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Microsoft sues 20 US-based companies for illegal hard-disk loading

Microsoft is taking the fight to the counterfeiters. The Redmond, Washington based company announced that it is filing 20 lawsuits against US resellers that are illegally distributing copies of Microsoft software. The companies under fire are accused of distributing counterfeit operating systems and accompanying software by using hard-disk loading (selling a customer or business a computer with pre-installed, unlicensed software).

Microsoft also announced the results of its forensic analysis of counterfeit copies of Windows XP from 17 different countries. Not surprisingly, the discs studied either didn't install or were loaded with additional content not officially sanctioned by Microsoft. According to Microsoft:

Of the 348 disks studied:

  • Thirty-four percent of the counterfeit copies
  • Forty-three percent had additional programs, or binary code, that are not part of genuine Microsoft Windows.

Of the remaining 228 disks:

  • Sixty-six percent had additional programs, or binary code, that are not part of genuine Microsoft Windows.
  • More than 40 percent of these added software programs or binaries had faults, and many included illegally created product keys, other tampered code, or code invisible to the user.

Microsoft has fought long and hard over the years against software piracy. The company ruffled a few feathers in the industry when it introduced a new activation scheme with its Windows XP operating system in 2001. Over the years, Microsoft has added additional features to combat piracy or let customers know if they have become a victim of counterfeiting. The Windows Genuine Advantage Program came under fire in June after it was found out that it was "phoning home" to Microsoft. Despite Microsoft's scramble to release an updated version of the software, two lawsuits followed after the initial discovery.



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RE: Microsoft Vista PC?
By Chillin1248 on 9/20/2006 7:10:21 PM , Rating: 2
While you are somewhat there Mr. Pirks, your logic is missing one critical point; Supply and demand:

What does Microsoft stand to gain? According to your logic, a very niche market appeal for proffessionals who probably know how to build their own PCs or would mass order for much cheaper from Dell. Not much profit they stand to gain here and they stand to loss a lot more.

Also for the certified hardware, they already have that in the form of Windows Vista Ready machines. Also for individual parts, according to your logic, all someone would need to do is look at the registry to see which parts are automatically supported to nulify any MS modified OS.

One thing you forgot about Apple, is that you cannot have Mac OS without buying the OS and the system together from Apple (not addressing upgrading here). Microsoft would have to stop selling their OS to all other OEMs in order for this business model of exclusivity (spelling? Tired.) to work.

Also then you will have all the Anti-Trust and infringement lawsuits coming in droves, all for something that is not critical or needed to maintain a profit for MS from Vista. Can you imagine what the EU would have to say about this then :)


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Chillin


RE: Microsoft Vista PC?
By Pirks on 9/20/2006 8:19:52 PM , Rating: 1
quote:
What does Microsoft stand to gain? According to your logic, a very niche market appeal for proffessionals who probably know how to build their own PCs or would mass order for much cheaper from Dell.
Prebuilt integrated Mac-like machine in a premium case with premium service has nothing to do with professionals who build their own PCs. Self-assembling professionals are what newegg and others are after, while MS Vista PC is totally different - it's rather for noobs and general public who know nothing about PC internals. I mean noobs with money, not poor ones. Poor people buy PCs from Dell or from next door small shop, I have two on my block with supercheap generic chinese PCs. MS Vista PC is NOT for them. AND it is NOT for self-assembling professionals.

quote:
Also for the certified hardware, they already have that in the form of Windows Vista Ready machines.


There is a difference between your "Vista Ready machine" where you plug in a card and Vista sends you to the manufacturer, leaving you on your own, and "MS Vista PC" machine where you plug in a (certified by MS) card and Vista quietly downloads and installs the driver Mac-style - the user does ABSOLUTELY NOTHING besides installing a card.

quote:
Also for individual parts, according to your logic, all someone would need to do is look at the registry to see which parts are automatically supported to nulify any MS modified OS.
Why would you go to the registry is MS openly publishes the list of certified cards on their web site? Certification does not mean MS has to put their logo on the card - it could be anything like eVGA, but just tested by MS and with drivers on the MS servers, that's the only difference. The Vista on MS PC would be a standard version with just one addition - the daemon that checks new hardware against database on MS servers and performs all the housekeeping IF the card inserted is MS certified. You can probably hack generic Vista into that just like you can hack OS X into booting on a PC, but it's easy to control via serial numbers just like they do it with WGA - once you get the MS PC you get the key to their servers and you have to keep it just like one keeps AppleCare keys, Windows keys etc - same stuff. They can add some chips or serial numbers on a mobo, in a BIOS, or even go EFI route like Apple did - lotsa possibilities.

