There’s a rumor that Microsoft is going to introduce a version of Office for Linux. Let’s run an analysis on the idea.
First, we need to cover a couple of things.
- I have no direct knowledge of Microsoft’s plans.
- I have no intention of asking anyone who has any knowledge.
- I know a half dozen people who probably know all or part of the answer.
I make a lousy reporter. I’ve spent a huge chunk of my life covered in Non-Disclosure Agreements. I may still be covered by several. I’m not sure, but I’m not going to do anything stupid. In fact if you go back and read my writing, you will notice that:
- I cite sources.
- When I’m speculating, I provide reasons for my speculations.
- I never, ever, cite ‘informed parties’
It’s just too damned dangerous. A family joke at one point was that I was under so many non-disclosure agreements that I couldn’t disclose how many I was under. I’ve spent a huge portion of my adult life dealing with the fallout from NDAs. I know how to talk, talk, and continue talking, without SAYING A DAMNED THING.
In other words I’m better at keeping secrets than anything else.
Again, go back and read what I’ve written. You’ll see a pattern. There’s a lot of stuff that I don’t talk about. For example I spent a lot of time working in the Catalytic Converter business before my body fell apart. I know how to design 3-Way catalytic converters for use on automobiles, generator sets, forklifts, and marine engines. You’ll never get the details of how to do it out of me, nor will you find out how I learned how to do this. I can however provide proof that I worked in the business, which is available from a public source. A government agency for that matter. Here’s a letter written to me by Robert Cross of the California Air Resources Board on May 25, 2006 (PDF Warning).
I didn’t design the exact catalyst used in that device, but I was responsible for its successors. And no, I won’t tell you how I did it. I can tell you where you can buy this sort of thing. That information is publicly available. I have no issue with using my knowledge to find publicly available documents. If it is available, and I find it, I’ll use it. If it isn’t available, it doesn’t get used.
I used the above as an example, because I am a public figure of sorts. A lot of people know me, and a lot of them know the basic details of my past. They don’t know exactly which companies I dealt with. They might know the people I knew (heck, all they had to do was hit Google – PDF warning) to find documents with my name attached. It isn’t exactly a common name.
But I don’t talk about what I did. Not publicly. That’s one of the reasons that people trust me. I don’t screw a source. Ever. If I was willing to loose my sense of morality, I’d probably be a lot richer. But could I live with myself? Could the people who trusted me live with me? Not likely.
What I am good at is analysis. When I was working in the catalytic converter business, and in the forklift business before that, I worked with some of the best, and was honoured to be taught by them.
One chap in particular I’ll mention, a fellow named Ross Harvey. Ross was a tough old bird (note that when I first met him, he was the age I am now). He was also damned smart, and could see what was really happening behind the curtain. Ross got me interested in analysis, and was the first person to tutor me on the basics.
Rest in Peace Ross.
Office on Linux – Part 1 – Market Share
Why would Microsoft introduce Office for Linux?
This is a rather complex issue. Fifteen years ago Microsoft controlled about 95% of the Operating System market. That was just prior to the release of Windows 98. Apple was effectively a shell, producing over-priced, over engineered junk. The Commodore Amiga had died in 1992, and the Atari ST about the same time. OS2 had started to fade. Linux was too new, and feature deficient at the time to be competitive.
Currently Microsoft’s OS market share is in the neighbourhood of 21%.
Yes, I’m serious. But it all depends upon exactly how you define a computer. If you include mobile phones, tablets, and computers all in one huge pile, Microsoft’s OS market share is 21%. If you include conventional laptop/desktop systems only, Microsoft’s market share is slightly below 80% (in Canada at least, where Apple has huge penetration).
Is a mobile a computer? I know of one person who wrote an 80,000 word novel on a mobile, using a BlueTooth keyboard. It isn’t something I’d want to try, but I’m nearly sixty, and my eyesight isn’t what it used to be.
What can’t you do on a mobile (or tablet) that you can do on a laptop/desktop computer? I can’t think of anything. I’ve seen video editing apps, sound editing apps, photo editing apps (did our Christmas cards using one), scientific apps, in fact I’ve seen things on mobile that I haven’t seen available for Windows or Mac OS X (though it has often been available on Linux).
So if it comes down to capabilities, yes, a mobile/tablet is just as capable as a laptop/desktop. I wrote another 500 words at this point explaining why this is, but I’m cutting them because they detract from the point:
Mobiles and Tablets are now powerful enough to replace conventional computers.
As a reference I went for three months without touching a keyboard, using only an original generation iPad. No, it wasn’t a problem. In fact it was hard going back to the keyboard.
Microsoft has recognized that they have a huge new market available on mobile, and have apparently committed to versions of Office for IOS and Android. Apple is already selling Office Suite software for IOS. Documents to Go has been in the market since the Palm Pilot days, and is happily playing on both IOS and Android. And there are a lot of vendors providing single part solutions, i.e. stand alone word processors on both IOS and Android. There is definitely a market, though I don’t know what the actual sales figures are.
