattro Pro as an alternative to Microsoft Works, a scaled-down version of Office, for consumer and small-business PCs. www.corel.com

Curl Corporation: Start-up backed by Internet pioneer Tim Berners-Lee, which sells a proprietary rich client technology. www.curl.com

Groove Networks: Start-up founded by office productivity software pioneer Ray Ozzie. Developing peer-to-peer desktop management. Microsoft is a significant investor. www.groove.net

IBM Lotus: Vendor of Lotus collaboration software comprising email, instant messaging, collaborative calendars and discussion forums, all running on top of a knowledge management database. www.lotus.com

Lindows.com: Developing the LindowsOS, a Linux operating system that supports Microsft file types and runs certain Windows compatible programs. www.lindows.com

Microsoft: Supplier of Windows, the world’s dominant desktop operating system, and enormously popular desktop applications. Moving its architecture from client-based to rich-client-server architecture with new .Net framework. www.microsoft.com

Softricity: Partnered with Microsoft and Citrix to provide a server-based software delivery and management platform. www.softricity.com

Software602: Supplies 602Pro PC Suite, an alternative to Microsoft Office that runs on Windows. www.software602.com

Sun Microsystems: Sells the low-cost StarOffice office productivity software that runs on Windows, Unix, Linux and Sun’s own Solaris operating system. Also distributes open source version called OpenOffice and supplies the SunRay server-based desktop architecture. www.sun.com

Tarantella: Thin-client architecture vendor that competes with Citrix. Focus has now shifted towards web-based application deployment. www.tarantella.com

Thinkfree: Sells the low-cost office productivity software, ThinkFree Office, which runs on Windows, Mac, Linux or Unix operating systems. www.thinkfree.com

VistaSource: Sells alternative office productivity software, Anyware Desktop (previously Applixware Office), which runs on Unix, Linux and Windows operating systems. www.vistasource.com

Ximian: Optimises Linux open source desktop applications and operating system for use within an enterprise. Also resells Sun’s StarOffice. www.ximian.com

Pick up the penguin

While talk of a mass exodus may be premature, the rapidly rising prices of Microsoft desktop software is driving renewed interest in Linux-based architectures. A third of businesses in Europe are considering a switch to open source architectures in order to cut IT costs, according to a 2002 survey by OpenForum Europe, an open source lobby.

Traditionally, the main barriers to open source have been the lack of support and in-depth functionality. But Microsoft’s chief rival, Sun Microsystems, recently released five million lines of StarOffice code as open source software, and plans to sell Linux for some corporate desktop computers. At the same time, alternative desktop applications suites, such as Gobe’s ‘Productive Office’ suite – originally used for the now defunct BeOS operating system – have also been turned over to the open source community.

Suppliers such as US-based Ximian develop free open source desktop applications and operating systems into enterprise class products, while developers such as Lindows.com and CodeWeavers are working to make Windows software run on Linux machines.

Wireless working

The notion of the Windows-based desktop as the main source of IT applications is changing. The increased processing power of mobile devices, such as smart phones, personal digital assistants and wireless-enabled laptop computers, has created an attractive market for mobile device operating systems and promises to make such devices more pervasive even than desktop PCs.

There are already more mobile phones in the world than there are PCs. And if wireless operators’ plans to build high-bandwidth networks across the globe are successful, it is conceivable that by the end of the decade more business people and consumers will access the Internet and Internet-based applications through their mobile devices than through a desktop PC.

Microsoft, for once the underdog, has built a cut-down version of Windows for mobile devices. But it is playing catch up to Palm, the dominant PDA operating system vendor, and Symbian, the smartphone OS operating system developer. Symbian is backed by a powerful consortium of mobile phone manufacturers, including Nokia, Motorola, Ericsson. By 2005 it is expected that 50% of mobile phones will run the Symbian OS.