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Is the Microsoft vs. LINUX war stalled?

Are large IT departments shifting their support back to Microsoft?

Last night I received a call from a friend, a CFO at a large multinational.  Seems that his ears are burning from the debates between the CIO shop favoring consolidation on a few Microsoft platforms and the CTO shop recommendations to continue to build out their Linux investments.

To acquaint yourself quickly with the MSFT vs. LINUX battle just click on Microsoft vs. Linux War search.

As you will see, there is plenty of material for both sides to fight with.  Lots of Linux positives, including the support of many rapidly developing countries (China, India, Brazil, etc.) and their governments showing strong support.  You also have articles like that at the NewScientest.com talking about some surprising positive results backing Microsoft in its article on which OS is safer?

After the huge Linux push over the last 5 years, why is Microsoft gaining back some ground amongst IT departments?

1. Linux isn't perfect! As more and more Linux installations occur, the "Linux-I'm a Bigger Geek! complex" hasn't been able to silence the news of its weaknesses, complexity/fragmentation between all the variants, and their vulnerabilities.  Frankly, I'm tired of wanna be uber-Geeks kicking Microsoft products blindly has some sort of badge of honor, as if Linux is perfect.  For most of us, the Microsoft products work pretty much as advertised and have the same weaknesses that the entire software industry is known for.
2. Is Linux really cheaper? The Linux license costs are definitely cheaper, but support costs are growing.  In general an expert in Linux can probably get 25-40% more than the hordes of MCSE holders out there.  Not just that, but a company has to be aware of its Linux-personnel leaving, getting a replacement at the same cost, quickly, and with hands-on experience in the same flavor of Linux isn't as simple as finding an MCSE holder or Microsoft Exchange professional.  If a corporation really has a problem they can always call on Microsoft's consulting group. Maybe the positive reception Linux has had from developing nations is that the cost of skilled labor in these countries is relatively cheap so developing and maintaining an abundance of expertise internally is viable.
3. Microsoft will do just about anything to remain a viable alternative on any large IT project or bid. I have had the pleasure of working alongside Microsoft personnel in Canada, the USA and Australia. Let me tell you, these people always work hard, are brighter than most, and you can call on them day and night.  They will also appear to do anything to keep from losing a sale! I am not sure if some of the AE's and Product Managers I have met are awarded for revenues and margins, or market share.   I have also worked with HP, Compaq and SUN on Linux projects, but when push comes to shove on a side by side comparison if you tell the Microsoft team what numbers they need to hit, they will meet them.  I have seen Microsoft take 80% off what they said was their best bulk license pricing, plus they'll throw in hands-on support like crazy to keep everyone happy (including feeding their business through a reseller).  As a business manager, you've got to like a professional partner that always wants to win and is on your side!
4. The old Cover Your Ass story! In the IT departments that I have had to manage, I have been lucky that this really never appeared to be a major issue; but I got to think in a more sink-or-swim environment that IT departments are OK managing the politics of Microsoft vulnerabilities.  No one is immune to them.  Yet on the Linux front, it was the IT groups who pushed and pushed for migrations strategies to move to Linux and open standards platforms.  So when the CEO hears of the billing system shutting down, a call center offline, or has email missing (or worse spamming his or her address book), who are they going to call on? And how much wiggle room is the IT department going to get to justify the failure?

As a technology-aware business person, I couldn't help but think that their own words are coming  back to haunt the LINUX soldiers.  They continue to show more success than just about anyone expected, but the story is getting old and buyers are getting smarter to look at the whole picture.  What are your thoughts on this battle?

UPDATE:  Via Slashdot and ZDnet I just saw a couple of relevant postings on this very topic:

 Study Shows that Microsoft vs. Linux Costs are Neck and Neck, in the Yankee Group study "88 percent of respondents said that the quality, performance and reliability of Windows was equal to or better than Linux." Interestingly, the study goes on to say that Microsoft's security rating by respondants doubled to 7.6 (out of 10) in a year, while Linux remained flat at 8.3.

