With the emergence of "Lintel" (Linux on Intel machines), has that, in turn, increased price pressure on Microsoft?
Software acquisition is 3 percent to 5 percent of the total cost--
I know. But on that one narrow part of the equation, is it having an impact on your pricing strategy?
Do we have competitive factors in the marketplace? We always do. It's not just Linux. We have people who have always put pressure on us in a variety of ways. This is perhaps the broadest phenomenon that we've had to think about across the company, from a pricing point perspective.
Six to nine months ago, we were hearing about shared source and how Microsoft had tried to borrow on that model. These days the message seems to be that commercial intellectual property is good, that someone owning the technology is good. Is it no longer that important?
No. The shared-source initiative is an example of us learning and moving from a position of "nobody but us shall ever see our source code and that's the end of the discussion" to one where customers and independent software vendors may want to see our source code. This remains a very important part of our strategy.
Microsoft prefers to concentrate on the total-cost-of-ownership issue when you're making the comparison with Linux. But sometimes Microsoft has been willing to do whatever's necessary on price -- recently you did that, but the city of Munich still went with Linux.
You're right in that there was a decision not based on technical direction or price but more on relationships and political sorts of things. It was a validation that we have to build better relationships with governments at a variety of levels and not assume they will take decisions based on traditional decision-making processes, such as value, cost, technical direction, stack, etc.
It sounds as if you believe Microsoft needs a foreign policy.
It means we need to build better relationships with governments at all levels. Honestly, we're a company of geeks. We're a company of folks who build really good technology and think that people will make decisions based on the strength of that.
But it's more than that. Microsoft also is a symbol of America's high-tech prowess and that may not play well in some countries because of political sensitivities.
It's a new set of challenges. Ten years ago in our wildest dreams, would we have thought that people might not buy Microsoft because of anti-American sentiment? We didn't think about that. Did we think that they might not buy Microsoft because they have this illusion they can build a local software economy using noncommercial software? All this has presented a new set of challenges, but in some way also a new set of opportunities for us to get smarter and better and understand the global scene better than in the past.
It's also forced us in a good way to become sensitive to global issues. For example, with companies that have very low gross domestic products, we have to think about the way they use and acquire software differently than a G7 country might.
