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|Halloween Document||Vinod Valloppillil -- the man behind the memo||Computer Press Commentaries on Halloween Memo|
So called Halloween documents (or Penguin will never fly serial as some call them) are a series of internal Microsoft documents (Ed Muth Enterprise Marketing Group Manager, Microsoft Corp. admitted that "although Microsoft has not attempted to perform a line-for-line review of the posted documents, they do appear to be confidential Microsoft documents with annotation, sent internally to select staff and management on Aug. 11, 1998"). The documents analyze Linux and other free/open source projects and were leaked from MS and published by Eric Raymond.
The most important memos (see for example Halloween Documents at Phillips.org), were written by MS engineer Vinod Valloppillil, and were originally distributed within Microsoft on Aug. 11, 1998. They "were intended to stimulate internal discussion on the open source model and the operating system industry within the company". They provide an interesting insights into open source model and its influence at the technology level as well as in terms of business models, applications, channels and alliances. One can not exclude the possibility, that the leak was a smart move to improve Microsoft standing in the government anti-monopoly suit. Here are the major links:
... The easiest way to get coordinated behavior from a large, semi-organized mob is to point them at a known target. Having the taillights provides concreteness to a fuzzy vision. In such situations, having a taillight to follow is a proxy for having strong central leadership. Of course, once this implicit organizing principle is no longer available (once a project has achieved "parity" with the state-of-the-art), the level of management necessary to push towards new frontiers becomes massive. This is possibly the single most interesting hurdle to face the Linux community now that they've achieved parity with the state of the art in UNIX in many respects.
...because OSS doesn't have an explicit marketing / customer feedback component, wishlists -- and consequently feature development -- are dominated by the most technically savvy users. The interesting trend to observe here will be the effect that commercial OSS providers (such as RedHat in Linux space, C2Net in Apache space) will have on the feedback cycle.
...the vast majority of OSS projects are supported by the developers of the respective components. Scaling this support infrastructure to the level expected in commercial products will be a significant challenge. There are many orders of magnitude difference between users and developers in IIS vs. Apache.
...For the short-medium run, this factor alone will relegate OSS products to the top tiers of the user community.
...Like commercial software, the most viable single OSS project in many categories will, in the long run, kill competitive OSS projects and `acquire' their IQ assets. For example, Linux is killing BSD Unix and has absorbed most of its core ideas (as well as ideas in the commercial UNIXes). This feature confers huge first mover advantages to a particular project
...Possession of the lion's share of the market provides extremely powerful control over the market's evolution.
The ability of the OSS process to collect and harness the collective IQ of thousands of individuals across the Internet is simply amazing. More importantly, OSS evangelization scales with the size of the Internet much faster than our own evangelization efforts appear to scale.
...Different reviewers of this paper have consistently pointed out that internally, we should view Microsoft as an idealized OSS community but, for various reasons do not...
"commodity protocols actually become the means of integration" for OSS projects. There is a large amount of IQ being expended in various IETF working groups which are quickly creating the architectural model for integration for these OSS projects.
The rise of specialty servers is a particularly potent and dire long term threat that directly affects our revenue streams
The Linux community is very willing to copy features from other OS's if it will serve their needs. Consequently, there is the very real long-term threat that as Microsoft expends the development dollars to create a bevy of new features in NT, Linux will simply cherry pick the best features and incorporate them into their code base.
...The effect of patents and copyright in combating Linux remains to be investigated
Microsoft's market power doesn't stem from products as much as it does from our iterative process. The first release of a Microsoft product often fairs poorly in the market and primarily generates fine granularity feedback from consumers. Similarly, Linux has shown that they are capable of iterative cycles -- but at an order of magnitude faster rate. On the flip side, however, our incremental releases are arguably much larger whereas many of Linux's incremental releases are tantamount to pure bug fixing.
