Related link: http://news.com.com/2100-1012-996528.html
Quoting myself, with some additions and editing, from http://lists.xml.org/archives/xml-dev/200304/msg00321.html:
MS Word is the biggest cash cow MS has. Yes, more so than Windows, as I
understand it, because they have to provide much deper OEM discounts for the
latter. It would seem MSFT is trying to mold InfoPath
into another cash generator, effectively by up-selling to the large base of MS
Word users that could afford it.
First of all, the archives are littered with the remans of up-sell schemes from
well-established commodity or low-end products. When people have made you
number one at the low end, it is usualy for very different reasons than the
ones that would motivate them to upgrade with you at the high end.
You may say then that the opportunity cost to MSFT here is no more than the
failed marketing expenses for up-selling InfoPath, but this case is even more
dangerous than any other up-sell scheme. In this case, the “feature” they are
trying to up-sell is really just a fix for one of the biggest complaints their customers
have had about the low-end product: the difficulty of getting manageable
information from its output.
It would make sense to establish InfoPath at the baseline in order to improve
the value of a product that they already know is profitable, and thus stay
ahead of competitors. Instead, they are costing themselves goodwill at the
low end at a precise time when their cash cow is under threat (when InfoWorld
rates OOo within a point of MS Office itself and customers look at the cost
comparisons, this spells trouble: not immediately, because a great many still
just buy what’s bundled, but any manager of a successful product understands
Whenever people tell MSFT to open up its data formats (this does not mean give
away products for free, as should be obvious), there is always somone who
pounces, talking about how those folks just don’t understand business. This
rebuttal is usually nonsense: openness has always been good business when pursued at the right time. All industries with mass
markets go through initial periods where bubbles inflated from proprietary
advantages swell profits. They then eventally settle down into commodity
businesses where margins are tight, competition hot, and true innovation (along
with luck) becomes essential. This has happened in consumer computing except in
the couple of areas dominated by Microsoft. Such market shifts is usually marked by a big increase in openess and industry standards, which is indirectly driven by customer imperatives. This will come to pass for computer software as it has for hardware, whether MS likes it or not.
MS has been very skillful at maintaining their bubble, but anyone with eyes
can see that it is about to pop. Hardware manufacturers, under the same
market pressures, have sliced the cost of computers so that it is rapidly
approaching a situation whereas when you plunk down $600 for a Windows PC,
you’re paying $300 for the hardware and $300 for Windows and Office Lite. Ths
is not a tenable situation, and MSFT sems unable to see their own risk.
Do you think Walmart started selling $300 PCs with Lindows because they’re
open-source-loving commies? No. Thy did so because Walmart is every bit as
esablished and ruthless a business as MSFT, and they see the market
inefficiencies of the Windows bubble, and they’re happy to work arbitrage. There will be more and more people lining
up to provide consumers with choices that redress these inefficiencies, and
unless MS fundamentally change their DNA, they could be end up
collapsing when their bubble bursts, rather than surviving by adaptation to
Opening up the connection from the Office UIs to information with tools such
as InfoPath would have been signs of such a change of DNA. There would have
been nothing charitable about it: they would have just started to understand
where they desperately need to retain a superior value proposition.
Now we’ll get to watch the market at work, in all its ruthless glory.