And if Microsoft is doing a port for Android, a port for Linux wouldn’t involve that much extra work. Android is a Linux Kernel variant, and the Android modifications are being merged back into the main Linux kernel, or at least they are when they meet the Kernel Maintainer’s standards.
Office on Linux – Part 2 – What is Microsoft
Everybody knows that Microsoft is Windows. When everybody knows something, it usually is worth going back and taking another look, because it is probably wrong.
Let’s look at Microsoft’s most recent Form 10K (yearly SEC filing).
First look at how the company defines itself:
We operate our business in five segments:
- Windows & Windows Live Division,
- Server and Tools,
- Online Services Division,
- Microsoft Business Division, and
- Entertainment and Devices Division.
Windows and Windows Live Division is one of five Microsoft operating divisions:
Windows & Windows Live Division (“Windows Division”) develops and markets PC operating systems, related software and online services, and PC hardware products.
Server and Tools
Server and Tools develops and markets server software, software developer tools, services, and solutions that are designed to make information technology professionals and developers and their systems more productive and efficient.
Online Services Division (“OSD”) develops and markets information and content designed to help people simplify tasks and make more informed decisions online, and help advertisers connect with audiences.
Microsoft Business Division
Microsoft Business Division (“MBD”) offerings consist of the Microsoft Office system (comprising mainly Office, Office 365, SharePoint, Exchange, and Lync) and Microsoft Dynamics business solutions, which may be delivered either on premise or as a cloud-based service.
Entertainment and Devices Division
Entertainment and Devices Division (“EDD”) develops and markets products and services designed to entertain and connect people.
Let’s look at overall company numbers, in millions of dollars:
Revenue $ 73,723
Operating income $ 21,763
Pretty impressive. Note that this is fiscal year 2012 only, if you want historical information I strongly suggest you read the SEC filing yourself. Also note that I’m not a Business major, and I use non-standard methods. I’m ignoring a whole bunch of things by only using the Gross numbers. For accounting purposes that would be suicide. For basic analysis, well, we won’t be all that accurate, but since we don’t know Microsoft’s internal numbers, nor a lot of the other numbers, we can’t be accurate anyway. What we want is a gestalt.
Windows and Windows Live
Revenue $ 18,373
Operating income $ 11,460
62.37% is a level beyond belief.
Server and Tools
Revenue $ 18,686
Operating income $ 7,431
39.77% is a level that companies like General Motors, Toyota, Exxon, and GoldCorp dream of.
Revenue $ 2,867
Operating loss $(8,121)
Online Services has been one of Microsoft’s weak spots for years, ever since a small startup named Google redefined the space for itself. Microsoft isn’t the only company to have had problems competing with Google, the trail of corporate bodies Google has left behind is just as impressive as Microsoft’s own trail, if shorter.
Microsoft Business Division
Revenue $ 23,991
Operating income $ 15,719
Remember when I said that 62.37% was a level beyond belief. What do you call 65.52% anyway? Utterly incredible.
Entertainment and Devices Division
Revenue $ 9,593
Operating income $ 364
The long suffering Entertainment and Devices Division is finally turning a profit, and a really decent one. Believe it or not, in most of the business world 3.79% is considered a decent return on investment. Oh, you’d definitely want higher, but considering how many companies right now are loosing money, or just breaking even, 3.79% looks really good.
Except at Microsoft, where it looks, well, anemic.
So, division with the greatest sales? Microsoft Business Division. Division with the greatest return? Microsoft Business Division at 65.52%.
Which division rules the company? Microsoft Business Division. What does Business Division make?
MBD offerings include the Microsoft Office system (comprising mainly Office, SharePoint, Exchange, Lync, and Office 365), which generates over 90% of MBD revenue, and Microsoft Dynamics business solutions.
Read that. Over 90% of the sales of the division that rules Microsoft come from one product line, Microsoft Office. Microsoft Office is the product that defines Microsoft Corporation.
Office on Linux – Part 3 – One Division to Rule Them All
Office Division rules Microsoft. Windows and Windows Live Division probably hates the idea of Office for Android, but Windows and Windows Live Division has presided over some real duds. Mess up, and you loose your influence.
Ever seen a Surface RT? I haven’t either. I’ve seen a ton of Android and IOS tablets, even a few Windows 7 tablets, but never a Surface RT.
Then there is Windows 8. When Acer’s President says that Windows 8 is “not successful” but Chrome notebooks are winners to a reporter, he is really sending a message to Microsoft. He really doesn’t like Windows 8, and he is willing to push the competition.
So Business Division is the fair haired child that can do no wrong. At least until they mess up. So if they do produce a Linux version of Office, it will only be after a lot of research, because they don’t want to end up like Windows Division. Research which will have included the following at minimum:
- How big is the market?
