Robert Pogson

One of the things I read about M$ is that M$ facilitated wide use of PCs and so has been a blessing over the years. While it is true that other OS was cheaper than UNIX licences back in the day (~$1000), the licences still cost too much to bridge the Digital Divide.

We can see this clearly now that Android/Linux on ARM is allowing other technologies into the market. Costs per unit can be under $100, several times less than Wintel. The number of people using IT could thus double within a few years, far greater growth in numbers than is typical using only that other OS in IT.

M$ of course mostly cares about its total revenue, and not about units shipped, but imagine M$ had adopted GNU/Linux a decade or more ago and encouraged ARM. They could have cut their licensing/support fees in half, reduced expenses and had a decade with treble rate of growth, giving them even larger revenue than they have now. They locked themselves in to lower profits at the same time that they locked in users to M$’s way of doing things. They now have to raise licensing fees to maintain profits on a decreasing share of the market which will hasten their demise.

At the same time, a billion people, more or less, were denied IT by M$’s short-sighted behaviour.

The score: In a decade of error,

• 10 billion person-years of computing was lost,
• $100 billion in profits was lost by M$ alone,
• billions were kept in poverty years longer than they should have,
• Earth was polluted/raped by the material wasted/used in PCs replaced every few years, and
• the world spent $billions more fighting the malware and bloat and re-re-reboots of that other OS.

So, rather than congratulating Bill G and Co. for their success, we should pity them for their failures and regret having given them any business at all. This is essentially what will happen in 2012 as M$ loses more market share, comes late to market with that other OS on ARM, and */Linux and ARM bring IT to the next billion people.

In 2012, the installed base of that other OS on x86 PCs could well fall to 70% or less and units shipped with that other OS could fall to less than 50% at the same time that Android/Linux smartphones ship 300 million units and tablets ship 200 million units and GNU/Linux ends up on 100 million more desktops/notebooks.

The desktop monopoly of M$ is looking very old today. Emerging markets are consuming an ever larger piece of the PC pie (Asia/Pacific exluding Japan shipped about 1/3 of PCs with per annum growth of 11%) and they are not loyal servants of M$. Consumerization of IT means stuff consumers drag in to work will have to be accommodated. No more “M$ shops”.

The numbers are spectacular. Last year folks were expecting the world to ship 45 million tablets and revised estimates to 60 million. It turns out Apple, on its own, shipped that many. The global shipments of tablets were close to 100 million. And then there are the smartphones which shipped in greater numbers than desktop/notebook PCs.

All this means M$’s share of personal computing is plunging like a stone and more importantly, the share of people who look to M$ for the source of software is declining rapidly. Only a tiny percentage of smart phones and tablets use M$’s stuff. Soon the desktops and notebooks will not be using M$’s stuff. The change in 2012 could be dramatic as more businesses use thin clients and/or web applications and have less dependence on M$’s software. In the last quarter M$’s client division decreased its revenue 6% on the basis of December’s shopping mostly. There’s no sign of a decrease in consumer spending on non-M$ software. Shortages of hard drives will impact desktop and notebook PCs seriously in 2012 on top of everything else.

Still, there are many who are seriously locked in but they may have taken their last step on the Wintel treadmill.

HTC and Samsung are huge players in smart thingies. It’s a battle to ship more faster. HTC has hired IBM to its sales team. The idea is that IBM will grease the skids for sliding HTC devices into large businesses who buy stuff by the thousands of units. HTC has shipped nearly 100 million units so far.

HTC is also fighting the battle from one individual to the next by opening the boot-loader to run GNU/Linux or other stuff for geeks.

And they are in the mainstream shipping smart thingies to consumers and ISPs.

2012 will see huge take-up in Android/Linux smart phones and tablets and HTC wants its share and is willing to compete on price/performance. M$ is nowhere to be seen.

With some provisos about the inherent unreliability of User-Agent analysis and logging Wikimedia report the following usage changes from 2011-11 to 2011-12:

That is consistent with news that tablets sold like hotcakes in December.

Worse yet for the Wintel monopoly, the trend of migration from that other OS increases.

The Linux component is both GNU/Linux and Android/Linux:

All of these operating systems grew in share except M$’s which declined precipitously. Combined with the information that tablet ownership doubled in December, it’s clear that Android/Linux filled Christmas stockings. By the time everyone owns a tablet, “8″ will still not be released… When you consider all the free advertising these Christmas presents will give to Android/Linux it’s clear that “8″ has nowhere to expand. A year ago, that other OS was at 82% share. By the time “8″ will be released, it could be around 66%, making 2013 the year the monopoly will be gone. A significant portion of PCs will be replaced by ARMed devices and desktop and notebook devices using ARM and Linux will be widespread. Considering the narrow margins of retailers and OEMs, I expect in 2012 many will find a place in their hearts for ARM and Linux one way or another.