It's all done in Macs already, although without centralized driver database, but this detail is secondary - MS can issue regular updates for Vista designed specifically for their PCs, for a premium price of course. So the users will always have a choice - either pay MS for service and forget about trouble with drivers/unsupported hardware or not pay MS and stay on their own, jsut like now, when MS does NOTHING if you have problems - they simply send you to the manufacturer.

quote:
One thing you forgot about Apple, is that you cannot have Mac OS without buying the OS and the system together from Apple. Microsoft would have to stop selling their OS to all other OEMs in order for this business model of exclusivity to work.
Why do you think offering customers ADDITIONAL service in the form of that MS Vista PC automatically excludes selling Vista just by itself? Why do you think if Apple sells their OS ONLY with their hardware Microsoft MUST follow the same route? Why selling Vista both for cheap generic Dells and more expensive/exclusive Microsoft-built-controlled PCs won't work? Please explain your point.

I think it will work because Dell and MS PC would cater to different market segments - Vista on a Dell PC is sold to a poor guy, and Vista on a Microsoft PC is sold to a rich guy who wants additional pampering from MS.

Your logic is also easily beaten by the fact that MS successfully sells BOTH generic stuff (Vista which can be installed on anything), and Xbox which is totally proprietary. MS can sell proprietary system and open system together, the same applies to PCs. MS could sell kind of proprietary MS PC with premium service, everyone else sells other PCs with other (cheaper and worse quality) service - customer still wins! No need to buy MS PC, you can get Dell. You won't get pampering that only MS can provide, but its cheaper!

You're telling me "no, MS can't sell premium PCs" is akin to telling me "Toyota can't sell premium Lexuses". Toyota sells BOTH cheap and luxury cars - it's perfectly normal! Same stuff in both cases - customer pays additional money for additional pampering. As long as MS positions their hardware in a premium niche outside of financial reach of typical Dell customer - everyone stays happy.

quote:
Also then you will have all the Anti-Trust and infringement lawsuits coming in droves, all for something that is not critical or needed to maintain a profit for MS from Vista. Can you imagine what the EU would have to say about this then
I'd piss on EU from a high tower and let them rot. In this case I think MS should try to do an experiment and try to sell their premium PCs to US public (maybe Japan/Korea as well) and KEEP THEIR MARKET SHARE SMALL! That's important. I agree that if MS starts selling their PCs cheap then DOJ will shell them again, and DOJ would be right. But why bother with kicking MS butt if their PC business would occupy only say 7% of the US retail PC market? Where's this monopoly to kick? This was always my point that nobody quite gets - MS should follow the hardware niche logic of Apple, this is THE KEY to success! Apple will never get kicked by DOJ because they stay smart and don't sell their PCs cheap. Hence they stay in niche - it's a BEAUTIFUL IDEA! And they still make nice money - tell me why MS can't carve their own fashionable niche like that and make money there, huh? They design and sell some expensive and quality hardware already - why not make a step further in this direction by selling their own expensive quality PC, and also sell more copies of Vista in the process? Sounds like a smart idea to me.


RE: Microsoft Vista PC?
By cscpianoman on 9/20/2006 10:51:06 PM , Rating: 2
OK I have to give it a try.

Pirks there are a lot more things involved in building MS PC's than what you just mentioned. It is an idea and one I suspect Microsoft has already considered, but look at it from their standpoint.
First, they are going to want to see if there is a market for such a machine and if so how much of one. Obviously, Apple exists so there is a market, but if that is the market they are targeting they are basically entering an already saturated market. Not only would Microsoft have to compete against a very strong player in that specific market, but they would have to start from nothing and work up. I can bet Apple has placed a lot of safeguards in this market to prevent something like this from happening.
OK, Second let's say there is a market and there is potential. The next thing MS does is do a feasibility study. In other words how much to get it going and keep it going and how much do you get in return. Microsoft would have to either buy a company already doing what the plan on marketing or start from scratch. Considering there are no other competitors other than Apple, they have to start from scratch, which by the way, is very, very expensive. They would have to form distribution channels, build plants, hire staff, build quality control, train customer reps, modify and tweak Vista, advertise. In just one sentence you are already reaching 10's of millions of dollars. Now what do you get in return? Part of Apple's share and not a really big one at that. Apple at most has taken 5% of the market, if Microsoft competes with them and does well they might get 20% of that 5. That's not a lot of money.
Three, potential lawsuits and antitrust. Apple destroyed their clones years ago, whose to say MS wouldn't do the same?
Four, losing focus. Microsoft is a software company that happens to do a few other things on the side. Adding computers may make them lose focus and profitability. Take a look at Disney or even Sony. These companies went too far and lost focus. Diversification is good, but not too much.
Anyway, sorry for all those who would really like their five minutes back. But, Pirks, that is why Microsoft doesn't make computers, in the end it is not worth it to them.


