Memo to Microsoft: Make Vista a Web Service, Too

By Gary Beach

I attended the Open Software Business Conference in Boston yesterday as Microsoft released its Windows Live and Office Live web services in San Francisco.

Sitting in a tedious afternoon session at the conference, I started to daydream about Microsoft embracing fully the open source community. My idea: What if Microsoft introduces its Windows Vista operating system as “openVista,” where they provide the code base for Windows Vista for all to see?

The more I thought about it, the more intrigued I became with the idea. Here’s why.

Microsoft shareholders might embrace the idea because the future research and development and headcount costs of openVista would arguably be lower, allowing the company to invest in other areas like higher-margin servers, mobile devices and home entertainment.

New versions of openVista would be measured in days, possibly hours, not years, making customers happier. In an openVista world, hardware OEM’s would see their margins increase significantly because they would no longer have to pay Microsoft for each copy of Windows, a cost they simply pass along to end customers.

Could openVista actually be a more secure version of Windows? I think it could. In one fell swoop, Microsoft cuts off at the knees the intrigue the bad guys have for hacking the world’s most used proprietary operating system. Where’s the fun in hacking an open operating system that a gifted 10 year old could hack?

I haven’t done the math, but Microsoft might be able to make even more money with an openVista version. If you want to see a grown person cry, say “no” to the three-year warranty question at the checkout counter of your favorite appliance store. That’s where all the margin is made. Same with openVista.

In the proprietary world, Microsoft gets a one-time hit to its top line for each license it sells. In the world of openVista, Microsoft would steal a page from the playbooks of the open source community and create three levels of support and service where Microsoft and its cadre of global solution providers share recurring annual revenues for agreed upon support and service. Those levels could be as simple as openVista Home support, openVista SMB support and openVista Enterprise support. The operative, and most lucrative, word being “recurring.”

The traditional wind behind the sails, and sales, of the Windows operating system has always been a dynamic third-party independent software vendor community which builds compelling applications that run on top of Windows. One of my major take aways from the Open Source Business Conference was this: The open source community has its sights set on the application layer of the software stack and the desktop: two areas Microsoft can not afford to lose in the future

If Microsoft introduces openVista, it could generate oodles of money by simultaneously creating an openVista portal, much like Google, where communities of openVista software developers would meet to share ideas on how to improve openVista and create cool openVista applications. The portal would, of course, be free. Where Microsoft would make its money is by selling sponsored advertising links to the tens of thousands of small ISVs who want to sell their tools and applications to that global cadre of openVista software developers.

By embracing openVista, Microsoft also takes advantage of possibly its strongest corporate asset: brand recognition. Most of the software vendors in the open source market have company names that sound like sandwiches at a boutique delicatessen.

Few understand what marketing or sales is all about. Most rely on small staffs of telesales people to follow up on thousands of download prospects each month.

Putting the Microsoft branding machine behind a fully embraced shift in corporate direction to open source would quickly make the company the lead player in open source.

Customers make choices. Most select a branded product over a generic. OpenVista supported by Microsoft branding would quickly become, in my opinion, the choice of millions of customers around the world.

What the open source world understands better than Microsoft is this: The new world of software is about service, not product. In Microsoft’s current business model it is all about the product first and service options second.

The senior management team of Microsoft, and its board of directors, needs to ask themselves this question: Has the open source movement peaked, or will it continue to gain market share and, possibly more important, market credibility?

If they think it has peaked, they should stay with their current business model.

If they agree it has not, it is time to fully embrace open source, release the next version of Windows as openVista, sell it as a service and think of a plethora of other ways they can generate cash around an open source business model.

Gary Beach is publisher of CIO magazine.