Extremadura was in the news years ago for rolling out a lot of GNU/Linux desktops overnight. Now that they have more experience and presumably a more complex system, they are going to a complete Debian GNU/Linux solution on all desktops over the next few months.

“The CIO says the most important reason for the migration to open source is the need to unify all the desktops of the civil servants. The desktop needs to be strong, easy to use and easy to manage and support remotely, without viruses and free from security problems which are common to proprietary solutions. “And of course, it needs to be free. Because our budget for this plan is of zero euros.”"

So, what some supporters of that other OS claim, that applications require people to run that other OS is just untrue. The last few thousand desktops in Extremadura’s government say so.

CES 2012 was the largest show yet for the consumer electronics industry. With 3K exhibitors, 153000 visitors and 20K new gadgets displayed, it reveals the fires of innovation are burning brightly, just not for M$ and its Wintel “partners”. This is the last time that M$ will give a keynote address since M$ is not catching the wave of innovation sweeping small cheap computers and everything being connected. M$ just cannot stifle this market as it did personal computers two decades ago. In 2012, no one needs M$ to bring a product to market and to sell millions of units whether it is a toaster, a smart phone or a PC. This is another milestone in the long road to freedom from the Wintel monopoly.

see CES 2012 breaks all records in its 44 year history, with 20,000 devices launched in a week

Much has been written on the web about M$’s taxation of Android/Linux but M$ mentions little but lawsuits in its recent 10-Q report. In fact, there we read, “there are approximately 60 other patent infringement cases pending against Microsoft.” Nowhere is there a number showing revenue from royalties levied on Android/Linux. While noting the risk of consumers buying gadgets not running M$’s stuff M$ never mentions royalty income from those gadgets. It must not be substantial because hundreds of millions of units running Android/Linux were sold but royalty revenue by M$ was not enough to prevent a decline in revenue by their client division.

If M$’s tax on Android/Linux were even $10, revenue from the “70% of Android/Linux” devices sold in USA would have been around $100 million, barely a blip in the 10-Q. Still, globally, the amount should have been significant but was not registered. Clearly, the taxation of Android/Linux by M$ is not impeding growth of Android/Linux in the least and is not affecting M$’s financial health. If any segment of Android/Linux were affected by royalties it would be the low-end devices, which are having explosive growth.

Overall M$ had a fine last quarter, but one of the cash cows has run dry, the desktop operating system. Revenue was down 6% and income was down 11% for the client division. M$ repeats, “Windows Division revenue is largely correlated to the PC market worldwide, as approximately 75% of total Windows Division revenue comes from Windows operating system software purchased by original equipment manufacturers (“OEMs”) which they pre-install on equipment they sell. The remaining approximately 25% of Windows Division revenue is generated by commercial and retail sales of Windows and PC hardware products and online advertising from Windows Live.” but shipments of PCs were flat not down according to IDC. This is a real downturn in M$’s business, separate from the world economy of PCs.

What hurt M$ in this segment is that XP is no longer generating revenue for them and half their end users run XP. Also, the number of PCs shipping with “7″ is only about 50 million per quarter, far less than the 90 million shipped. The monopoly is seriously weakened and has no prospect of new life. The world wants small cheap computers which are selling with double digit growth quarter after quarter. Worse yet, for M$, is that the shortage of hard drives from Thailand will now kick in and could affect the whole of 2012. Not enough people can even buy the obsolete technology even if they wanted it.

The shifts in the market for PCs will cause more organizations to use thin clients and smart thingies which don’t require hard drives. OEMs and retailers, normally “partners” of M$ will be shifting to other technology long before “8″ arrives. They cannot afford these drops in income because their margins are much smaller than M$’s. This will compound M$’s decline because a feedback loop has started. Very few PCs running M$’s stuff were sold at Christmas and the retailers are way behind. They know they can sell Android/Linux on ARM and will be seeking other things to sell like GNU/Linux on ARM and x86/amd64 to increase their margins. M$ will be cut out of the market by their inefficiency.

UPDATE
ZDnet has a story that includes this information:
“Microsoft has sold over 525 million Windows 7 licenses since launch”

Wow! Let’s see, October 22, 2009 until December 31, 2012 is 9 quarters. They sold 525/9 = 58 million licences per quarter when the world is shipping 90 million PCs per quarter. No wonder they’re doing so well in the client division.

