Perhaps they're hoping the XBox, etc. will make up for it.

Ben writes:

Microsoft can't afford to make Windows free. It is one of 2 profit centers, and if profits tank, their stock will tank faster.

I disagree. They're willing to sacrifice their stock ([link|http://quicktake.morningstar.com/Stock/StockPerformance.asp?Country=USA&Symbol=MSFT&stocktab=charts|recall] (taking account of splits, etc.,) it's gone from a peak of ~ $60 at the end of 1999 to $27 now. The stock's bascially been flat since the last half of 2000.).

Microsoft's all about control. If giving away Windows or Office helps them keep control they'll do it in a heartbeat, IMO.

How would it do that? By lessening the takeup of unencumbered alternatives and by making it even more difficult for suppliers of free software to make a living. Couple that with MS's proprietary stuff like XBox, their patents, their push into telephony, music, movie distribution, their rumored interest in AOL, etc., and they could very well decide that they need to sacrifice the oldsters to help maintain their power over the industry.

Note that they already dramatically cut the price of Windows to developing countries if they think it's necessary to compete with Linux.

I think IE's a good example of what they're willing to do to fight competition. They've got a big war chest so they can afford to have some lean years. Gates' latest "leaked" [link|http://media3.washingtonpost.com/wp-dyn/content/article/2005/11/08/AR2005110801735.html|memo] sounds an awful lot like the earlier memo he put out before killing Netscape...

But we'll see.

Cheers,
Scott.

It's hurting both recruitment and retainment. They did a split on the way down (an unusual action) in hopes people would see their stock as undervalued and buy them back up. That didn't happen. They issued a divident so their stock would be acceptable to institutions that buy only dividend paying stocks in hopes of broadening purchase. That didn't work either. They are no longer seen as a growth stock because they've stayed in a narrow trading range for years, and that helps keep it in that range.

Windows and Office both yield over 80% profit, but their markets are saturated and "upgrades" aren't doing well. Give those two items away and they will have no profit at all because MSN is breaking even and everything else is bleeding money. Their billions in reserves would evaporate quickly trying to maintain such a large and expensive structure as this company has become without profit.

A company that weak will control nothing. They are in a precarious balancing act, and if they can't get a lot of profitable new product out the door soon, that stock trading range will be broken to the downside. They are in trouble (for the long term) and they know it, but the public doesn't know that yet.

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