LWN: Comments on "Mandriva CEO rants at Steve Ballmer"

Update - Microsoft really did offer money

epa — 2007-11-09T16:40:36+00:00

Apparently Microsoft really did offer a bribe, or something close to it, to put Windows on
these machines: <http://linux.slashdot.org/article.pl?sid=07/11/09/1540206>.

agreed

landley — 2007-11-05T02:50:46+00:00

Their marginal costs may be near zero, but they've got some darn huge 
fixed costs they need to amortize.  Billions of dollars a quarter.

Now microsoft just had a _spectacular_ quarter, with Vista and the current 
Office finally making a profit for them, which bumped their stock to 
around $37/share.  (They've been hovering between $25 and $30 since 2000, 
their all-time high from the start of 2000 would be a split-adjusted 
$50/share, for reasons I explained at the time here: 
http://www.fool.com/portfolios/rulemaker/2000/rulemaker00... .)

Here's their 5 year stock price.  Notice the spike at the right.
http://quote.yahoo.com/q/bc?s=MSFT&t=5y

That said, here's their most recent quarterly report:
http://www.sec.gov/Archives/edgar/data/789019/00011931250...

According to that, they had $7.8 billion in expenses this quarter.  (And 
over $13 billion in income.)

Here's their most recent annual report:
http://www.sec.gov/Archives/edgar/data/789019/00011931250...

That puts their 2007 expenses at $32 billion and change (on $51 billion 
revenue).

Their biggest expenses are employee salaries and office space for them.  
From the 10k:

> As of June 30, 2007, we employed approximately 79,000 people on a
> full-time basis, 48,000 in the United States and 31,000 internationally.
> Of the total, 31,000 were in product research and development, 24,000 in
> sales and marketing, 13,000 in product support and consulting services,
> 3,000 in manufacturing and distribution, and 8,000 in general and
> administration.

If each of them only cost the company $150k (and between salary, health 
insurance, social security taxes, training, and so on, that would be very 
cheap) that would be 11.85 billion annually, right there.

Now add in office space.  Note that the University of Texas at Austin only 
has about 50,000 students on a 40 acre campus:
http://en.wikipedia.org/wiki/List_of_largest_United_State...

So yeah, msft can afford to throw money around, but their annual expenses 
are more than their cash on hand.  (They've got about $21 billion, they 
threw their big cash hoard at stock buybacks and dividends during the 
seven years of wall street famine they just broke out of.)  They couldn't 
afford to give windows and office away to everybody for free for a year.  
They do actually need to keep making money to stay in business.

Mandriva CEO rants at Steve Ballmer

job — 2007-11-04T23:22:27+00:00

As the previous poster mentioned, what did he expect? OLPC is a pretty big undertaking and not
something you compete with by throwing in a Linux distribution.

I find this letter a bit speculative and not very news worthy.

err ...

vblum — 2007-11-04T19:56:37+00:00

...that's exactly what is illegal under any kind of antitrust law. There is a highly
entertaining biography of Thomas J. Watson on Wikipedia, for example.

linux still wins!

jzbiciak — 2007-11-03T01:33:44+00:00

I don't buy it.  If yet another nation standardizes on Microsoft Products, even if Microsoft
gives it to them for free, it makes it harder for the rest of their paying customers to switch
away, pure and simple due to "network effects."

linux still wins!

martinfick — 2007-11-02T15:26:24+00:00

That's a win win situation for linux, although perhaps not for Mandriva.  If linux can force
MS to lower their prices to compete it only helps consumers.  Bribery, zero margins (not
true), etc. is unstainable for MS.  It may have traditionally seemed sustainable with the
large amounts of cash that they have, but that is only against other vendors.  Linux can
outlast MS since its margins are even lower!  So, in the mean time even if customers still
choose MS because of the lower cost (and/or bribe money they receive) they still win because
of linux!  So while I can understand why Mandriva might feel slighted (they may not outlast
MS's cash forever,) they are not linux.  In the long term, MS can only beat linux on features,
good luck with that one. ;)

Mandriva CEO rants at Steve Ballmer

nim-nim — 2007-11-02T09:04:36+00:00

What a fool. The classmate only commercial advantage over OLPC is that it is  a "normal" (read
bloated and badly ruggerized) laptop you can run "normal" (read windows) education apps on.

Of course any country that buys classmates is going to put windows on them at the first
opportunity (read when the MS discount is steep enough). That's the whole point. That's how
the classmate primary partner (Intel) is marketing it.

What? Mandriva really though Intel invited them on board to build a competitive Linux
solution? And not 
a. provide a cheap software placeholder while customers negociate with MS,
b. provide matter for anti-OLPC articles in Linux press outlets close to Mandriva?

Fedora got on the OLPC because it's a genuine charity program (and I suspect Red Hat is not
treating it as a direct money-earner) where being cheaper (installation and maintenance wise)
counts a lot.

The classmate is a defensive commercial program  that's not the same thing at all. But I
guess dreaming itself as the Red Hat of classmate, with rich Intel not poor AMD as partner,
and even earning hard money in the process, was too powerful a lure for Mandriva executives to
resist.

You'd have though their previous disasters would have taught them to concentrate on being a
competitive Linux distro instead of building castles in sand.

i'd like to know more about this...

ncm — 2007-11-01T20:15:22+00:00

Microsoft's advantage there is that there's always lots of money changing hands already, and
"discounts" and "marketing support", don't count as bribes; and threats to reduce either of
them don't count as extortion.

agreed

JoeBuck — 2007-11-01T18:59:04+00:00

Microsoft tends to compete on deals like this by lowering their price to make it near-free. They can afford it; their marginal cost is near-zero.

i'd like to know more about this...

JoeBuck — 2007-11-01T18:57:58+00:00

Doubtful, as Mandriva doesn't really have the money to offer a large enough bribe.

shaky reputation?

dmarti — 2007-11-01T18:11:57+00:00

Outside Linux boards and maybe some EU antitrust committees, MSFT doesn't have a shaky
reputation.  For politicians, MSFT is a company that they want to attract to do business in
their countries: they pay high salaries and hire educated people, don't pollute the
environment much, and throw money to lots of local partner and vendor companies.

Don't know what's going on in this case, but there are reasons other than corruption for
countries to play ball with MSFT.

i'd like to know more about this...

rgmoore — 2007-11-01T17:38:19+00:00

Bribery may be helpful to get things done in Nigeria, but it's illegal for any company in the US under the Foreign Corrupt Practices Act. If somebody could prove that Microsoft had gotten a contract through bribery- not an easy thing to prove, of course- the company could be in even more legal trouble.

i'd like to know more about this...

peace — 2007-11-01T17:37:27+00:00

If what you say is true, than Mandriva must have payed out some bribes to get the original
contract of 17,000 units.

i'd like to know more about this...

nix — 2007-11-01T16:19:09+00:00

Transparency International have long rated Nigeria as among the most corrupt countries on
Earth; for some years it was right at the bottom. Bribery is not just par for the course but
essential to get *anything* done.

i'd like to know more about this...

ipes — 2007-11-01T14:08:21+00:00

I'd like to too, but that would require an investigation into what actually happened, and that
may be very difficult. With the level of corruption in so many places in Africa, no thing is
impossible, as long as enough "tip" is paid. OTOH, if the truth does somehow miraculously show
up, a great deal of damage can be done to Microsoft's already shaky reputation.

i'd like to know more about this...

nettings — 2007-11-01T13:51:21+00:00

the letter itself is very personal and has to be taken with a grain of salt, and the comments
are the usual fanboy lingo. i'd really like to hear some background information on par with
the journalistic quality of LWN editorials (hint, hint!).