Ballmer's economic 'reset' vision: Who'd benefit?

The economy is resetting to a lower level, which should benefit open source, not necessarily Microsoft and other proprietary vendors, which have an initial cost of more than nothing.

Matt Asay Contributing Writer
Matt Asay is a veteran technology columnist who has written for CNET, ReadWrite, and other tech media. Asay has also held a variety of executive roles with leading mobile and big data software companies.
Matt Asay
2 min read

Microsoft CEO Steve Ballmer, speaking to the technology heads of U.S. federal agencies on Wednesday, suggested that the global economy is in for significant change, as TechFlash reports.

While this suggestion is not surprising, I found his comments about a "resetting" of the economy, a theme he has been discussing a lot lately, interesting in that it would likely favor open source:

Essentially, the economy is going to reset to a different level, and then again be propelled by what really should be, and typically are, the fundamental drivers of economic growth--which are really productivity and innovation.

(The) things which are really productive and really valuable and really make a difference, they'll either get funded at companies like ours and our competitors (or) get funded by the venture capital community. We may not get the eighth, ninth, and tenth start-up in every area, but we'll get the first four, five, or six that make sense, and we'll get plenty of good competition.

(When) I tell you the (Microsoft R&D) budget was over $9 billion and is going to remain over $9 billion, it speaks to this fundamental faith and belief and excitement that we have about the things technology will do, and we've got to be at that table.

Actually, all it tells us is that Microsoft may be spending far too much to develop its products, R&D spending which, to date, has yet to demonstrate much market value for Microsoft. It also suggests that Microsoft must put a higher price tag on its products to ensure that it recoups its R&D costs. Guess what that means? It means that Microsoft may not be able to accommodate the "resetting" of price tags that buyers are already demanding.

In that environment, open source wins. Microsoft and every other proprietary vendor are going to struggle to compete with open source, which has an initial cost of nothing. As Ken Starks notes on his blog, this isn't making those dependent on the proprietary ecosystem very happy, but eventually, the ecosystem will reset toward open source, too.

CIOs are also looking to open source to drive innovation: one CIO told me that for any projects that have the potential to competitively differentiate his company, open source is the innovation platform it'll use every time.

It's no wonder, then, that Gartner finds 85 percent of enterprises adopting open source to drive efficiency through code reuse, lower costs, and more. The economy is in the process of resetting, as Ballmer speculates, but it's not necessarily going to reset in his company's favor, though I suspect that Microsoft, with its comparatively low price points and integration, will do well.

My own company has seen a dramatic increase in our pipeline, and in conversations I've had with the CEOs of Pentaho, RiverMuse, and other open-source companies, it's largely the same.

The economy is resetting for open source. It's open source's game to lose.

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