Sometimes Linux competes with Windows NT. This is hardly news. But it is not NT vs. Linux. [Linux] Dramatically demonstrates the wildly different business models of the OS marketplace and the vigorous competition at every level (technical, alliances, applications, channels and business model) that characterize the industry.
In addition, however, Linux is an alternative to/competitor for other versions of UNIX, especially RISC UNIX - in fact this may be the more powerful affect in the marketplace. Has an utterly different business, support, and investment model from the comprehensive, integrated Microsoft model for Windows NT, which has attracted millions of developers and tens of thousands of applications.
Linux is a philosophy as much as technical phenomena. On the positive, and Microsoft is interested in better understanding and finding ways to accommodate this dynamic, it provides for extensive peer review, and for a lot of independent parallel work on a variety of features. The negatives are stark, however:
- no long term roadmap ... and no way to get one;
- individuals are a non-scalable factor in the development at various control points;
- no intellectual property protection means that the deep investments needed by the industry in infrastructure will gravitate to other business models.
- Unless Linux violates IP rights, it will fail to deliver innovation over the long run.
Ed Muth(MS group product manager) Comments
Q: Does Microsoft consider Linux a competitor?
A: Yes. Linux is a competitor on the client and the server. My analysis is that Linux is a material competitor in the lower-performance end of the general purpose server industry and the small to medium-sized ISP industry. It is important to recognize that Linux, beyond competing with Microsoft, is also, and perhaps even more frequently, an alternative or competitor to other versions of UNIX (bold italic are mine - NNB)
The operating system industry is characterized today by vigorous competition. This competition, of which Linux is only a part, exists at the technology level as well as in terms of business models, applications, channels and alliances.
Q: The first document talked about extending standard protocols as a way to "deny OSS projects entry into the market." What does this mean?
A: To better serve customers, Microsoft needs to innovate above standard protocols. By innovating above the base protocol, we are able to deliver advanced functionality to users. An example of this is adding transactional support for DTC over HTTP. This would be a value-add and would in no way break the standard or undermine the concept of standards, of which Microsoft is a significant supporter. Yet it would allow us to solve a class of problems in value chain integration for our Web-based customers that are not solved by any public standard today. Microsoft recognizes that customers are not served by implementations that are different without adding value; we therefore support standards as the foundation on which further innovation can be based.
|'We think the total cost of ownership
of NT is lower than Linux.'
-- Ed Muth, Microsoft product manager
ZDNN MS exec What Linux threat interview with MS group product manager Ed Muth
I see it as more of a threat to Unix. Linux is a challenge, a competitor," Muth said. "The more I study Linux, the weaker I think the value proposition is to consumers."
Muth delineated two main technical reasons why he believes Linux will not succeed with corporate customers.
The second failing, Muth believes, is a low level of integration between the OS and its applications.
It's a point that touches on ground where holy wars are fought.
Indeed, some Linux advocates say Linux's small footprint, efficient code and lack of integration with surrounding technology is what makes it appealing. Muth disagrees.
"People want more integration," he said. "They want to take a bar chart from Excel and put it in Word. On the server side they want strong queuing and security. This is all done through integration. Linux has a low degree of integration. Linux is basically a big step backward for those two reasons plus others."
Economies of scale
Muth next turned to the economics of Linux. He said his preliminary cost analysis showed Linux actually costs end users more than Windows NT. "We have very little concern we can't compete with Linux on a TCO level," Muth said. "We think the total cost of ownership of NT is lower than Linux, but it's still hard to do good TCO studies because at the moment they're hard to compare since Linux supports so few applications."
Vinod Valloppillil -- the man behind the memo -- home page. In favorites it has the following links:
.. all this fuss about the relevance of a particular document ignores one crucial point: Linux doesn't really pose a major threat to Microsoft's NOSes or anyone else's. If anything, I find it hilarious that someone at Microsoft even takes the freeware movement, which Linux represents, so seriously. I half-expect this document was written as a deeply sarcastic joke.
