Accounting & Business Management

Microsoft promised their business management software development "partners" they would never compete with them. I predicted about a year ahead of the fact that Microsoft would purchase a major Windows accounting software publisher, and predicted it would most likely be Great Plains, and that would be the beginning of the end for everyone else publishing accounting software for Windows.

I further predicted that a low end accounting package would be purchased or developed quickly to take market share away from Intuit (QuickBooks), Sage (Peachtree, Business Works, etc.), and other low range publishers. Finally, I predicted they would tack on Point of Sale and other more specialized modules.

Microsoft bought Great Plains, and six months later, Great Plains announced a low end accounting package, Small Business Manager. Later, in June of 2002 Microsoft purchased Point of Sale software publisher Sales Management Systems. The POS products will be integrated with Small Business Manager.

In announcing Small Business Manager, Microsoft made a point that it was higher priced and did not compete with QuickBooks, Peachtree and the like. This was quietly fixed some months later when a reconfigured and re-priced version of Small Business Manager was issued, moving firmly into QuickBooks territory.

Nor does all this stop with just accounting and Point of Sale. Microsoft has announced its entry into the lucrative CRM (Customer Relationship Management) market in direct competition with former partners. SCM (Supply Chain Management) is sure to follow.

For other business models, Microsoft has announced Professional Services Automation (B5), a software package designed for wall to wall control of professional practices, especially engineering, law and others that are "project" based. PSA integrates Microsoft Project, knowledge management, time, expense and project accounting, financial reports and analysis,

Microsoft makes a lot of noise about concentrating on the "underserved midrange market" ($1 million to $1 billion in their definition) and not competing against "established enterprise partners" like SAP at the high end. Translation: "We aren't ready yet, and we still need you to lay the groundwork by converting all your enterprise clients to Windows and .NET".

Microsoft's "development partners" are going through the same three stages we have seen in other markets Microsoft has invaded: denial, desperation, bankruptcy. They'll all get a brief mention on www.fu??ed company.com (you need to fill in those ??s yourself).

Sage (Best) denied any impact on its business, but has already entered the desperation stage with a joint announcement with IBM that it will be a major supporter of Linux. Way too late - they've already forced their customers to Windows versions of their products. Peachtree, for instance, refuses to install if you have a Linux / Samba server on your network, even though it would work just fine (if you could install it). Peachtree support still refuses to talk to you if you have such a server. Sage is toast.

"But," you say, "how can Microsoft displace Intuit? Everybody's using QuickBooks. Intuit is just too popular." Microsoft's "Triple Terminator" is the transition of Windows software to .NET, Longhorn and Palladium. Microsoft will "help" Intuit make these transitions the same way they "helped" WordPerfect and Lotus make the transition from DOS to Windows. Only Microsoft software will be able to take full advantage of the this future world - Intuit is the WordPerfect of the future.

So what does all this mean to your business? When evaluating your management and accounting options, you need to keep these points in mind:

• If you stay with Windows for your business management software, you will, sooner or later, be running only Microsoft software.
• Microsoft's economic model requires rapid revenue growth. They are finding new markets resistant, which means squeezing more money out of established markets.
• The purpose of monopoly is to increase profits through unrestricted increase in prices. Monopoly is established by underpricing competitors until they are gone. Microsoft Office used to be $99, or $0 because it was safe and easy to steal. Now it's $500 and going for $700, and stealing it is becoming difficult and dangerous.
• Microsoft intends to move their customers to a .NET / Web Services / ASP model, particularly small business customers. Your software and business data will not reside on your computers, but on .NET servers, with access controlled through Microsoft Passport servers.
• Even if you avoid the .NET model, your business data is held hostage through proprietary formats interpretable only by Microsoft software, which will be time limited (see Palladium). If you don't make your payments, you will be out of business.
• You won't be able to control Microsoft by threatening to go to other vendors. There won't be any, unless you are willing to bite the bullet and abandon Windows entirely. Microsoft's goal is to make that transition so traumatic it is effectively impossible.
• Even if your established competitors are as stuck with Windows as you are, new entrants into your market may not be so limited . There are mature and capable non-Windows alternatives that already cost much less, offer liberal licensing terms, do not report back to Redmond, and allow perpetual ownership of both software and data.
• Think about Security (see below).

By now, it should be pretty obvious you are going to have to raise your prices, because 100% license compliance is going to be expensive, and you can't afford not to make your software subscription payments because that would be instant Chapter 7. Pray that your competitors all stick with Windows too.

Software development may seem out of place in this business discussion, but in actual fact, only a small percentage of programmers are employed by companies that produce software for sale. The great majority work for non-software businesses developing software for internal use. Custom programs often yield huge labor savings compared to "canned" software.

A large amount of in-house developed software for Windows is written in Microsoft Visual Basic. While Visual Basic coders and their chosen language are roundly despised by "real programmers", they have given business a pool of relatively low cost developers capable of handling routine business tasks.

The Visual Basic language is very loose and forgiving. Its easy to use "point and click" structure ("point and drool" to the "real programmers") allows fairly complex programs to be created with very little understanding of programming principles.

All this changes with Visual Basic .NET, which requires much of the same planning and disciplined structure the "socially acceptable" languages have always demanded (D1, D2). This, and the fact that Microsoft is pushing very hard for conversion of everything to .NET, has left Visual Basic programmers feeling confused, disenfranchised and concerned about their futures.

The effect on businesses, as they too feel Microsoft's heavy hand pushing them to .NET, is an increase in software development costs. Either the existing Visual Basic programmers will have to be sent off for expensive training in the new methods (and then paid more for their new skills), or "real programmers", will need to be brought in, and they're going to want to write in "real languages" like Java or C++.

Another expense is that .NET automatically recasts all the software already developed into "legacy code" that needs to be rewritten. Microsoft provides conversion software, but the resulting .NET programs suffer a nasty performance hit and will need a lot of hand tuning to overcome that.

After that, there will be a complete rewrite for Longhorn (see above). All this is threatening to consume the cost advantage Windows development has enjoyed over other development environments (though some maintain this advantage has always been mythical).

These and other factors described in other sectons of this document have resulted in an unexpectedly high rate of defection by software developers from Windows to Linux (D3, D4, D5). Rather than coming mostly from Unix, 52% of Linux developers previously targeted Windows. This is perhaps the most serious threat to Microsoft's continued dominance, because controlling software developers has always been been their most powerful tool for destroying competition.

As Microsoft pushes its market toward the enterprise data center, they increasingly encounter IS (Information Systems) departments that have very high expectations of vendor support - expectations born of a long association with IBM. To meet these expectations, Microsoft established MCS (Microsoft Consulting Services).

Very quickly, MCS became as much a problem as a solution. Microsoft's "channel partners", VARs (Value Added Resellers) and integrators, long established in the enterprise market, were finding themselves competing directly with MCS for business from large accounts. These channel partners expressed their concern very clearly.

Now, here's Microsoft's problem - .NET. Microsoft's Web services are still pretty much "vaporware" (often impolitely called .NOT), and .NET has serious competition. Sun Microsystems' Sun One and most especially IBM's WebSphere are more mature, and are backed by companies long established in the data center space. WebSphere is backed by IBM Global Services. a worldwide operation with an estimated 2002 revenue of nearly $40 Billion (after absorbing PWC Consulting).

It would take Microsoft decades to build an organization competitive with IBM Global Services, so they must depend on their channel partners - not only to push .NET, but to convince customers to delay Web services implementations based on competing products available now. An upset channel could easily switch to non-Microsoft products.

"The channel" has indeed always been Microsoft's secret weapon - a huge number of VARs, resellers, consultants and integrators of all sizes and stripes promoting Microsoft products to businesses, and Microsoft has always treated these "channel partners" very well.

