Microsoft: The Wal-Mart of Software

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At a time of economic uncertainty, Microsoft serves as a Wal-Mart of software, offering high-volume, low-cost products, a Microsoft executive said in an interview.

Discussing Microsoft's economic value points and its open source outreach last week, Robert Duffner, senior director of Platform and Open Source Strategy at Microsoft, compared the company to the giant discount department store chain, calling the Redmond, Wash. software giant the Wal-Mart of software.

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"We're a good choice right now in this economic downturn," Duffner said.

In the current economic climate, Microsoft is finding that strategic IT vendors become even more strategic, Duffner said. Companies should be enlisting these vendors to help reduce costs, he said.

As an example of Microsoft's cost-cutting efforts for customers, the company is heralding its Hyper-V virtualization software featured in Windows Server 2008 and virtualization management capabilities in its System Center product. Virtualization enables consolidation of servers and can cut the costs of software and licensing, Duffner said. 

Duffner also cited online versions of software like Microsoft Office, Sharepoint, and Exchange as potential cost-savers. The company is looking at business models for the online products that might save customers money, such as selling advertising to pay for the services. 

He stressed the company's epiphany pertaining to open-source software. While Duffner does not see Microsoft offering up bread-and-butter products like Windows or Word to open source, the company nonetheless has forged a host of partnerships in the open source realm with such companies as SugarCRM, Novell, Zend Technologies, and Sun, he said.

The company also worked on efforts like improving the ability of Windows to run PHP applications, Duffner noted.

Open-source software has been touted as a more economical choice than commercially priced software, which Microsoft offers. But acquisition costs are only about 7 percent of total costs of ownership for server software during a three-year period, said Duffner, citing IDC numbers. There are other costs to cope with, such as staffing and training. Microsoft software can gain an edge when these factors are measured, according to Duffner.

"The cost of acquisition really doesn't represent the whole story. [There is a need] to look at the total cost of ownership," he stressed.

"More and more organizations are becoming very pragmatic and understand this and especially the ones that experienced working with both Linux and Windows environments," he said.

Microsoft, however, has generated a considerable degree of disdain in open source and free software communities as expressed on sites such as "Boycott Novell."

(A "Boycott Novell" representative had harsh words for a two-year-old Novell-Microsoft partnership in a recent InfoWorld retrospective on the arrangement.)

"I think there's some statements that our executives have made in the past that have engendered some strong emotional reactions," Duffner said. He cited Microsoft CEO Steve Ballmer's raising questions about whether Microsoft patents were being violated in Linux.

Duffner said there will always a hardcore group of people in the open source realm that view Microsoft as antagonistic. But he emphasized the company's recent accommodations for open source and its willingness to look at innovation from all sources.

This story, "Microsoft: The Wal-Mart of Software" was originally published by InfoWorld.

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