Facing Free Software, Microsoft Looks to Yahoo
SAN FRANCISCO — Nearly a quarter-century ago, the mantra “information wants to be free” heralded an era in which news, entertainment and personal communications would flow at no charge over the Internet. — Now comes a new rallying cry: software wants to be free.
Context & Ripple Effects
Microsoft had already explored making desktop applications free, free web-based business software, and cloud delivery through 2007. IBM's free Office challenge added a direct warning that zero-price alternatives could pressure Microsoft's licensed-software model.
Microsoft's confirmed proposal to acquire Yahoo places a corporate-scale response alongside those product and delivery shifts: the company is seeking a larger position as software distribution moves online.
First-order effects
- Microsoft's proposal makes Yahoo an immediate strategic decision point, while giving Microsoft a potential route to strengthen its response to free software pressure beyond its established desktop products.
Second-order effects
- IBM's free Office challenge and Microsoft's web-software efforts make online distribution and price increasingly central competitive variables, rather than features of paid desktop suites alone.
Third-order effects
- If free, web-delivered software continues to spread, Microsoft and other established vendors will face a structural shift from defending license prices to competing for the scale and reach that support alternative software models.
The trend: Software competition is shifting from paid desktop licenses toward free, web-delivered offerings, pushing Microsoft to seek scale beyond its traditional software business.