Now, in recognition of their intense need for the channel to do the heavy lifting, not just for .NET, but for business management and accounting, CRM (Customer Relationship Management) and SCM (Supply Chain Management), Microsoft has had to revamp their channel partnership program (S2).

A major feature of the new program recasts MCS from a profit center to a "satisfaction center" (without, of course, giving up profit). It has been decreed that MCS will always seek to be a subcontractor behind a partner rather than the prime contractor. MCS will also sell support to the partners in substantially discounted lumps of $68,000/year for up to 400 hours ($170/hr) and $20,000 lumps for SMB (Small, Medium Business) partners.

This new program has a number of strategic advantages for Microsoft.

• It eases the concerns of all-important enterprise partners, preserving the channel.
• It places no limit on the growth of MCS.
• It gets customers accustomed to dealing with Microsoft people directly.
• It gets partners accustomed to Microsoft being directly involved in their deals.

Yes, Microsoft still covets its channel partners' revenues, and grew its direct sales team by 47% in 2002, and account management staff by 15% (S4, S1), and there's still an imperative to grow MCS to satisfy their largest customers, but they must do all this very delicately, lest upset partners bolt to IBM/Linux and Sun alternatives.

The big question is, can they pull it off? Partners will still be running up against MCS to some extent. Revenue for upgrades is a major item, and is already migrating to Microsoft direct, and that will accelerate as Microsoft moves licensing to a subscription basis. I expect established channel partners to remain concerned enough to build significant capability with alternative products, but not concerned enough to jump off the Microsoft ship any time soon.

What does this means to the small business manager? It means you will be dealing with your local service providers. not directly with Microsoft, for some time yet. Yes, "A Microsoft partner is a victim they haven't gotten to yet", but the channel partners still have a while to live. Microsoft just isn't big enough to do without them, and may well never be that big.

With its business monopolies saturated, the home PC market stagnant, and heavy resistance in the corporate data center, Microsoft sees the huge home entertainment market as its next big revenue generator. Here they expect they can leverage their PC monopoly effectively. As with any market Microsoft enters, "we only want our fair share - all of it".

Microsoft's expressed intent is for all family entertainment to be delivered through Microsoft controlled channels - both hardware and software, and to charge both the content distributor and the content consumer for the privilege.

The XBox game console introduces the concept of Microsoft manufactured and controlled hardware, but is just the first (multi-billion dollar) step. Having seized complete control of hardware design from Intel, Microsoft is setting the stage for taking over the home market entirely - disk, box and content.

Microsoft's next step is piloting now - XBox Live (H3), an on-line gaming system. Unique to Microsoft's system is that Microsoft owns all the servers, thus Microsoft collects all the money and all the personal information about the players. Sony encourages third party businesses to set up and run gaming servers.

Sony is providing an adapter kit supporting both modem and broadband (H4) connections, while Microsoft supports only broadband. Remember how important broadband is to .NET and you see why they discourage modem use. Consider also that Bill Gates and Microsoft co-founder Paul Allen have invested heavily in cable companies.

Next up is the XBox Home Gateway through which all family entertainment will filter. It will, for instance, contain the TV schedule (updated daily from Microsoft.NET) and will select the channels for your new digital TV. This will enable Microsoft to sell "positioning" to TV shows the same way they sold icons on the desktop to Internet services. Any content critical of Microsoft will be pretty hard to find.

Following Home Gateway will be XBox 2, which has been described as much more like a full function PC. This will be the beginning of the end for makers of PCs for the home market. They will find it impossible to build machines compatible with Microsoft's content controls.

The Home Gateway will extend, through Universal Plug and Play (already a default setting in Windows XP (and already a severe security problem (H1))) to control your home appliances. At least it'll give you some nifty new excuses: "A hacker broke into the microwave and ruined the turkey", "The refrigerator got a virus and that's why the food spoiled and everyone got sick".

Of course, Microsoft will be selling plenty of information about you and your family to advertisers, market researchers and probably Homeland Security. They've already contracted for profiling software for their current TV set top boxes (H2).

The Home Gateway, coupled with Digital Rights Management software, and eventually Palladium is half the "Trustworthy Computing" picture Microsoft is promoting to the MPAA (Motion Picture Association of America) and RIAA (Recording Industry Association of America) as an unbreakable distribution method.

The other half of the picture is the servers used to feed digitized content (motion pictures, music, etc.) to PCs and other devices equipped with Microsoft DRM technology (H10). A more advanced DRM Server (H5) is planned for release, and will replace the current Media Rights Manager server. The servers are used by content providers .

To support all this, the Microsoft EULA (End user license agreement) you have "signed" (by the act of using Windows XP or by downloading recent Service Packs and security fixes) specifically states that Microsoft has the right to inspect software on your PC and to change or disable that software as they wish, without notice to you, and without liability to Microsoft, to protect copyrights (including their own). This means Microsoft has complete administrative rights to your PC - home or business.

Every household with children or teenagers will have its computers infected with Microsoft's DRM schemes within a few months. Kids have always received everything free from their parents, and just can't understand that "free stuff" from the outside world must be regarded with suspicion. Microsoft is distributing their DRM system with free "preview" CDs and by similar means (H9, H12).

Of course, advanced DRM requires hardware support at your end, but hardware manufacturers are all perfectly willing to go along ( H11). They see no downside whatever to your need to buy new video and sound cards, or even new PCs to support Microsoft's schemes.

All this has caused considerable unrest among rights and privacy advocates, because it tramples a number of legal rights, such as the "fair use" doctrine, post sale usage of purchased content, privacy, the security of your PC and control of the content you can view and the software you can run - but with lawmakers already bought and paid for, there's not a lot that is likely to get done about it.

So Microsoft's push to control home entertainment seems unstoppable, yet right in the midst of it, they received a stunning setback. It was announced on September 9th, 2002, that Movielink (H8), a joint venture of Metro-Goldwyn-Mayer, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Brothers would offer movie downloads starting in Q4 of 2002. IBM, not Microsoft, provides hosting, system operation, rights management and network management.

This deal is so big the Department of Justice jumped in before it was even announced. It's now obvious these movie giants never intended to consider Microsoft's delivery plan. Why? Looks like it's that pesky "trust" thing again. You just don't hand a company with Microsoft's ambitions control of your air supply (I told you these guys were smarter than the software industry).

The music industry, on the other hand, is a different matter - all the greed with none of the brains. I expect Hilary Rosen's RIAA to go hook line and sinker for Microsoft's promises. If they had two synapses to rub together they would have seen the power of Napster and turned it to their own advantage, but now, they'll be completely dependent on Microsoft for delivery, and that's going to cost them plenty (H12).

Security problems will continue to dog Microsoft at an accelerating rate. Security is high profile since 9/11, and it's one of Microsoft's most serious weaknesses. Worm, virus and trojan invasions, Web page defacement, credit card theft, data theft, espionage and destruction are major features of Windows systems, costing business tens of billions of dollars per year worldwide, which could easily become hundreds of billions.

The vulnerability issue has now become such a serious public relations problem (even long time ally Gartner Group has recommended dumping Microsoft's Web software (X34)). Security issues now threaten Microsoft's expansion into the enterprise datacenter and encourage customers to look seriously at alternatives.

Microsoft claims attacks predominantly focus on Windows because Windows is so popular, but it is even more because Windows is a uniquely soft target. While no system is entirely secure, most at least take some skill to penetrate. Windows provides easy success for neophyte crackers and entertainment for thousands of unskilled "script kiddies". But don't take it from me, here's what Microsoft says.

"... Our products just aren't engineered for security." (X0) - Brian Valentine - Microsoft senior vice president for Windows development. Another Microsoft executive recently explained they never paid attention to security "Because customers wouldn't pay for it until recently" (X23). In other words, customers wouldn't pay extra for something they expected as part of the product.

