In an old youtube video “Microsoft Windows 3 and NT, 1991 Part 1” Bill Gates gave an overview about the Windows 3 and Windows NT product line. He explained, who Microsoft brings modern computer technology to the user and he presented modern software and even network capabilities. For the time of 1991 the presented technology can be called advanced and it was explained easy, so that any customer can understand it. But something is wrong with the presentation and the reason why Microsoft was modern in 1991 but not in 2018. It is not about the Windows 3 operating system, the technology is great. The problem is that the user has to pay enormous amount of money to profit from all these feature. What is not shown in the promotional video is how much exactly. The shown 386’er PC costs around 3000 US$, the MS-DOS 5 operating system was sold for 200 US$ and the presented Windows NT line costs even more. If the user needs also the Microsoft encyclopedia, the MS-Office product line and the C++ development kit he will pay 1000 US$ additionally. And that is only the price for 2 years. If he needs upgrades for software bought some months ago, he will pay even more. That means, if money is not important Microsoft is a great company. But for most users this is a problem. The PC industry is competing with technology and with the price and if a company is not able to reduce the costs he will not be able to survive.
Let us take a look into today’s market position of Microsoft. For beginner users with a small need in software, Microsoft is great. Like in the early 1990s the customer buys a PC, gets a preinstalled Windows operating systems and buys additionally one game and the MS-office package. The total amount of money he has to spend is low, perhaps 300 US$. That is the behavior of many million customer worldwide. But, if the customer has greater needs he will recognize that Windows is a dead end. For example, if he is visiting the computer store with a list of software he needs: Database application, Server system, C++ compiler, encyclopedia, office application, image manipulation, sound tools and video editor. If he puts all the software in his cart and moves to the checkout he will notice that the computer store ask him to pay 4000 US$ only for the software. That is too much. And there is a need to search for an alternative. Microsoft isn’t able to provide such an alternative. Their prices are fixed some kind of software flatrate isn’t available. What the customer can do and what most professional users are doing is to switch to Open Source. So they get all the software they need and their costs are limited.
The business model Microsoft worked in a time, in which only a small amount of software was needed. That means, the typical PC of the 1990s consists of an operating system, plus 3 additional programs, not more. Paying the license costs was affordable. Since the 1990s times have changed. Today’s poweruser have a higher demand. They need all software available on the market. That means, they have a PC and on the PC they have installed 100s of programs. The only business model which is able to provide such a service would be Open Source and a flatrate. That means, the individual software package costs nothing or very few.