The problem with Linux is that its biggest strength -- the ability to build a highly motivated, eclectic mix of freeware adherents--will doom it to remaining forever on the periphery of computing. It is the anarchic, libertine nature of Linux that makes it impossible for third-party hardware and software vendors to make money within the environment [probably not true -- free operating system does not imply free applications -- for example BIOS is free. Also Linux is Unix and as such it is a pretty stable OS -- now with lack of central development lab and Linus Torvalds working for Transmeta it is more stable than innovative -- NNB]
Software developers have found it nearly impossible to convince the Linux community to pay for their software, and those who have found it necessary to cut their rates dramatically from what they get on other platforms [probably true -- commercial software developers are not that enthusiastic about Linux, but here fear of Microsoft domination can help ;-) -- NNB]
Despite all the surveys showing huge growth for Linux, its reach on corporate servers is negligible. Without support from hardware vendors, respectable network managers wouldn't take money to use Linux. Not very many PC server vendors ship systems with Linux installed, and the number of peripheral vendors that provide Linux drivers is also miniscule [I believe that this is wrong -- NNB]
Linux may be a great way for computer-literate individuals to get under the hoods of their computers for little cost, but it's nothing more than a convenient form of protest and public relations for the major software vendors that plan to support it. If nothing else, the Linux community has an influence beyond its numbers, and getting on its good side might help sales elsewhere.
As long as Linux remains a religion of freeware fanatics, Microsoft (and other NOS vendors) have nothing to worry about.
And Matt Youell thinks the simulation is well underway:
"It's already happening. The tools that made Unix great are coming to Windows. The free software that used to only be found in the Unix world is coming to Windows. And, eventually, NT will be stable."
Meantime, expect Microsoft to protect what it regards as its turf, perhaps as Brian Hurt suggests:
"I expect MS will make an example of an OEM real soon now -- the DoJ be damned. MS does not dare let one of the major OEMs ship Linux preinstalled."
Shawn Harvell wrote to point out that, while all this Linux noise is perhaps having a good effect, Linux is far from perfect. Free or not, it can cost you a bundle. As a server OS, it has its limitations. "And as a desktop OS, it's not yet usable for the great majority of people."
So why is there so much noise about Linux right now? Ron Watkins has a theory:
"Linux has so much energy behind it because of Microsoft. If Microsoft played nice and got along well with everyone, Linux would have little energy to drive it. Essentially, it is a monster of Microsoft's own creation, and the more they fight it, and the more energy they give it, the stronger it will get. They can defeat it only by accepting it, and accepting that Linux will transform Microsoft into something else. It's very Zen."
Why the Linux World is Upset and Shouldn't Be
There is very little history of Microsoft leaking documents, so I think we can discount that idea right away. Microsoft takes itself too seriously to try a tactic so imprecise. But the document itself has some interesting ideas, and seems to represent logical Microsoft thinking about what is to them a very real threat. Linux does threaten Microsoft, especially Windows NT, and the company is smart to be thinking about these issues. That Microsoft thinks it can defeat Linux is also interesting -- wrong-headed, but interesting.
...To throw the Halloween Document into a single paragraph, Microsoft feels that Linux and Apache are significant threats to Windows NT and Microsoft's IIS web server.
...Microsoft's answer to this threat is a combination of sowing Fear, Uncertainty and Doubt (FUD), and "decommoditizing" the core protocols of these products
Microsoft tries to redefine the public's view of Linux and Apache, especially in the eyes of top and middle management (the guys who don't really know what they heck they are talking about) in corporate America. They want to lean on the idea that nobody ever got fired for buying Microsoft software, even when the alternative was free software.
Decommoditization of protocols is a more complex idea, but can be seem best in how Microsoft has been attempting to undermine Java
So Microsoft gives added functionality, but at the cost of making the code incompatible (proprietary). This is decommoditization, and according to the Halloween Document, Microsoft will be doing the same thing to TCP/IP, HTTP, and the other core protocols of Linux and Apache. Going further, they want to replace simple protocols with complex ones, to tie developers forever to using Microsoft tools and code.