Windows XP, advertised as "The Most Secure Windows Ever" needed a major security patch within weeks, for a feature (Universal Plug and Play) for which there is still no use, but which fits into Microsoft's marketing plans. Now Windows XP's password security has been found totally useless, easily bypassed by even normal users (X58).

The skill level needed to write a successful Windows worm or virus is absurdly low. The people who launched the famous Love Bug (estimated $8 Billion in damage and eradication costs), was launched by people with only a few weeks of computer training.

Even commercial products take advantage of Windows' weaknesses. Anyone can install a keyboard logger on someone else's Windows PC and have it email all the activity on that computer to the perpetrator's mailbox (X10, X9).

Now that Microsoft's customers are desperate enough to pay extra, Microsoft has opened a Microsoft Security Business Unit, and is exploring ways to charge customers to overcome the design failings of Microsoft products. This will allow "tight integration" between vulnerabilities and extra cost add-on security products. Sweet deal, huh? Of course, Microsoft's existing security product, ISA Server (Internet Security and Acceleration Server) also requires occasional security patches (X69).

Microsoft's .NET Initiative will magnify the current problems, since business systems participating in .NET have to be permanently attached to the Internet, with key services coming from Microsoft servers of questionable security (X28, 57). Key features are "single sign-on" and "tight integration", so when security is broken at one point, it's broken everywhere. What a convenience for invaders!

What makes Microsoft's environment so uniquely vulnerable to invasion, subversion and security leaks, and why are the vulnerabilities not getting fixed?

• Single User Roots - Microsoft's software was originally developed to run on a single user computer not attached to a network of any kind, never mind the Internet. Key integration features, such as OLE (renamed COMS, then DCOM (distributed COMS), then Active X) were originally single user code requiring no security features.

  You can't just tack security on to a fundamentally insecure structure and have it be effective. Unix (and by extension Linux) and mainframes were designed to be multi-user and networked with prudent built-in security from the very first.

• Ease of Use - Effective security is always at odds with convenience. Microsoft's main marketing pitch is "ease of use". and "integrated environment". For this reason, what security features there are are often turned off by default.

• Tight Integration between products allows a rogue process to move freely. Tight integration through secret programming interfaces locks competitors out and is a critical "ease of use" factor as Microsoft products become more complex, so it's here to stay.

• Automation Features - the very features that make it possible for non-programmers to automate business processes and improve ease of use are used by worms and viruses for their own automation needs. Because every Windows computer has these features, worm and virus writers can take full advantage of them.

• Intentional Vulnerability - Microsoft demands access to your computers and network over the Internet, without your consent and without your knowledge (it's in the license agreement for Windows XP and Windows 2000 SP3). To expect a computer system outfitted with these "features" to be in any way secure is purest fantasy.

• Deliberate "Back Doors" - It is strongly suspected that Microsoft has provided government agencies with keys and codes allowing secret entry into Windows systems. This is a major reason why China and the German Bundeswehr are dumping Windows. Further, Microsoft developers have hidden whole games within the code of Microsoft Office. It's absurd to think they haven't put in a few convenient entry points.

  Many think the sudden surrender of the Bush Department of Justice to Microsoft, after the antitrust case was decisively won and upheld on appeal, was in return for Microsoft inserting access points into Windows - access points that are probably redundant, but asked for as a result of the now famous lack of communication among U.S. security agencies.

• Uniformity - (X59) - In agriculture, the "Uniform Windows Experience" would be called a "monoculture". Monoculture crops, all from exactly the same genetic material, maximize ease of marketing, but are vulnerable to complete destruction by pests tuned to that exact crop. Monoculture agriculture makes heavy (and sometimes ineffective) use of expensive pesticides. Monoculture computing makes heavy (and often very ineffective) use of expensive antivirus and invasion detection software.

• A Corporate Culture of aggressive competitiveness both within the company and without has different groups working on similar projects. They rush their development and do not communicate with others, knowing that one group will survive and the other will not. Adding new features takes precedence over all other work, because that's what wins political battles.

• Poorly Trained Administrators - Microsoft's constant pitch to business is that with their products you don't need highly trained and experienced administrators (color them expensive), it's all "point and click". Unfortunately, system security is rocket science, so most Microsoft shops do not have the skills to implement effective security.

• Inexperienced Developers straight out of college are Microsoft's choice, so their employees are vulnerable to indoctrination in Microsoft's cult-like corporate culture (the uniformity of Microsofties in appearance and attitude is startling). These developers have no real experience in business methods and little interest in or understanding of security issues.

What is Microsoft Doing About This

Denial has always been Microsoft's "remedy of choice", blaming "dumb users", "criminal hackers", and "poor administration" for security problems. Apparently Microsoft itself employs plenty of dumb users and poor administrators, because they've had to disconnect their internal systems for major cleanups with every big worm attack, and they got slammed pretty hard by the Slammer worm in JAN 2003 (X51, X48).

FUD (Fear, Uncertainty, Doubt) is Microsoft's second line of defense. A large number of articles are now appearing in news and magazines purporting to show that all environments have about the same level of vulnerability (X27), or that Linux has more bugs than Windows. They are typically by "Writers for Hire" (X26), and are simple rewordings of the Microsoft line.

Aberdeen, a market research firm that numbers Microsoft among its important clients, published a "report" with a catchy title claiming that Linux has more security flaws than Windows (X49). Cert , the prestigious security clearing house upon whose numbers the "report" was based, immediately declared Aberdeen's interpretation meaningless and invalid, but this has not stopped the Aberdeen "report" from being widely quoted in magazines and newsletters that should know better.

In January 2002, Bill Gates issued his famous internal memo (obviously designed to be leaked) proclaiming security as Microsoft's number one development concern from that point forward. He also copyrighted the title "Trustworthy Computing" to symbolize Microsoft's new mandate.

Microsoft also created a new vulnerability category, "Important", so they wouldn't have to release so many "Critical" warnings. Since then, public pressure has forced them to bump several "Important" warnings up to "Critical", and we're still getting a "Critical" about every two weeks. (X24, X29).

When a security problem is found Microsoft often does nothing until it becomes a PR problem (X21). Then a patch is issued, which may work, but may cause problems (X25, X56). If it isn't easily fixed, or the fix would violate Microsoft's marketing plans, they just deny the problem (X7, X3, X4, X13).

Meanwhile, security patches continue to roll out in an incessant stream, (X5, X8, X11, X12, X13, X14, X15, X18, X19, X22, X29, X31, X32, X43, X54, X55, X67, X69), and many, many more, but you get the picture. Despite boasting of spending over $100 million reviewing code, very few of the problems (1 out of the first 15 in 2002) have been discovered by Microsoft.

In March, 2003, The U.S. Army was hit by an attack exploiting a vulnerability that had not yet been announced by security researchers (X67). This is a rare occurance, because most attacks depend on well known vulnerabilities for which patches have been long availble. Microsoft rushed out a patch, but it killed some Windows 2000 servers (X68).

Patches already available are often not installed until an attack has made it absolutely necessary. Microsoft has worked hard to convince people that Windows doesn't require skilled administrators, so few businesses have them, so security patches aren't tracked and don't get applied. The Code Red and Nimda server worms came out long after the patches, but a year later servers all over the world still transmit these infections. When informed of an infection, server owners become very angry at the messenger, but don't fix the problem - most have no idea how.

Companies that do have skilled administrators are swamped by the sheer number of patches, and difficult patching procedures, some taking hours to apply. They are often reluctant to install patches at all, because they often break something else, or make the system unstable or nonfunctional (X53, X68). Sometimes they simply don't fix the problem anyway. Sometimes they are used by Microsoft to force new license terms customers don't want, as with Windows 2000 SP3, and to install new features that may disrupt operation.