It’s about large business’ use of GNU/Linux. While that’s a niche market for GNU/Linux, it’s large and growing:

• 8 out of 10 “inivtation-only” respondents plan to spend more on GNU/Linux servers in the next five years while only 2 out of 10 plan to do that for that other OS,
• twice as many plan to use GNU/Linux rather than that other OS to deal with “big data” issues,
• those with technical problems preventing adoption of GNU/Linux dropped 20% compared with 2010. Now only 12% find technical obstacles,
• there has been an increase in contributions of code and bug reports,
• more than 2/3 see GNU/Linux as more secure than other operating systems.

see Enterprise Linux User Report 2012

One picture is worth millions of words. Here’s a site that has plotted sales/shipments of various platforms of personal computing over the decades. The PC has obviously peaked while new technology climbs like a scalded cat. It’s also clear that the new technology is just getting started… and Android/Linux is overtaking whatever Apple puts out.

There are many reasons for why the new technology performs this way:

• the old technology is bulky, expensive, heavy, hot and noisey,
• the new technology is small, cheap, light, cool and quiet,
• the new technology is easier/faster to bring to market mostly because it is cheaper and has so many advantages,
• more choices stirs interest in consumers, and
• more options stirs innovation in producers.

The counter argument is that the x86 PC can do more faster but that is irrelevant as consumers don’t want/need to do more. “More” was just marketing hype from Wintel over the years to bring on new sales rather than any kind of necessity. A lot of basic roles PCs performed have largely been taken over by servers and USB devices: storage, computing, manipulation of data, and of course servers do a lot of stuff PCs cannot, like the social media. PCs do not scale well enough to do that.

The only question in my mind is whether or not M$ can swing the monopoly it had on x86 PCs to ARM. I think there’s not much chance of that working because the new technology is all about small and cheap whereas Wintel is all about big and expensive. Some things need to be big to perform well, like vaccuum cleaners, but a personal computer is not one of them. Moore’s Law, networking and ARM have eliminated the need to be big in IT. One does need to be flexible and the EULA of M$ and the need to cool x86 make Wintel deprecated. Intel is trying to remain relevant by it’s Atom line and pushing GNU/Linux but Atoms need to be one or two steps ahead of ARM to be in the same league of energy consumption. Eventually Atom and ARM will both be so low in energy consumption that difference may not matter but that is still a year or two away and Atoms still cost far more than ARMed CPUs to produce. There may continue to be a need for desktop/notebook personal computers but there is less need for them to be run by Wintel. The same is true for “social” servers.

Oracle is the goto guy of enterprise databases. Data is the anchor for corporations with global reach and large organizations have clusters of databases for security, performance and to deal with the complexity and scope of operations. That dependable Oracle database has been holed below the waterline.

Infoworld has discovered that there is a fundamental flaw with the counters that allow transactions on Oracle database to be synchronized around the globe. There is a Y2K-like error in the way backups and some transactions cause the counter to be incremented towards the upper limit of the counter’s value. The result is an intruder using routine commands could break the database. The larger and more nodes the database has the bigger the vulnerability. Basically a storm of increments to allow for synchronization can rather quickly bring the counter to its limit.

There are a couple of fixes for this problem: a temporary shutdown to reset the counter and/or a patch that Oracle has developed. Either are a costly interruption in the service upon which Oracle has built a saleable reputation.

This is another example of how IT with a monoculture of software can leave itself open to serious threats. That even the normal backup procedure relied upon for the ultimate security layer is a part of the problem must be giving system admins nightmares. I would bet there are a lot of Post-it^TM notes up today logging the idea of rethinking the databasery of large organizations and aspiring smaller organizations. I would bet some are considering PostgreSQL or dual-database systems to close out the possibility of database-Armageddon in the future. I would bet a few intruders will find unpatched systems out there with which to create some chaos.

The ultimate blow to Oracle’s reputation in all this is that Oracle was aware of the problem and assumed users would never find it. They were counting on security through obscurity.
“After much discussion and exchange of technical data, Oracle acknowledged that there were ways to increase the SCN at will. Referring to one method, Townsend said, “This is an undocumented, hidden parameter, so it was never intended for customers to discover and use this.”

However, we pointed out that there were several other methods that could be used; we sent those to Oracle as well.”

Is that good enough for a licence that costs £31,839.00 / Processor?

Once again, we see that dependence/lock-in to a single source of supply for anything in IT can be fatal. We saw that in Wintel (both costs and malware), hard drives made in Malaysia (flooding interrupted supply), and now databases. IT systems need to be robust and flexible which is not what lock-in gives.

For those considering PostgreSQL, you might be interested in the offerings by EnterpriseDB.
“EnterpriseDB is the only world wide provider of enterprise-class products and services based on PostgreSQL, the world’s most advanced and independent open source database.

