Competition from Below

Todd Bishop posts about an interview with former Microsoft exec Brad Silverberg and his perspective on how Microsoft is dealing with the threat of open source software.

They are struggling with not so much open source, per se, but rather they are no longer the low price solution. In the past Microsoft was the low cost solution and Microsoft was then competing and attacking expensive proprietary systems from below. Now for the first time the tables are turned and it’s Microsoft that’s being attacked from below by a lower price solution.

A few weeks back I read a couple of articles that led me to believe that Microsoft may have concluded that its best defense was an aggressive intellectual property strategy. Sue the bastards! – ala the RIAA and music.

What’s interesting about that approach is that it might have worked twenty years ago — when the US and Europe were the markets that mattered. With globalization well advanced, pursuing an aggressive IP strategy is almost a waste of time in some important markets that now matter a lot. In the US, many enterprise customers are still downright angry over Microsoft’s pricing changes — and big companies find lots of ways to get even over time.