Even if Microsoft's Trustworthy Computing efforts do produce a "better moustrap", "better mice" are here already - root kits for Windows are now available (X66). Root kits are a generation more sophisticated than the traditional Windows attacks, and a properly written root kit can be nearly impossible to detect. Security experts think there are a bunch of them in the wild, but only a few have been detected so far (mainly due to programming errors).

For desktop computers directly attached to the Internet, the situation is infinitely worse. Most will never be patched, and make convenient tools for DDoS (Distributed Denial Of Service) attacks and as entry points into company networks. For this reason, Microsoft is trying to force feed updates using Windows Update every time you attach to the Internet. Anything wanted by Homeland Security will ride along, of course.

A real concern for users is just exactly what information is being sent to Microsoft during a Windows Update session. Originally, Windows update sent no information at all, but this has changed. A German organization has recently examined the data stream with special tools and found a lot of information about your computer is now going to Redmond, including the Windows product ID and a listing of its hardware configuration (X60).

While it appears no software listing is included in the Windows Update transmission, this too could change. The on-line registration wizard for Windows95 was suspected of sending such a list, but Microsoft denied it and the data stream seemed to show no list. Later analysis, however, revealed a list was being sent. Numeric codes were assigned to about 100 software packages, and codes for the first 10 found on your computer were included in the header block (X61).

Some effects of "Trustworthy Computing" are being noticed by Microsoft's customers, who have started complaining that the initiative is being used primarily as a marketing tool to force them into unwanted upgrades to newer, "more secure" versions of Microsoft products (X33).

The effect of "Trustworthy Computing" on security is much less obvious. In January 2003, Bill Gates gave another of his "we are so secure" speeches, and an ad campaign promoting Microsoft security was kicked off (X47), just in time for the Slammer worm, exploiting a weakness in Microsoft's SQL and MSDE database engines, to shut down networks worldwide (X44).

In the U.S. most of the damage was contained in the early morning hours, but many found they could not use bank ATM machines (X52) or airline reservation systems for the rest of the day. Unlike Nimda and Code Red, Slammer did not become a chronic problem, simply because of its severity. If you had an infected machine, you had no choice but to turn it off, because your network was useless if it was left on. (X46). Once again, it could have been much worse, but the worm's designer didn't optimize for damage (this worm was only 376 bytes in size).

Countries with more centralized Internet structures than the U.S. has, like South Korea, lost Internet access entirely for some hours. In the U.S., access was just deathly slow (I experienced it first hand at about 1:00AM). Had Slammer been designed to do damage, Internet access might have been unavailable for weeks, and the cost astronomical.

All in all, security experts aren't real impressed with Microsoft's "Trustworthy Computing" efforts (X50). In fact, some programming houses have adopted the phrase "Trustworthy Computing" to mean bugs, as in "Make sure there's no Trustworthy Computing in that code". Some experts feel Windows is broken so severely at such a deep level it simply cannot be repaired (X1, X2).

It's just coincidence, but the Department of Homeland Security moved its servers from Windows to Linux on the very day of the Slammer attack (X45). Note also the great improvement in uptime since then.

Conclusions: If your business has data it must keep secure and protected, such as medical records, legal files, or credit card numbers, or your systems must be always available, or if you have something to hide, running Windows leaves you vulnerable to data loss, theft, and possibly to arrest or legal action for failure of due diligence.

If you are a lawyer, why bother with the criminals - charging the victims with negligence is going to be much easier (I am not a lawyer, so this does not constitute legal advice). If you have criminal intent, or antisocial tendencies, I suppose you already know what to do and are probably already doing it.

Microsoft's endless legal problems will continue to erode the company's public image and the trust of business partners.

Even the antitrust case, which Microsoft has settled with the Department of Justice, continues to grind on. Microsoft executives have freely admitted the settlement they negotiated with the Bush/Ashcroft administration hands them greater power than they had before the trial began - not surprising since they wrote it and Bush/Ashcroft just retyped and signed it, but others continue to pursue the case,

Microsoft's highly publicized moves to "comply with the DoJ settlement" are PR stunts and are causing adverse publicity. Their high profile release of 272 APIs (Application Programming Interfaces), for example, was in a format completely useless to anyone (Q1).

Even so, if this was the extent of the matter, Microsoft would be little damaged, but, similar to the O.J.Simpson case, the real damage may be done in civil court. A number of private antitrust cases have been filed against Microsoft. With Microsoft now a convicted abuser of monopoly, guilt need not be proven, just damages - and triple damages apply.

Prominent antitrust cases have been filed by Sun Microsystems over Java, AOL/Netscape over the subject of the original trial, and Be Systems. over crushing their superior operating system, all through monopoly leverage. All these cases include very substantial evidence.

Microsoft has already bought out the Caldera antitrust suit which threatened to drag out a huge pile of their dirty laundry. The buyout is estimated at between $350 and $500 million, but Microsoft tried to trick the press into believing a $150 million addition to existing reserves was the total settlement. Most of the technology press suckered for the ploy.

Microsoft will probably fight the Sun Microsystems Java case to the bitter end, and buy out of the others, because only the Sun case involves current action. The other plaintiffs are already dead. The settlements will look huge, but will be small compared to Microsoft's wealth. The major damage to Microsoft will be to trust, and that will hinder deployment of .NET.

Another "little problem" with the Microsoft / DoJ settlement is that judge Colleen Kollar-Kotelly added a couple annoying items asked for by the states, and wrote herself in for oversight of Microsoft's compliance. Should Microsoft blatantly defy the agreement, as they have done with previous DoJ agreements, judge CKK can pretty much have her way and her way of having it as far as remedies are concerned.

Questions have now surfaced about claims Microsoft made during the antitrust settlement hearings. Microsoft argued that exposing the Windows source code would seriously compromise national security. Now they have agreed to open this same source code to the governments of Russia and China (X62). Is Microsoft deliberately compromising American national security to protect its markets, or have they been bending the truth in court (X63)? Either way, they should be held accountable.

There are currently about 25 patent infringement cases against Microsoft (Q4). Technology innovators tend to be hopelessly naive and do not recognize the smell of Microsoft's money as the smell of death. Microsoft routinely drags out license negotiations until they know everything they need to know about the product. Negotiations are suddenly dropped, and Microsoft issues an infringing product. The next step is to cut off the innovator's cash flow and use Microsoft's massive legal forces to bankrupt him in court. No royalties will be paid.

The list keeps growing. British company Sendo partnered with Microsoft to bring Microsoft's SmartPhone version of Windows to the mobile phone market. Just days before introducing their product, Sendo dropped the relationship and has filed suit against Microsoft. It seems Microsoft's favored contract manufacturers in Asia, who have little software design expertise, started shipping handsets incorporating sophisticated technology identical to that developed by Sendo (Q6).

Microsoft has just lost its appeal of an important patent case brought by Timeline. Microsoft signed a patent license agreement with Timeline, but apparently issued misleading statements about that agreement to their customers to encourage developing for SQL Server. SQL Server developers now face the possibility of having to pay staggering license fees to Timeline. Some are considering suing Microsoft for misleading them (Q11).

Two cases cleared for trial threaten every version of Windows from Windows95 on (Q7, Q8), and if either wins, it will cost Microsoft the big bucks. Microsoft does lose in court pretty regularly, since they're clearly guilty most of the time. When they lose, they negotiate a settlement incorporating a nondisclosure agreement. This costs them extra, but is well worth the cost, because the public never learns the true extent of Microsoft's violation of laws and ethics.

