PDF Capability Has No Value These Days

The attacks on Microsoft (NSDQ:MSFT) by EU anti-trust chief Neelie Kroes are just getting more and more ridiculous. Of course before we already had the issue whereby MSFT wasn't allowed to include its Media Player installed in European versions of Windows 2004. But now with the new Windows Vista, Ms. Kroes is arguing that Ol' Softy can't include its XPS format viewing capability (similar to PDF format for files), and most shockingly of all can't provide Vista's increased level of security.

The argument is that by including all of these features, for free, that MSFT destroys the franchises of other companies such as Adobe for PDF's (NSDQ:ADBE), Real Networks for media playback capability (NSDQ:RNWK), and Symantec for security software (NSDQ:SYMC).

But lets stop for a moment. With Adobe, does turning a word file into a picture have any value these days?. Ok, ten years ago it might have been an amazing software feature, but today, is it that fantastic? Is it value-added? Or has its value dropped to almost nothing since anyone can just make a picture format and do it? Adobe is just lucky people use their format by habit, they add no value with this feature any more. Thus in an efficient economy they shouldn't earn any profits from this either.

Adobe Systems Inc. of San Jose, Calif., has told regulators that Microsoft should be prohibited from building free competing software for reading and creating electronic documents into the operating system, called Vista, according to people familiar with the situation. ...

...Adobe is objecting to Microsoft's inclusion in Vista of its own software for creating and viewing digital snapshots of documents, known as XML Paper Specification, or XPS. XPS competes with Adobe's widely used portable document format, or PDF.

While Adobe earns money by selling its Acrobat software to create PDF documents (while giving away the software to read such documents), Microsoft will include both reading and writing software as part of Vista for no extra charge. That could erode Adobe's sales. -from WSJ

Look, turning word files into pictures shouldn't really cost that much extra these days, nor should the revenue from this service be all that much. It should just be taken for granted, any company can write the software. Its like if I had a company that was the first to make text bold, which maybe in the 1970's was a major programming feat. (Wow! I can do it to ANY font!) But then now in the 21st century I decide to attack Microsoft for making text bold in its new Word program. They are giving away my franchise for free? Yes because the minimal cost to do so represents the economic value my business adds- zero. Thus I don't deserve profits from it.

Really, should users have to download a separate program and even make a payment for turning word documents into pictures? No, not these days, its a simple feature, like making any font bold. Thus there shouldn't be much profit from such a service and if Adobe currently has so much to lose from Microsoft's XPS format, then its for the better. Their revenue for PDF'ing files is an economic inefficiency. Their service is no longer worth squat thus shed no tears if their PDF based revenue dies. Why is the EU trying to protect Adobe's PDF monopoly?

We can make similar arguments for Real Networks' Real Player media playing software. Yes its amazing how it can play mp3's AND dvd's. Oh wait... there are tons of free software programs written by amateurs online which can perform all of Real Player's key features (playing songs, watching videos). Thus this service too is no longer worth squat either.

Instead of trying to get  governments to support their now value-less software, Real Networks should be spending more time figuring out how they can once again create a product which adds value. You can't just sit on your old idea forever. Again, if MSFT can just plunk in a Media Player for free, at a minimal cost, then your service is worthless. You need to do something they can't do so easily. (and which amateurs can't do easily online as well) Create a product which makes it more appealing for MSFT to buy your company out, rather than just spend a little R&D on a similar software application and drop it into Windows. If you can't pass this test, then you don't add value.

We can write a longer post applying the above argument vis a vis the EU's most absurd desire to downgrade Vista's upgraded security, I mean wasn't security the big complaint against Windows? But we are tight on time at the moment...

In conclusion, if your product has great value, it should be very tough for MSFT to just do a little R&D and plunk similar software into Windows for almost free. Look, Google Search is still killing MSFT. MySpace is way ahead of MSFT as well. The greatest threats to Microsoft these days have come from companies with completely new ideas, acting through innovation instead of lobbying for government-enforced shackles around their competition. The EU attacks on Vista are pathetic.

 

Comments

[beeker]

Your lack of understanding is quite astonishing.

The whole point of the unbundling argument is not that Microsoft Vista contains doc viewing and security for free.

It is that you have no option but to pay Microsoft for the feature BECAUSE it is bundled, and so the incentive to pay yet more money for a competitors offering is greatly reduced, even if that offering is demonstrably superior!

Nothing from Microsoft is "free". This is extortion by Microsoft (who could of course write a secure OS in the first place, but can't be bothered).

[A Stalwart]

Thanks a lot for your reply.

Surely we admit there is some minimal cost to including these features, and a small added value which does get passed on to the consumer in terms of a slightly higher price for Windows Vista & Office 2007. But this marginal cost is so minimal as to deserve the word "free".

The point in this article is that these little services have very little value-add, thus cannot command much of a price increase for Windows/Office.

Think about it, you can download these add ons for free online. Music players are in abundance, as are PDF viewers and converters.

Thus Microsoft doesn't have all that much power for extortion. It includes these as a slight convenience. You could just take 5 minutes and download similar add-ons for free. They are included pretty much for free since they have very little value added.

Is Microsoft extorting you because they include the Bold Text feature? No. You're right that the Bold Text feature techinically adds a marginal cost to the Office 2007 product, but this added cost is miniscule. As I believe it is for PDF viewers (free online in abundance) and Music playback software (also free online in abundance). MSFT can't hike their Vista price just because these features are included.

In terms of writing a secure OS, its in MSFT's best interest to write the best OS they can. There's no conspiracy.

You must understand that Microsoft does not have a natural or regulation-created monopoly. If a much better OS can be made and can be cheaper it will win in the long run. The cost of MSFT's OS still cannot be higher than the switching cost to a competing one. Its not MSFT's fault they built a strong franchise. Its up to competitors to build an OS which goes one leap ahead. It will probably happen one day. Internet browsers are starting to replace the desktop.

There is no extortion going on, you are free to download open source software, and build up your PC's capability piece meal. But I think you will find this takes a lot of time. (Time = Money and MSFT saves you this time). Its kind of nice when everything is just included out of the box. And it has value. No one has yet been able to beat Windows. (Though inroads are being made)

Thanks again for the comment.

[fornetti]

I do not believe this

[Games]

One of the themes...

[jorry]

I agree that Windows XP is the most popular version of OS. But I tihk that you must try the newest version too. For this moment it is Windows 7 (see here http://rapid4me.com/?q=Windows+7+Build+6956 )

[Warez Library]

It's time to move to Windows 7