RE: Microsoft Vista PC?
By Pirks on 9/21/2006 1:06:36 AM , Rating: 1
quote:
Obviously, Apple exists so there is a market, but if that is the market they are targeting they are basically entering an already saturated market. Not only would Microsoft have to compete against a very strong player in that specific market, but they would have to start from nothing and work up. I can bet Apple has placed a lot of safeguards in this market to prevent something like this from happening.
The situation was EXACTLY the same with Xbox several years ago and look at the market now - MS is winning an UPHILL battle and first time since Xbox was released many years ago they got fruits of their labor. Remember whiners and MS bashers several years ago laughing at Xbox when it was just a rebadged SFF PC? Where are they now? Where all the whiners and MS PC bashers will be in several years if MS decides to make their PC? Who knows, I hope they will be in the same place where Xbox bashers are :)

Maybe same will happen with Zune - I'd bet if MS can propel Zune into the same position they propelled Xbox they can win or at least NOT LOSE the main battle - battle for the home multimedia PC or HTPC, which they already started (WAY BEFORE Apple woke up with their Front Row and iTV) with XP MCE but just haven't followed the path all the way by offering their own hardware... yet. To me the way into people living rooms is through the proprietary designs, Shuttle-style (look at their nice HTPC Mac Mini-like cases), nobody would ever use standard ATX box as HTPC, people want Sony style thin silver/black things - here's the golden opportunity for MS, maybe other opportunities as well, depends on how they position their potential PC. I just offer the most obvious route.
quote:
Microsoft would have to either buy a company already doing what the plan on marketing or start from scratch. Considering there are no other competitors other than Apple, they have to start from scratch, which by the way, is very, very expensive.
Nope, this part is the easiest - just buy Shuttle. Shuttle is the direct competition to Apple expansion, same style and price, same niche, but with open PC architecture flavor/mix of lower price, upgradeability and expandability, everything Macs lack.
quote:
Now what do you get in return? Part of Apple's share and not a really big one at that. Apple at most has taken 5% of the market, if Microsoft competes with them and does well they might get 20% of that 5. That's not a lot of money.
Every Apple basher (this is not about you, it's a general remark) loves market share and forgets about profitability. For the Apple basher market share is everything. If Apple has profit margins unheard of in the world of Dells or other generic PC builders, that doesn't count. However, if one looks at things not through the Apple-hate glasses... one can see that small market share with hight profitability is a VERY NICE THING! Think about it - Shuttle never ever dreams about selling case for every PC out there - this is work for Dell, Antec, other generic makers - but Shuttle market share (or Lian Li's market share) does not detract anything from their profitability. In fact, profitability is usually inversely proportional to the market share, at least in the sense that those who cover cheap market segments get the lowest profit, as Lexus gives Toyota much more profit per unit than Yaris - same for any other item/brand. So, in fact, if you think of it, MS could make a profit on one of its exclusive Vista PC equal to a profit from an expensive fully loaded iMac! Which is maybe similar to a profit from FIVE cheap Dell PCs - now isn't that nice? Tell me, why do you need huge market share with low profitability if you can get the same NET SUM of profit with much lower market share BUT with much higher profitability? Got it? Understand now why market share is not that important and profitability can easily compensate for low market share?
quote:
Three, potential lawsuits and antitrust.
Why antitrust if MS will intentionally hold their market share back with MS PCs? This is of no concern because MS won't market their PC as a PC for cheap masses - this would be a suicide, I totally agree.
quote:
Apple destroyed their clones years ago, whose to say MS wouldn't do the same?
I'm to say MS won't do the same, because I, unlike you, understand deep difference bewteen MS and Apple. Apple is a hardware company, hence clones were destroying their business model based on HARDWARE. MS is NOT a hardware company, they are a SOFTWARE company, and you CAN NOT clone Vista as you can clone Mac, PC or whatever else from the open/cloneable hardware. It's impossible to do by the nature software is developed - only the holder of the source can clone the software. Therefore, MS can NOT have any clone makers by definition and your point is total nonsense. Actually, IF Vista source were open - THEN AND ONLY THEN you point would be valid :-)
quote:
Microsoft is a software company that happens to do a few other things on the side. Adding computers may make them lose focus and profitability. Take a look at Disney or even Sony. These companies went too far and lost focus. Diversification is good, but not too much.
Lose focus from what? From Zune and Xbox? :)) Well, I definitely agree that MS should probably wait until they totally succeed with Xbox and Zune, which they actually do - they're just tasting first success with Xbox and adjust their heavy artillery to take on iPod just like they did with Playstation, so they won't start producing PCs right now, but your point about "focus" is dud... since Xbox and Zune are out. It looks like pure software development model doesn't work for them and they enjoy some hardware design stuff... I'd say Xbox and Zune are just first signs, and I think they'll go further into hardware business, but ONLY IF Zune succeeds on the same level as Xbox, i.e. becomes major market player on par with iPod.
quote:
that is why Microsoft doesn't make computers, in the end it is not worth it to them
Yeah, OK, now it's too early, I agree here. If they do it they do it not earlier than 2009, that's my rough estimate if things go well with Zune.