We've seen this all before, of course, from IBM, which invented this technique. IBM's Token Ring networking technology was intended solely to decommoditize Ethernet. And note here a very important lesson from IBM's Token Ring experience: Decommoditization failed in the long run. So all these nerds are upset. They are angry at Microsoft and concerned about how to make sure Linux and Apache can stay competitive. This is the thrust of Raymond's comments in the Halloween Document, and hundreds of other comments on Slashdot. With even the Wall Street Journal on the story, this has become a discussion around breakfast tables all over America.
While Linux and Apache may be threats to Microsoft, the truth is that Microsoft in no way represents a threat to either Linux or Apache. No threat, none, zilch, nada.
Eleanor Roosevelt said, "Nobody can make you feel inadequate without your permission." These nerds -≠ maybe because they just like to get upset and spout off ≠- are suddenly worried about the inadequacy of Linux and Apache to compete where competition was never before a part of the discussion.
In the Halloween Document, Microsoft acknowledges that it can't compete with these products on quality or speed of development. So stop worrying and get back to work.
See also Why Linux Quite Appropriately Scares the Bejesus Out of Microsoft
Instead of trying to subvert Linux, what Gates should do is release the NT code and let the collective IQ of the Net fix it for him. He wonít do it, of course, which is why his company has just peaked. If you have Microsoft shares, prepare to sell them now.
FRANCIS: Now, we made a veiled reference to a Microsoft (MSFT) memo that began to be circulated around the Internet -- I received a copy of it this week -- that identifies Linux as a strategic threat. What do you think of that? And how is that going to change things at Red Hat?
YOUNG: It's not, really. Microsoft, of course, are desperate to find a competitor. Otherwise, the Justice Department is right and they are a monopoly. (LAUGHTER) And we were the closest they've got, I guess, right now. We're very flattered by the attention. But our product delivers benefits to our users that Microsoft's operating systems just don't offer. And as a result, we are going to succeed, whether or not Microsoft chooses to try and compete with us.
FRANCIS: There might be some consumers out there who are hearing of Linux -- perhaps for one of the first times -- and thinking, well, is Linux for me? Is Linux a consumer operating system? And is it practical, right now, for a consumer with a 56K modem to go out and say, well, you know, maybe I'll try this Linux thing?
YOUNG: Yes, absolutely. You can buy it at CompUSA (CPU) or all the other major retailers. And so it's very popular in the consumer field for a variety of technical purposes. Now, I'm not going to argue that your mom should use Linux to run her recipes with. But if you're interested in setting up a personal Web site for displaying your hobby -- your stamp collecting information to your friends on the Internet -- Linux makes a terrific, very reliable operating system for running Web servers.
FRANCIS: Over Microsoft's history, a number of Microsoft's rivals have tried to rally around some of the other guys and flavors of Unix have often been the favorite one. I understand you have support from a number of Microsoft competitors. Do you believe that actually that will turn into meaningful help for you?
YOUNG: Well, no, again, we're very different. Previously, a lot of these approaches were, in fact, an anti-Microsoft approach. In our case, it's really delivering a unique value to our users, which is the control they get over our operating system because we do deliver a complete source code to the operating system and we deliver it under a license that allows you to do whatever you need to do with the operating system with without so much as asking our permission. And those features means that the customer can fix the operating system. He can improve the operating system. He can improve his applications that run on the operating system in such a way that he ends up building simply more reliable applications or systems using Linux than he can possibly do using any of the, what we refer to as "proprietary binary-only operating systems," whether they come from Microsoft or any of the other big technology providers.
Open source development is a worldwide, collaborative effort. Everyone who wants to can contribute code, and read the code provided by others. It puts the "science" back into computer science; results are shared and peer reviewed.