Postgres Plus Advanced Server provides the most popular enterprise class features found in the leading proprietary products but at a dramatically lower total cost of ownership across transaction intensive as well as read intensive applications. Advanced Server also enables seamless migrations from Oracle® that save up to 90% of the cost of typical migrations.”

A system suitable for embedded, educational and R&D applications has been developed based on ARM and minimal hardware (no PSU) for $15, about the price of a box of copy-paper. The idea is to have a complete stack from circuit-board layout, CPU and OS completely open and produced by cooperation with Free Software proponents and Chinese hardware design and production.

Clearly, this is at or near the theoretical minimum cost so we finally see where Moore’s Law and Free Software can take us. Already some smartphones and tablets are available around ~$100, so we are “there”, at the end of the rainbow, the pot of gold, what the material costs and a bit of labour and shipping.

This means an end to many limitations of IT:

• the Digital Divide between rich and poor is getting narrow enough anyone who wants to can leap over,
• within a few years no region of Earth or activity of humans need be devoid of IT because of costs,
• Wintel need not apply, and
• the number of intelligent devices, including computers, smartphones, tablets, netbooks will explode.

With costs of material so low and with cost of entry into industry so low, we are entering an era of enhanced innovation with the only limitation left being imagination. I can see education where costs of Wintel have widely prevented environments with 1:1 student:computer ratio, government, business and individuals sooner or later using IT everywhere daily. The technology is just too inexpensive and too productive not to use it.

Bringing a product to market for end-users is just a few months away using this technology. China already has broadly used technology developed by government for the package, keyboard and display so new products using such low-cost inputs is inevitable and sure to have a market in wide emerging markets for IT and in niches in well-developed markets. Everything from toasters to desktop PCs are within reach. Even with Wintel costing $100+ we saw netbooks at $200 so the era of complete systems costing $100 or a bit less are upon us. No ultrabooks or market distortions by M$ and Intel are going to derail this juggernaut. In 2012, small cheap computers are going to kick ass everywhere but high-performance computing and servers.

There are still bottle-necks in prices such as plastic, displays, storage and memories but they seem to be relaxing, too. The old technology was so bloated, the new technology may be able to live off discarded material. The CPU and software are no problem at all. Here’s what was on the market last year. Here’s a video of it running:

With Vista, and “7″ we heard this refrain:
“benefiting by Intel’s launch of the Ivy Bridge platform, demand for notebook is expected to rise in the second quarter and with assistance from Windows 8 in the third quarter, a new wave of replacement trends are expected to start appearing in the quarter, helping notebook shipment to grow.”

Wintel, it’s getting tired. Vista flopped. “7″ did well but did not stimulate the desktop/notebook markets. They’re flat at best. How is “8″ going to be any different? The world is not waiting on “8″. The world is moving on with thin clients, Android and GNU/Linux, netbooks, tablets and smart phones. If there is any life left in desktop/notebook PCs, likely Linux on ARM will be involved. That’s what improves price/performance.

There’s news from Taiwan that M$ and Intel are trying to jack up the price of “8″ on tablets. Manufacturers are concerned the devices won’t sell well.

They could be right. They know the world wants small cheap computers, not small expensive computers. The iPad sets the acceptable price-horizon and Wintel wants to exceed that.

Android/Linux on ARM is looking better all the time and there is still the option of GNU/Linux on everything if prices really do matter.

see also Wintel tablet PCs may be priced from US$599-899

Better luck next time M$. Oops! There will be no next time. This is M$’s last chance to remain at the top of monopoly pricing. It will be so embarrassing when they have to cut prices in order to compete on price/performance. The world has seen tablets before and knows what they can do thanks to 2011. 2012 cannot undo the global experience. No amount of advertising can put that back in the bottle. It was one thing to pay manufacturers to install that other OS but M$ will not be able to do it on ten times as many units without a serious hit to the bottom line. This week we will see last quarter’s numbers and it will not be pretty for fans of M$.

It’s always fun to see the school-yard bully take his lumps:

• ITC: Motorola does not violate Apple patents
• Oracle v. Google – Rock, Meet Hard Place
• Barnes & Noble Opposes Microsoft’s Motion for SJ on Patent Misuse Defense ~pj

The bullies of IT, Apple, M$ and Oracle have hardly gained any traction in their barrage of lawsuits and even book-sellers are beating them up. That public humiliation is adding to the decline in monopoly in IT. Going forward, everyone will seriously consider open standards in new systems and upgrades and monopoly will fade back into the swamp where it belongs, competing on price/performance. In the end the $billions the monopolists stole from the economy will become tiny compared to the rapid growth in global IT.