RE: Microsoft Vista PC?
By Chillin1248 on 9/21/2006 4:31:18 AM , Rating: 2
Sorry that I do not have time right now to write a extended post, but I would like to point out one thing quickly.

Before the I-Pod came into being, Apple's profit margins were steadily declining on its OS+PC combo sales.

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Chillin


RE: Microsoft Vista PC?
By Pirks on 9/21/2006 11:32:35 AM , Rating: 1
quote:
Before the I-Pod came into being, Apple's profit margins were steadily declining on its OS+PC combo sales
And now after Apple went Intel their profit margins back to normal again. Conclusion: iPod and Intel are two independednt things. If Apple switched to Intel a long time ago they wouldn't get declining margins in the first place. So iPod doesn't matter here - it's the switch from PPC to Intel x86 that matters.


RE: Microsoft Vista PC?
By Chillin1248 on 9/21/2006 12:54:16 PM , Rating: 3
I agree and am not arguing this point.

I just stated that, in my opinion, the positive brand recognition that came along with the I-Pod (of which I just recieved word, someone is sending one to me as a present..) also helped boost their PC sales. But like you said one has nothing to do with the other.

You can also say that Apple "Boot Camp" could be increasing the sales of Mac systems as users can now buy one PC and be able to boot OSX and if they choose to do so, Windows.

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Chillin


RE: Microsoft Vista PC?
By Pirks on 9/21/2006 1:45:19 PM , Rating: 1
quote:
Apple "Boot Camp" could be increasing the sales of Mac systems as users can now buy one PC and be able to boot OSX and if they choose to do so, Windows
That helps too, but my main point was that MS successfully follows some of the leads of other companies, for example they successfully put serious pressure on Sony which was a clear leader in consoles just a couple of years ago, and now they are trying to exert same kind of pressure on iPod line, so basically what I was saying is: if MS can leverage Zune as well as it did with Xbox, then following same route definitely makes sense, and the next logical choice would be to continue to put pressure on Apple but now in a form of a Mac competitor. If MS can fight Sony on a large market of consoles, and if they can do the same with Zune - I think it's pretty clear that if Mac market grows to some significant point which justifies another attack from MS, then they will do it.

Looks like the main obstacle is the Mac user base size - at the moment it's not large enough to justify spending on MS side. But imagine what would happen if this market grows to say 30% US market share in retail PC sales? I'm sure MS would be more than seriously interested in such a large market. So it's a matter of time and some luck on the Apple side - if they blaze the trail that's large enough for MS mammoth - the mammoth will eventually go there :) It's the same strategy MS was always following - intervening the large market created by someone else and putting a big fight in there, recall Netscape for example, or Sony playstation deal, or what happens with Adobe Acrobat if MS Metro format embedded in Office takes over, or what happens with Symantec if Vista has all thir functionality built in... same with Mac - what if PC has all Mac goodies built in? See, it's all the same, the question if not "if", the question is "when".


"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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