In fact, nearly every Microsoft agreement or contract carries an NDA (Non Disclosure Agreement), often to hide the extent to which extortion was applied. Facts hidden by the NDA may seep out many years later. The NDA required to get critical Microsoft programming assistance in the transition to Windows, for instance, included an extortion clause requiring software developers to drop all development of software for IBM's OS/2 operating system. By such means, superior products are driven from the market.

Now, with Microsoft battling Linux in the universities, they require NDAs that force public institutions to be in violation of U.S. public records laws (Q5). In other words, "You want our software, you're going to have to break the law a little".

Related legal problems are that Microsoft's licenses for Windows XP and Windows 2000 SP3, which are expected to be expanded in future products, apparently force customers to violate both U.S. Banking law (Q10) and HIPAA (Health Insurance Portability and Accountability Act of 1996 Q9). Microsoft's demand to be allowed to enter, examine and make changes to systems that are required to be certified and secured is incompatible with U.S. law and regulations.

Microsoft also faces legal problems oversea. Most prominent is action by the European Commission which is investigating Microsoft's business practices in several areas (Q12). If charges are brought, the EU has much less incentive to accept a favorable settlement than Bush/Ashcroft did. The Taiwan FTC (Fair Trade Commission) also has ongoing action concerning Microsoft's business practices (Q13).

For certain, there will be many more legal actions against Microsoft, because the company has never respected the law. Microsoft started out by stealing intellectual property ("dumpster diving" for code) and computer time, and it hasn't changed its attitude one bit since. It is likely new Federal antitrust charges will be filed soon after Bush/Ashcroft leaves office - there is certainly plenty of material for one.

The smiling Bill Gates mug shot from 1977 exemplifies this attitude. Microsoft claims it was for a traffic violation, but the laws of New Mexico say otherwise - mug shots are reserved for more serious offenses. What was the offense? Microsoft's money has caused that to vanish from the record. As long as money buys "justice" Microsoft will respect neither law nor justice.

Despite matters discussed above, some of which can be interpreted as detrimental to businesses, most businesses Will choose Microsoft solutions, and many will choose only Microsoft solutions.

A principal factor is that America's business leaders simply don't want to think about complex technology issues - they want to think about golf. Microsoft promises them that, and being a large, and hugely successful corporation, they have high credibility with top business executives.

Microsoft's sales teams waste little time pitching to people who understand and implement technology, they pitch to executive "decision makers" who have the power to dictate what information systems will be used, even though they know little about them. Microsoft has direct access to high level managers, many of whom are strong admirers of Bill Gates' wealth,

So strong is the desire to simplify decision making, many executivs are willing to live with "solutions" that don't actually work. The industry is replete with stories of "Microsoft only" shops where staff replaced Microsoft products that didn't work well with lower cost products that did, only to be ordered to remove them and return the Microsoft "solution" to service. Other shops are reported to have adopted a "don't ask, don't tell" attitude.

Microsoft promises integrated solution packages they assure the customer will all work together seamlessly to implement efficient new business processes resulting in huge contributions to profitability in an amazingly short time. Better yet, this is all pre-packaged and can be implemented and run by cheap, semi skilled labor rather than the expensive administrators required by other systems - it's all "point and click".

Microsoft backs all this up with very well developed product selection tools (M2) to help configure systems that might actually work. If the tools are good enough that semi-skilled managers feel comfortable pointing and clicking their way through the design stage, those expensive and troublesome "experts" won't be brought in at all, and superior alternatives to Microsoft's solutions will not be examined.

That's the pitch: at the top, become a superhero to the stockholders without taking your mind off golf, and for the middle managers, the security that "Nobody ever got fired for buying Microsoft" (not actually true, but widely believed). This two-pronged pitch is difficult for any competitor to counter.

Small businesses don't get wined, dined and golfed by Microsoft sales, but they are still continuously exposed to Microsoft's marketing materials, and are just as vulnerable to the temptation of making easy choices. "Lets just go with the leader - that'll be safe." In some cases small businesses have little choice, since their internal systems are dictated by customers and business partners much larger than they are, and they don't have the skills to get around that.

Most small businesses don't call in a consultant until they have already decided on a course of action - they just expect the consultant to make what they have decided to do work. In truth, most consultants are happy to go along with this, because they can charge full rate for everything, and not get blamed for the choices. A system that "sort of works" generates a lot more consultant dollars than one that works (IBM Global Services favors Windows over IBM's own OS/2, because OS/2 works).

Does Microsoft deliver on its promises? In many ways, yes - but that "bottom line" part - no. Microsoft's solutions have always proven to be very expensive, sometimes absurdly expensive, and often far more expensive than available alternatives. If Microsoft solutions were cheap, Microsoft wouldn't be that rich.

Microsoft's solutions often look inexpensive, and are always claimed to be, but are often cheap by the unit and expensive overall. There is often little economy of scale. One unit, a thousand units, the cost per unit is about the same, and each carries full support costs. There are also often many more units than with competing solutions, especially when it comes to servers.

Some years ago, Microsoft convinced management that moving from Novell NetWare servers to Microsoft Windows NT servers would save them huge amounts of money, because the servers could be administered by people with far less skill - it's all "point and click". Companies following this path found that every NetWare server was replaced not by one, but by three or four NT servers, and the admins were definitely cheaper, but there were four or five times as many of them.

Even Microsoft internal documents admit that, dsspite Windows' "point and click" interface, Windows server administration is more difficult and time consuming than with Unix/Linux (A15). Others have had similar results (C37). Compound this with constant security patches and a platform that crashes much more often and you start to see why you need more administrators.

Why wasn't a big stink raised? For the pointy haired bosses of middle management, the Windows conversion was a godsend. Four or five times as many employees means more power and more pay - and nobody could object or criticise, because it was all dictated by top management. These same conditions apply on the "Road Ahead".

This state of affairs will persist, and be resistant to change. Business leaders simply are too comfortable with the Microsoft solution, and become more comfortable as Microsoft eliminates more competitors - less decisions to be made. Being able to say, "we really had no choice", is something most business "decision makers" are willing to pay any price for.

Alas, this soothing ointment does come with flies in it. There are many applications for which Microsoft solutions are simply not at all suitable, and others where they become way too costly the moment a competitor implements an alternative solution. This has given alternatives staying power, and as the cost and complexity of Microsoft's solutions continue to increase, alternatives increasingly threaten the status quo.

Given that Microsoft makes such a compelling case to business leaders, you would think competing products are at the end of their days, yet many are showing such strength, even the technology press is beginning to notice.

In important areas, competitors have slowed Microsoft's expansion to a crawl, and even threaten to recover lost territory. Deliberately incompatible Windows features now often slow acceptance of Microsoft products rather than demolish competitors as intended. To maintain revenue growth, Microsoft has been forced to increase costs to its current customers, providing yet more incentive to look at alternatives.

What happened? Windows NT was supposed to hit Unix hard (it did - like a bug hitting a windshield), and the last mainframe was to be unplugged before the end of the century - yet Unix and mainframes are still the power houses of business technology. Even Novell, decimated by Microsoft's superior marketing, is showing signs of renewed life.

The problem is simple, superior marketing can take you a long ways, gathering all the low hanging fruit, but eventually you get to a place where you must compete on merit. Microsoft has reached that place, and their products have proven inadequate for many jobs.

• Business with highly demanding applications requiring outstanding performance, vast storage capacity, and high reliability find Microsoft products do not meet cost / performance and manageability requirements. Embarrassingly, Microsoft's own HotMail service falls within this category (A14, A15). Unix, Linux and mainframes each have established markets here.

• Specialized workstations - Many organizations have a large number of workstations that don't need Microsoft Office functionality, they just perform one or a very few specialized functions. These stations can be rolled out on thin client systems or Linux workstations at far lower cost, especially for ongoing administration (no - Windows Terminal Services is not equivalent).