"If you are a civil engineer with plans for a nuclear reactor, there is no way concrete gets poured until your plans are reviewed by other engineers who weren't part of the design team," says Eric S. Raymond, author of "The Cathedral and the Bazaar," an influential paper on open source development. "The same solution that works in other branches of engineering -- peer review -- works for software too: Where there is no peer review for source code, software reliability is really bad; where we do have peer review for source code, software reliability is really good."
At the same time, open source platforms are attracting a growing number of developers. "Linux provides remote manageability, stability and scalability, but it was not a decision we made overnight to port Oracle8 to Linux," says Arvind Jain, senior product manager at Oracle. "It all goes back to market forces: It would be foolish not to support operating systems that win."
There are indications that all of this has Microsoft worried. In a recent SEC filing, Microsoft noted, "Over the past year, the Linux operating system has gained increasing acceptance, and leading software developers such as Oracle and Corel have announced they will develop applications that run on Linux." While that is partly a red herring meant for Justice Department investigators, Apache is gaining market share at the expense of IIS, and Microsoft has been forced to release open source extensions to Apache that support Front Page.
Still, the triumph of open source is hardly a foregone conclusion. Maintaining software is so expensive that purchase prices are often a vanishing small component of TCO. Second standards never matter much. The religious fanaticism of Linux proponents may not be as effective as the billions of dollars Microsoft is investing in developing NT.
And while support is getting better -- many open source advocates claim it already far surpasses the support available from Microsoft -- the ease and comfort of single vendor environments is hard to deny.
But the price of depending on a single source may be even higher. As Raymond says, "If you base your strategic business systems on closed source, you have mortgaged your business strategy to the whims of your software vendor.
What kind of man aims to take a perfectly good, multibillion-dollar market and cut it to a tenth of that size? In fact, Red Hat Software president Robert F. Young doesn't pretend to have a chance of taking away the $5 billion operating systems market that Microsoft owns. But he thinks he might create a new market by changing the rules.
"You can't be in the operating system market and win if you play by Microsoft's rules," Young said.
Young was perplexed by the apparent lack of an economic model for the OS when he first encountered Linux as editor of a New York Unix newsletter. But he became intrigued after starting a mail-order business that offered Linux software.
"My concept originally around Linux was to build a customer base so that I could then sell them a real operating system," said Young, who by then had also founded a computer sales and leasing company. "But every two months I would go over my sales figures and see that instead of selling less Linux, I was selling more Linux. So I decided there's got to be more to this." The fact that he could sell free software told Young that price wasn't the main attraction with Linux. Linux users, he decided, were really buying control. "If you need it and you need it now, [with Linux] you can fix it." Another early suspicion Young harbored--that Linux's advocates were mere hobbyists--evaporated as he encountered more and more consultants and corporate developers who relied on the OS.
Looking for a Linux product he could brand as his own, Young connected with Red Hat co-founder Marc Ewing, a former Carnegie Mellon student who had become a star Linux developer. When they formed Red Hat in 1995, they had a critical philosophical difference: Ewing thought the way to make money off Linux would be to charge an initial fee for accessing Red Hat's code. Young's instincts told him otherwise.
...The specter of a world in which operating system software is free--or close to it--has apparently caused some consternation at Microsoft, putting Red Hat on Microsoft's radar screen.
In turn, this has generated an increasing amount of attention from high-profile publications that would not normally devote so much space to so small a company. The media coverage has shot up in the six weeks since Netscape and Intel announced investments in the company.
"It makes me very nervous," Young said. "My board is impressed that we're getting mentioned in all these places. But the question I ask is, 'When are we going to find the time necessary to deliver on the overblown expectations we're creating?'" Young has been effective because he offers "deep insights about the value of Linux," said Jon Hall, a Digital Equipment Corp. manager who serves as president of Linux International. "He's the one I first heard say the thing here is not the money. Who really expects things to be free?" For all the goodwill he has won for advancing the open-source movement, Young isn't pushing enterprise partners such as Oracle to make their software free as well. "To me, that's still way too radical," he said.
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