"It is spending a fifth of what it would be for traditional technology, said Jayshree Ullal, Arista’s chief executive."
[Traditional technology being mostly the standard Microsoft stack, replaced by various online applications.]
At some point, CEOs of more conservative corporations are going to be presented with these numbers in a board meeting, and will have a very hard time defending the value they're getting for the money they're handing over to Microsoft. True, there's the "we would have to retrain our employees" argument, but young employees are already used to doing everything online and will be asking the same questions.
Add to that the downward pressure on margins from netbooks (no one is going to spend $200 for an OS on a $200 computer), and I do not see any upside for Microsoft in the near future.
It's not just Microsoft, but they should be questioning the value they get from their entire IT departments when an entire infrastructure can be leased. The smarter IT departments will adapt and push for it, the dumb ones will try everything they can to block the adoption of it - fearing their own demise without regard to the best interests of the company they work for.
no one is going to spend $200 for an OS on a $200 computer
They would if they had to. Lots of people spend $200 on games for a $200 game console, don't they? I just spent $380 on a computer to run on a $20 power supply, because without the computer, the power supply is pretty useless.
The difference is that Linux is now good enough that they don't have to spend $200 on an OS.
Microsoft has been successful largely because the cost of their product was hidden in the cost of the computers on which it is pre-installed. $200 total price point does not leave them much room to hide. Because consumers have been trained not to think of the operating system as a separate cost, but just part of the computer, I don't think you can convince them now that the operating system, by itself, is worth as much of the rest of the computer combined.
This is not quite as true for businesses, but even there the cost of site licenses for the Microsoft product stack needs to be questioned for employees whose needs are web browsing, email, and basic document editing. And, of course, the article shows that newer companies are coming to that conclusion already.
You might be surprised at the economics of Microsoft volume licensing. Businesses are not paying retail price for every copy of Windows and Office. And neither are most consumers. In fact I wouldn't be surprised if retail revenue of these products was insignificant and they exist only to implant the idea of "value" in people's minds.
> Most online programs are so simple that there's no training involved.
That is manifestly not the case; complex work is complex regardless of the delivery method. I have worked on and with a couple of web applications where it took several days to train someone to use the application; mostly because of the sheer number of variables they controlled.
What I think you are trying to say is that there is no need to train people in the UI basics.
[Traditional technology being mostly the standard Microsoft stack, replaced by various online applications.]
At some point, CEOs of more conservative corporations are going to be presented with these numbers in a board meeting, and will have a very hard time defending the value they're getting for the money they're handing over to Microsoft. True, there's the "we would have to retrain our employees" argument, but young employees are already used to doing everything online and will be asking the same questions.
Add to that the downward pressure on margins from netbooks (no one is going to spend $200 for an OS on a $200 computer), and I do not see any upside for Microsoft in the near future.