- How much are users willing to pay?
- Who are the users?
- How much will it cost us to enter this market?
- How much will it cost us to not enter this market?
I can assure you that Microsoft’s list will have been a lot longer than that. Those five questions are core though. Remember I said that if you include Mobile and Tablets that Microsoft’s OS Share is only 21%? Microsoft hasn’t released their IOS version of Office yet, so if we include Mac OS X, that probably brings the addressable share of the gross market for Office Suite products to 22.5%, which means that 77.5% of computing devices cannot run Microsoft Office. Business Division probably considers this intolerable. I know if I worked there I’d find it intolerable.
The second question isn’t one we can address, beyond remembering the commoditization of Office Suite products I mentioned earlier.
The third question doesn’t mean specific users, it means classes of users, i.e. writers, business users, scientists, academics, etc.
The fourth and fifth questions are intertwined. If it is going to cost a million to enter the market, and five million if you don’t, you’d be damned stupid not to enter the market, EVEN IF YOU DON’T MAKE A PROFIT. Think about it. You have a choice of loosing money, or spending a million to break even. There are people who wouldn’t spend the million. You can find them in Bankruptcy Court. The term ‘False Economy’ says it all.
Remember the numbers. You could split Microsoft into five companies. Four of the companies would have no problems surviving on their own, at the current time. But the Cash Cow of the all is Business Division. And if Windows ends up dying? Who cares. Business Division is a right profitable little firm all on its own.
Office on Linux – Part 4 – Costs and Benefits
Now we get into the real speculative part. I’ve never programmed for Android, though I’ve done a lot of programming in the past. I did a lot on DOS, some work on Windows (but only Console programs), and a fair bit of Web programming.
So while I know the basics, there are a lot of people who know this stuff better than I do.
Android uses a variant on the Linux kernel. In theory anything designed for Android, should be fairly easy to port for Linux, as long as it doesn’t use Graphics.
But everything uses Graphics. Your Desktop is a Graphical User Interface. The screen on an Android, IOS, Windows 8, Blackberry 10, or Palm Pilot devices is a series of graphics drawn on a screen.
Microsoft has the capability to build their own graphics library that interfaces with the Linux Kernel directly. Yes, it would have to have modifications for Android, but it is quite possible those modifications would be relatively minor. For a given value of minor.
If this sounds impossible to you, I’ll refer you to the Wikipedia entries for John Carmack and for ID Software. Microsoft has a lot more money that ID Software did when it developed the 3D engine for Castle Wolfenstein. And the basic technology is now fairly well known. There’s no reason Microsoft can’t develop their own graphics library. In fact they’ve already developed their own graphics library for Windows. They could use the same basic interface, with different device specific hooks.
Overall I believe that the costs would be relatively low for a division the size of Business Division.
Benefits are harder to quantify. Microsoft currently has access to about 22.5% of the total market for tablets, mobiles, desktop/laptop computers, and of that 22.5% only a certain percentage are buying Microsoft Office. Gamers for example probably don’t buy it, nor do a lot of home users. It doesn’t make economic sense. We can assume the same of the new market that would open up with IOS, Android, Linux, and possibly Blackberry 10 variants of Office.
So the market expands by about four times in gross. In reality most mobile users have no need for an Office Suite, and a lot of tablet users probably don’t either. But Business Division’s total sales could increase by between 1.10 and 2.00 times.
An increase by 1.10 may not sound like much, but, if Microsoft doesn’t address that market someone else will, and tell me exactly why you would be willing to throw away $2.4 Billion worth of revenue. Are you nuts?
Agreed, margins might not be what they have been historically, but with Windows market share plummeting as more people move a lot of their life to non-traditional computing devices, Microsoft has to address this market.
Microsoft’s earlier attempts through Windows Division have been failures. Windows CE, Windows RT, Windows Phone, Kin, none have done superbly in the market place. If you are Steve Ballmer, you’ve got to be thinking that you’ve been attacking the market completely wrong, and that it’s time to bring in a new team.
Linux market share is of course nearly impossible to define. I buy my Linux boxes from a computer store that will sell them to my bare bones, no operating system. But my Linux laptops all originally had Windows installed. Linux ran a lot better. No crashes, totally stable. Yes, it was a bit harder to set up when I started, today? A child could do it (and if you ask, my wife will tell you I’m her fourth child).
Nobody knows how many systems have had Windows removed. Microsoft probably has the best idea of anyone just from tracking Operating System serial numbers on computers calling home for updates. They would have noticed that one serial number, assigned to Gateway, stopped calling home in June 2008. That was when a six month old install of Windows XP died, and I blew up and installed Ubuntu.
But the market really doesn’t have to be all that big for Microsoft to make a profit, as long as they can keep their porting costs in line, by leveraging off the work done for Android.
Based on the raw numbers, I’d call this rumour plausible.
Thursday February 7, 2013