• Supercomputer class performance is needed for oil exploration, movie special effects, weapons research, weather analysis and many other demanding applications. Microsoft has no product at all for this market - Linux clusters now all but own this space.

• Cost - Fast growing new businesses with limited financial resources are turning to alternatives, particularly Linux. In years past, cash limited businesses just copied a lot of Microsoft software, but this is becoming difficult and dangerous. Many businesses in highly competitive financial services, volume retail and fast food are running alternatives to Windows.

• Business Continuation - Some businesses have taken a hard look at issues of data ownership, control, security, and business continuity (see above), and realized their interests and those of Microsoft are on a collision course. Yes, there are a few business executives who don't play golf.

• Ethics - Organizations that put a premium on ethics (few businesses, but some social organizations) find it impossible to rationalize using Windows. Only our top corporate CEOs (such as they are) could consider Microsoft to be an ethical company.

• Server Consolidation - Windows NT/2000 server is slow, runs only on relatively weak Intel based platforms, and major Windows server applications are not at all happy to share the same server. On converting to Windows, many companies found they had four or five Windows servers where there had been only one NetWare server, and more were added as needs expanded. With Windows being so high maintenance, this resulted in a huge increase in cost, complexity and staffing. To reverse this, many companies are adding multiple Linux partitions to their IBM zSeries and iSeries servers to get their operations back on a sane number of servers.

• License Raids - Some who have suffered a BSA / Microsoft license raid have stripped all Microsoft software from their business to make sure it never happens again. A license raid feels like rape, but costs a lot more. A few businesses believe in prevention, and are moving to alternatives, particularly Linux, before getting raided. All you need to get raided is one disgruntled employee (whose identity will be kept secret) (A6).

• Specialized Devices - Makers of consumer electronics and other specialized devices have turned away from Windows on grounds of cost and flexibility. Despite investing billions in cable companies, Microsoft has lost almost the entire interactive TV market to mostly Linux based alternatives, and Symbian dominates in advanced cell phones (and Linux coming soon to a Motorola phone near you).

• Security - Some businesses are actually bothered by Microsoft mucking around in their data systems on a regular basis, and that crackers and spies find easy pickings. They may even resent every worm, virus, and trojan having its way and its way of having it with their PCs. Windows security - it is to laugh! There are over 63,000 worms and viruses for Windows, many out of control, under 100 for Linux, and none that amount to much.

• Linux - Desktop & Server - Now Number One on Microsoft's enemies list, Linux is eating server markets Microsoft expected to be theirs, and increasingly threatens their desktop monopoly. Linux is an updated, more user oriented version of Unix. It scales from wristwatch to supercomputer. We have a lot more to say about Linux below.
  Disadvantage: many specialized business applications don't run on Linux, yet (but many do and more are coming).

• eComStation (OS/2) - Desktop & Server - IBM's OS/2, offering the most usable desktop environment on PCs, is now updated, enhanced and distributed by Serenity Systems as eComStation (by contract with IBM). It's economical, secure, free of worms, virus, trojans, crackers and license raids. It's easy to use, and plays well with other systems (Windows, Linux, etc.). It can be outfitted to run Microsoft Office for light usage.

  At Automation Access, we run our business on OS/2 (including building this Web site) and have no intention of changing - anything else would be less stable and cost a lot more. eCS / OS/2 also makes a fine client to Linux or DOS based accounting systems.

  Most OS/2 users are larger organizations that depend on critical information systems (banks, insurance companies, airlines, grocery chains, etc.).
  Disadvantages: IBM wishes it would go away because something that doesn't break doesn't generate service revenues (why IBM Global Services loves Windows). Support for the latest cameras, scanners, etc. may be slow coming out, so most OS/2 based offices keep a Windows machine around for that.

• Thin Clients / Java - Desktop/Server - in many organizations, there are a lot of workstations where a full Windows desktop is not justifiable, where Thin Client is fully adequate and can save big bucks in support and maintenance costs (all the software is in one place, on a Linux, Sun or IBM server). If a Thin Client fails, you unplug it and plug in another - that's all.

  Thin Clients generally have no hard disks and no programs beyond what's needed to find a server to boot from. They may boot a stripped down Linux with X Windows, a minimal Java OS, or some other simple system with a Web browser. The coming era of Web Services will result in massive growth for thin clients.
  Disadvantage: they don't run Microsoft Office (but do run StarOffice / OpenOffice).

  Microsoft's WTS (Windows Terminal Services) will run Microsoft Office, but it's hardly "Thin Client", it's more like "Fat Server". If you have to have Office on Thin Clients, Web based solutions are provided by Citrix and Tarantella.

• Apple Macintosh - Desktop & Server - Heavily used in publishing and advertising, the Mac also sees use as a general purpose small business system (A5). Apple's OS X (an Apple user interface running on a BSD Unix operating system) has caused renewed interest in Apple computers. Microsoft Office is available for OS X.
  Disadvantages: you are tied to Apple's hardware, and the selection of business software is relatively small (though growing, especially since Linux software is easily ported to OS X).

• Novell NetWare - Server - Often used to support networks of Windows workstations to provide greater security, better performance and lower costs than with Microsoft servers.
  Disadvantages: no desktop environment, and a shrinking pool of techs who understand NetWare administration.

• VMS - Host, Server - DEC's (Digital Equipment Corp) VMS dominated the minicomputer field when minicomputers dominated, VMS is still considered by many to be the "One True Operating System", and it is still widely used.
  Disadvantages: DEC was bought and dismantled by Compaq, which preferred to sell Windows. Compaq was bought and dismantled by HP, which would rather sell Windows and Linux.

• Unix (Commercial) - Host, Server & Engineering Desktop - Whether supporting "green screen" terminals, thin clients, or Networked PCs, Unix is the workhorse of the server room, and runs on Sun, Intel, IBM and many other platforms, Unix is also the platform for thousands of specialized "vertical market" software packages. It runs the McDonalds restaurant chain, your local telephone switching system and most of the entire Internet, as well as many small business accounting systems. After many years of trying, Microsoft is unable to move its HotMail service from Unix to Windows.
  Disadvantage: why run Unix when Linux is a more modern version, costs a lot less and is easier to support?

• BSD Unix - Server, Host & Development Workstation - BSD Unix is most used by ISPs (Internet Service Providers) and by software developers. The several varieties of BSD Unix each serve a different audience and each has a separate development group with unique goals. Several versions of BSD Unix are free and open source.
  Disadvantages: Little known to the general business community - otherwise same disadvantages as Linux

• IBM iSeries (AS/400) - Host/Server - scaling from small business to major enterprise, iSeries is for businesses that require the highest level of reliability and solid performance. For many years, Microsoft's deepest darkest secret was that their business management and accounting ran on AS/400, not Windows. iSeries is now much more flexible since it can run Linux alongside its regular tasks (or Linux only) for server consolidation and expanded application availability (A7).
  Disadvantages: few small business people are aware of it.

• IBM zSeries (mainframe) - Host/Server - for system that must support thousands of users, thousands of transactions a second, Terabytes of data storage and NO downtime. Mainframes are now more flexible, since they can run even thousands of instances of Linux alongside their regular tasks (a "Linux only" version is also available).
  Disadvantage: you've got to have some really, really serious transaction and storage demands to justify the cost - this is not a small business platform.

• Supercomputers - Compute Engine - Once the province of highly specialized computers costing millions, most supercomputers are now large clusters of low cost computers running Linux. A few traditional supers are still made for applications requiring truly linear processing.
  Disadvantage: you have to need a really, really serious compute engine to justify the cost.

The prominence of Linux in every one of our "reasons" categories, and its appearance in many of the "alternatives" as well, has caused Microsoft's management to move it to the top of the "Enemies List", and declare it to be the most serious challenge Microsoft has ever faced.