Yankee Group Slams Linux Extremists. I doubt if a company spends its budget supporting extremist thinking, but there has been a definite bias; as I mentioned in point #1 above.

 

Why the fuss over the AOL Internet Phone Service launch?

Has AOL done anything right this millennium?

We all know the answer to this (and yet I continue to hold a few shares).  Then why does Jeff Pulver go on to say "I believe AOL will end up teaching the rest of the IP Communications Industry on how to market cool and geeky technologies to the masses. I look forward to being one of their students." (see: Jeff Pulver's blog)

It is disturbing to see the number of respected VoIP professionals supporting AOL's announcement.  I wonder if its time for bloggers to declare any affiliations with the company they mention overtly (i.e. consulting revenues, etc.). 

As some background, the company's membership continues to dwindle, with 4Q'04 results in its core domestic market dropping 464k* members in the quarter ending December 31st.  A 2mil member decline in a year, down to 22.2mil total.  This tells me that AOL ISP customers don't feel they are getting value and cannot avoid the offers being made by Telco the CableCo broadband bundles.  The gains in its domestic high-speed Cable offerings are still insufficient (with YE'04 total subscribers of 3.9M, up less than 700k during the entire year) to make up for the above retention issues. (* all figures come straight from filings posted on the AOL/Time-Warner corporate website).

Why do I regard today's AOL announcement weak?

• They are six months late!  With everyone and their brothers already in the market and many other great brands (Vonage, Packet8, Verizon) offering very competitive products and most at better price points.
• Speaking of Pricing, AOL's is off and clumsy from a customer value perspective.  AOL should be looking at VoIP as a retention tool (for the number of loyal customers who have stuck by them) and mirror the Apple iPOD "halo" effect to hopefully attract ISP customers via a competitive VoIP offering.  The current short-term promotional pricing is kind of attractive, but after a few months there really is no customer pull in the offer.  G4TechTV's AOTS "The Feed" segment already commented on tonight's episode that the pricing&plans AOL offers appear to be written in Latin.  Why not just do a simple value-add option to existing AOL users?  AOL needs to start looking at profitability from a customer bundle perspective rather than a product-centric view.  Imagine the confusion if they try and mix in a cellphone offering into the pricing?!?  AOL needs to make its pricing and plans more compelling... or customers just won't care.  AOL Canada's offered VoIP for a couple of months now, anyone think they are even close to 5000 sign-ups?  I'll take the action!
• More confusion and missed opportunities - People don't expect perfection from VoIP, and AOL should be able to easily meet these expectations.  AOL/Time-Warner have already been offering their Digital Phone service to Cable subscribers, so a VoIP offering (even if a little cheaper) just sounds like more technology being shoveled down to their customers.  They definitely need to clear up the confusion here!  On the plus side, why not use perceptions to their advantage?  Just the mere fact of using the same backbone and reducing hops should allow AOL to promise better quality to AOL callers within their network (aka "on-net").  Sure they could use QoS, etc... but just marketing the perceived notion of better quality could lead to some customer-get-customer pull through (think of MCI's Friends&Family).  Throw in a referral program and you've got viral marketing going!  Remember the good old LD days of the 80s/90s?  Sprint worked on improving their quality perceptions with a simple pin dropping next to their fiber network.  Of course, they didn't have any special network that others didn't, but they worked on the perceptions and their customers thought the Sprint lines were cleaner.  AOL needs to bring its network and heritage to the deliver the same kind of perceptual advantages.

What has AOL done right?

Simply, their web dashboard.  Something easy and interactive for customers to use and feel the benefits of using an Internet Phone.  Add in presence, integration with AIM (isn't it time for AOL to consolidate AIM and ICQ?), uniform buddy lists, audio calling via instant messenger users worldwide, SMS capabilities to the AOL IPS telephone number and smart call forwarding options (again integrated into the presence capabilities of AIM); and AOL may get a unique VoIP service that delivers retention benefits, all via delivering convenience and a seamless service.  AOL has the ability to leverage its product portfolio, why aren't they leaving it all on the field?

Please share your thoughts on the AOL IPS offering and most of all let us all know if you think customers will care!