A discussion about the software industry and their coders

Continued from my previous post Why Online Ad Models threaten Microsoft Corp.?

The core reason that has Microsoft worried after seeing the growth and product release trajectory of Google and Yahoo! is that both these companies could commoditize Microsoft's "only our software (running on our OS) for sale" business model. The Open Source movement has already badly hurt Microsoft.

The Ad Model coupled with the Open Source Movement could potentially make Microsoft a non-entity within some years. Why?

Microsoft makes Windows, Office Software, Browser, Media Players and offers all of these for a price. (Browser and Media Player are free because competitiors offer the same free).

However, Google and Yahoo! compete by earning advertising dollars by showing advertisements to users that visit their websites, register with them, and/or download software from them. Both Google and Yahoo! offer free applications that *could have come* from Microsoft and users could have had to pay for them. Commoditization of its software is Microsoft Corp's (MSFT) core worry. A Knowledge@Wharton Article says just that:

Microsoft understands that software, its core business, is becoming increasingly commoditized. It needs to find new revenue streams if it wants to keep growing," says Wharton legal studies and business ethics professor Kevin Werbach. "Across the computer industry, value is moving from the desktop to network-connected services. Integrating software, hardware, content and services, as Apple has done so effectively with the iPod, can be a wonderful business model if you can do it right.