To date, Linux has displaced Unix to a greater extent than it has Windows, but that is changing. A new report from Forester Research states that Windows servers are increasingly replaced by Linux (C36). Even where Linux replaces Unix, it's a loss for Microsoft, because they expected all those Unix servers to be replaced by Windows.

Linux gained a foothold in server conversions because it's much easier to convert from Unix to Linux than from Unix to Windows. Once Linux is in place, Windows no longer offers a cost benefit. With Linux deployed, many companies found they preferred it's stability and ease of administration to Windows servers. This has seriously stalled Microsoft's expansion in the server market.

To make matters worse, developers are rapidly improving Linux' already capable graphic desktop environment, which can even be configured to look exactly like Microsoft Windows. As Linux starts seeping out of the server room into "line of business" workstations, Microsoft's most jealously guarded monopolies are directly impacted.

If you don't think American business is taking Linux and other open source products seriously, you might check out a recent article in CIO (Chief Information Officer) Magazine, aimed squarely at corporate officers (A17), and a Computerworld article in an issue aimed at helping corporations falling behind the technology curve catch up (A18).

Microsoft's crown jewel has always been control of software developers, enabling them to starve other platforms for software titles, but a recent study by Evans Data, a research group serving the developer market, has found developers abandoning Windows for the Linux platform in unexpected numbers (D3, D4, D5). This is perhaps the worst news yet for Microsoft's future.

Linux is very difficult for Microsoft to fight, because it isn't the product of a single company they can buy out or bankrupt. The Linux code is open source (free and freely available), so anyone who wants to can publish it, and thousands of programmers worldwide contribute to its improvement and maintenance. Destroy one Linux publisher and another would take its place overnight.

Evidence indicates Microsoft's most successful tactic is pressuring manufacturers to supress Linux on their equipment by not providing drivers or marketing support. For instance, Intel, which has always enthusiastically supported Linux in the server market (which Microsoft does not control), withdraws support entirely if the desktop (which Microsoft does control) is involved (A16). While this has antitrust implications, what's actually happening is, as always, concealed by Microsoft's insistence on NDAs (Non Disclosure Agreements).

Linux isn't the extent of the problem, though. Other open source products counter Microsoft, often in conjunction with Linux, but often on Windows itself. open source Apache dominates the Web server market with a 60% share, while Microsoft's IIS holds less than half that. Additionally, IBM's Websphere e-commerce suite is also based on Apache. open source OpenOffice and its commercial variant, StarOffice 6, now directly threaten the Microsoft Office monopoly. When our clients balk at $500/workstation for MS Office, we just install OpenOffice for free.

With business management moving to Web Services and Web based applications, the strength of open source Web applications is very worrisome for Microsoft. For instance, both FedEx Freight (C25) and Union Pacific Railroad (C24) have placed their customer interface and traffic management systems on Linux and/or Apache. Neither FedEx Freight nor Union Pacific Railroad are exactly "Mom & Pop" operations.

FedEx Freight moved from Windows NT to Linux / Apache, and intends to dump another 40 or 50 Windows servers, consolidating their functions onto a single 4-processor Intel server running Linux. Union Pacific has a mostly Unix network, and refers to their remaining Windows / IIS applications as "legacy applications".

So powerful is the Linux freight train, even mainline business magazines are getting on board. Business Week (A8 - articles listed to the left of the cover picture) has just published a 9 article cover feature on Linux.

Competitiveness issues are arising from the high and rapidly rising cost of Microsoft solutions. Some years ago, research firms Forester, Gartner and others established the real cost of Windows PCs on a corporate network to be between $8000 and $14,000 per year per PC, and corporations confirmed these figures internally (the bulk of this cost is hidden, consisting of support, administration and upgrades). Multiply this by the number of PCs in the company and it starts to look like real money.

As long as your competitors use similarly costly systems, you can just pass costs on to customers with little loss of business, but once a competitor implements a more cost effective system - you have a problem.

This is now happening in the financial markets of Wall Street. Morgan Stanley (C29), Merrill Lynch (C28) and others have moved their financial reporting systems to Linux, and now everyone else is scrambling to follow suit to bring their costs in line. Some Windows NT/2000 is being replaced, but much of the transition is from Unix. Nonetheless, it's a major loss to Microsoft because they expected to own this territory, and now it's gone.

The same thing happened in the special effects industry. Titanic was rendered on a Linux supercomputer cluster. Lord of the Rings was produced on Linux workstations and rendered on Linux supercomputers. Now the entire industry is either on Linux or scrambling to get there as fast as possible, including Disney and Lucas.

Retail is already starting to slide down the slippery Linux slope, with Sherwin Williams, Papa John's Pizza (C21), Burlington Coat Factory, Boscov Department Stores (C20), Regal Entertainment Group (550 theater concession stands), Hannaford Brothers (119 grocery stores) (C30) and others. It won't be long before this becomes the same sort of landslide the special effects business has experienced. Sending millions upon millions to Microsoft is hard to justify in hardscrabble retail, especially if your competitor isn't.

Other businesses are looking very hard at Linux. Even GiftCertificates.com, founded by a former Microsoft executive, and built entirely on Microsoft software, is now seriously considering a move to Linux. The difference "is hundreds of dollars on the Linux side versus tens of thousands of dollars for Windows." according to its CEO (C14).

Even the U.S. military is concerned with costs these days. A report prepared by MITRE for the U.S. Army (C1) is very favorable toward the use of Linux and open source software for government systems, even though Microsoft was allowed to review the report and request changes before it was published.

Linux appears in every category Microsoft operates in and beyond in both directions (wristwatches to supercomputers). It cooperates well with other threats such as Java, Thin Clients, eComStation and Mainframes, and. since it's a variety of Unix, it merges easily into the high end server environment. On top of this, it's strongly backed by Microsoft's most powerful competitors (IBM, Oracle, Sun Microsystems) and even Microsoft's leading allies (Hewlett Packard, Dell).

Microsoft's response

Microsoft executives are (bleep)ing bricks over Linux, and using every method they can to fight it, but with limited success - they were tied up getting convicted on antitrust charges at the critical moment, and it's now hard for them to get the genie back into the bottle. How do you undercut an established product that costs as little as nothing, is highly stable, performs better than your products in most situations, and is more scalable? Bummer!

Originally, Microsoft called Linux a toy, created by hobbyists for hobbyists. The traumatic end of that line is wonderfully stated in this press conference quote by a top Microsoft executive, "Linux is a toy, well, with IBM backing it, no it's not a toy".

Next was to claim that "Linux is cheap to purchase, but license costs are a very small part of TCO (Total Cost of Ownership)". In truth, other system costs are far greater, making purchase cost almost irrelevant. Microsoft's problem with this line was that many of their customers had already found these other costs to be lower with Linux as well.

In mid-July, 2002, at Microsoft's "partner" conference in Los Angeles, Microsoft president Steve Ballmer made an about face. He explained that Linux was less costly overall, but that Windows provides "better value". This is a more defensible line, since it's impossible to quantify. For some definitions of "value", Windows really can be the better deal, but those definitions are rapidly becoming less numerous.

Then Microsoft launched, through paid writers, Microsoft sponsored lobbying groups, and its own management and sales force, a major disinformation campaign, calling Linux and other open source products "Communist", "Un-American", and "a major threat to intellectual property and American prosperity".

Microsoft claimed open source software is not safe to use because it doesn't protect users from possible patent claims. This argument has less impact since Microsoft itself has been shown to have not only left SQL Server devlopers wide open to patent claims, but to have deliberately misled them about the risks (Q11).

Microsoft claimed open source software is a security risk because the source code is available. Microsoft has argued in court that exposing Windows source code would compromise national security, but they have now agreed to provide that source code to the government of Russia and China (X62). Both are not only considered hostile powers by the U.S. government, but are point of origin for many viruses and cyber attacks.

Of all its arguments, Microsoft's intellectual property claims sound the most reasonable, but are completely false. No one in the world (including entire countries) holds more patents, copyrights and other intellectual property than IBM, yet IBM is a major user and promoter of Linux and other open source products.

Further, any business can incorporate open source code in any way it pleases for its own use without risk and without having to reveal anything, so long as it doesn't distribute the resulting material. The GPL (General Public License) (C32) and other open source licenses limit Microsoft and other software publishers, but not most businesses.

The upshot is, just about nobody (not even technology journalists (C34)) was buying Microsoft's disinformation - as confirmed by a captured internal memo (C23).

Then, in December 2002, Microsoft about faced again, saying Windows has lower TCO (Total Cost of Ownership) over a 5-year period, and cited an IDC study which Microsoft paid for (C22). Problem with the study is, nobody believes it. It not only contradicts established experience, but has flaws obvious even to the untrained eye. Further, one of the authors is on record saying Microsoft's conditions biased the study.

The study presumes: Linux installations need as many administrators as Windows installations (they certainly do not), and Linux administrators cost a lot more than Windows administrators (they do not). Completely omitted are the cost of major Windows upgrades, which are required by License 6, every 3 years. Windows 2000 Server is the 5-year baseline, and it's only been out 2 years, so figures are just projections.

Microsoft is keeping the full study and its methodology secret and releasing only summary figures. This suggests there are many more questionable assumptions and a lot more twisted logic in there.

Other studies have come up with decidedly different results, as did a quantitative analysis of cost, performance and reliability by David Wheeler (C31), and a cost comparison by Robert Frances Group (C33). These results are confirmed by less rigorous studies (C35).

There are many reasons why business and governments outside the United States should be taking a hard look at breaking free of Microsoft, and many are doing so. Security, high cost, ownership of data, balance of trade, and developing a local software industry are prime factors. Several countries have ongoing antitrust action against Microsoft which further encourages them to look at alternatives.

For developing countries, cost is a huge factor. Most have been running on stolen Microsoft software, but international pressure to enforce copyright continues to increase. Many are looking at Linux and other open source products as their best bet - in two ways. Not only does Linux itself promise to save huge amounts of money and help build a local software industry, the Mexican experience has shown the way to use Linux to extort free licenses, and even computer equipment and services, out of Microsoft.

If Microsoft lets Linux take over overseas markets, that's sure to spread. If they bow to extortion, as they have been doing, it also depresses their overseas markets. Though "millions of dollars worth of software" costs Microsoft about $15.00 (the millions only show up on their tax deductions), it means no income is derived from those licenses. In addition, computers to run the software and support services do cost, and these are often part of the deal. Here's a bit of what's going on:

• The German Bundeswehr (armed forces) has banned Microsoft products due to real and "suspected" security problems (like little back doors for the NSA (X64, X17), for instance). Note: some have questioned the extent of this ban, since a current Microsoft contract is still in force.

  Beyond the Bundeswher, the German government has formulated an ambitious program to move the public sector to open source software. Adoption by various agencies has begun (O28).

• Australia government agencies are investigating and adopting Linux at an accelerating rate (O11). Agencies say they stand to save up to 30% on hardware and software. The Department of Veterans Affairs deployed Linux on an IBM zSeries mainframe as a basis for deploying "thin client" workstations, further reducing costs, especially for administration.

  Also, Microsoft's largest Australian customer, telephone giant Telstra is considering deploying Linux on 48,000 desktop PCs to reduce costs. They've already chosen Java 2 instead of .NET as their Web Services platform and are considering StarOffice instead of Microsoft Office. Microsoft CEO Steve Ballmer has flown to Australia in hopes of slowing the slide to Linux.

• China promised to suppress intellectual property piracy as a condition of entering the WTO (World Trade Organization). China can't afford to buy licenses for the millions of stolen copies of Microsoft software in use, consequently, Linux has been declared the "official" operating system for China. The government is financing Linux development, and is also using the move to Linux to extort cheap licenses from Microsoft.

  China has the added incentive of security (X16). It is not always on the best of terms with the U.S. government and is quite confident the CIA has easy entrance to any Windows based software systems.

• Japan is currently completely dominated by Windows. This is becoming a concern for the government, which is now investigating open source software for public use (O22) and industry (which includes TRON (O21), a home grown open source operating system). Government officials are strongly emphasizing Linux and TRON development to retain control of its "substantial" consumer electronics industry (O23). Bill Gates has recently flown to Japan in an attempt to disuade government officials from this policy.

• Mexico declared it was moving its education system to Linux. Microsoft responded immediately with a lot of free software, some free computers, some free tech support, and a little entertainment for Mexican government officials. The Linux move is on hold, but it won't go away.

• The Peruvian Congress introduced a bill calling for all government systems to be based on open source software (which includes Linux, but not Windows). Microsoft wrote a letter of protest, to which Peruvian congressman Dr. Edgar Villanueva Nunez wrote his now famous (and totally devastating) response.

  Microsoft's reaction was swift. They recruited the U.S. Department of State to apply pressure on Peru, and flew Peruvian President Alejandro Toledo to Redmond Washington where he would be far from his own Congress, They gave him the full tour and brainwashing, an audience with Bill Gates, and sent him home with the gift of $550,000 of Microsoft stuff.

  Hmmm . . just $550,000? Other countries have scored a whole lot more. Was some other "consideration" applied to magnify the effectiveness of such a small gift?

• Venezuela appears to have rejected the extortion path entirely, and is going straight forward with laws requiring open source software for all government systems. Perhaps Bill Gates' buddy G.W.Bush can arrange a Grenada style invasion or some other "regime change"? Looks like they're working on that already.

• England's Prime Minister, Tony Blair, is said to worship Bill Gates as a minor deity. The result has been major contracts handed to Microsoft to develop eGovernment systems. The result has been that only those running the latest Microsoft software have access to government services in England (Duh!).

  This has caused considerable backlash, and resulted in new policy cautiously favoring open source software, use of open interoperability standards, and interest in open source initiatives in the European Union.

• France has been considering legislation mandating open source software for all government operations. With an economy almost as powerful as California's, France would be difficult for Microsoft to sway with a few software donations, and that would seriously undermine an important revenue stream in any case.

  France was the country where Microsoft Office first achieved a true monopoly. Microsoft rewarded the French by doubling the price of the French version of Office and threatening dire consequences to anyone who dared import the much cheaper French Canadian version.

  On the other hand, the French worship Jerry Lewis as the king of comedy, so we can't expect their actions to be entirely rational (update: I have received missives from France advising me that many French don't like Jerry Lewis. Encouraging, but please don't send him back).

• Sweden's Agency for Public Management has formulated policy based on the principle that "no-one should be forced to use a vendor-specific product in order to communicate with the public sector" (O26). This means across the board adoption of open standards and open source software in government.

• Denmark has opted for StarOffice in the schools, and in the homes of students. Both Linux and Windows versions are covered by the agreement with Sun Microsystems (O24).

• The European Union, aside from separate actions in Germany and France, is strongly considering standardizing all inter-government communications and data systems on open source software. This would seem almost essential to achieve the collaborative goals outlined in the document eEurope 2005: An information society for all (O27).

  The seemingly inevitable move of European government to an open source basis would have a strong spill-over effect for all companies doing business with European governments, and for a great many American companies as well.

• Republic of South Africa - License 6 was more than the State IT Agency could take, and it's made the decision to convert entirely to open source software (O25). The projected savings is about $333 Million per year. A major consideration was that nearly the entire $333 Million was leaving Sou