A Theory About how Microsoft Makes its Money

Microsoft makes a lot of money. Its profits, as many of us know, are a few times the GDP of some of the middle-sized economies of the world. But tell me, apart from the Office Suite and the ever crashing Windows operating system, has Microsoft made any other "successful" (selling) product? So how is it that the company keeps making these huge profits? Microsoft hasn't released a single product for the mass market in the last so many years -- nothing since Windows XP, if I am right. There's hardly any positive buzz about the company. Most of the good news and innovative products are coming from its competitors: Google and Apple. Firefox is steadily eating into Internet Explorer's share. So how is that Bill Gates still rakes in the moolah? That question plagued me for a number of days but I found the answer over the last week.

About a month back my PC went kaput. Somehow, in spite of taking numerous precautions, spyware had made my PC its home. My anti-virus and numerous spyware fighting softwares fought the good fight but they were unable to weed out these well entrenched terrorists. The situation clearly called for more drastic steps -- it was the time to send in the marines. I got hold of a computer servicing firm. The computer engineer had a look at my PC, shook his head a somberly for a few times and then said, "The machine will have to be formatted, all its drives if you want to be sure there's no more spyware. The spyware has become one with your operating system. You haven't installed any of the necessary software updates that are provided by Microsoft from time to time. What do you expect?"

So the machine went for a complete overhaul. It turned out to be a bit more serious than I had expected. The hard disk needed to be changed - the old one had barely managed to cling to life in the past few months. The service engineers installed a spanking new Windows XP and Office XP on my "as good as new" computer. I decided to go the the full hog and installed a new anti-virus system. Then for a good measure added two anti-spyware programs, a registry cleaner and a firewall. My service engineer nodded approvingly and then added, "All that is fine. But your PC operates on Windows and you use MS Office products regularly. So keep them updated too. Get a broadband connection, that'll help you download updates easily."

By that time I had smelt blood. So a broadband connection was installed. The service provider asked me to choose a package and I decided to go with the one that offered a Gb of data transfer for a Rs. 950 and would be valid for three months. One Gb for three months should be okay, I reasoned. I never download any heavy files.

With broadband installed, I went on to configure my operating system. I clicked on the Control Panel, went to the Security Center and switched "Automatic Updates" on. After all it is the "recommended setting." The Windows Security Center informed me that now "Windows will automatically keep your computer current with important updates." I heaved a sigh of relief and forgot all about it.

That was till last week. I signed into my broadband account last week only to be prompted that my Rs. 950 had dwindled to Rs. 100 and I should think about renewing my Internet connection soon, if I wanted to stay connected to world. I was a flabbergasted. I had downloaded nearly a 1000 Mb of data in the last three weeks!!!? This Internet package was supposed to last me a three months and here it was already nearing its end inside three weeks!

I went carefully over my Internet activities for the past few weeks. But I couldn't find anything amiss. I had checked my mail daily. . .but there were never any heavy attachments. I had surfed a bit, blogged a bit. Yes downloaded weekly updates for my anti-virus and anti-spyware programs but they wouldn't have added up to more than 20 Mb and even that figure was a bit on the higher side. Where had I used up nearly a Gb of data transfer. On a whim, I decided to check if anybody else at my home had downloaded and added any new programs (they wouldn't without telling me) that were not reflected in the Start and programs menu. So once again I clicked on the Control Panel. And then I clicked on "Add-Remove Programs." And I immediately knew what had guzzled that 1 Gb of data.

There were a total of 32 Windows updates installed to my computer in the last three weeks. Of these 18 were "critical" Security Updates, 11 were hotfixes (whatever that means) and 3 other updates. MS Office too had joined the party. The Office Suite had got itself 2 security updates and 6 other updates. 40 Microsoft updates in three weeks, averaging nearly 13 a week.

Suddenly the answer I was searching for all these days was right in front of my eyes. You want to know how Microsoft keeps making money, I'll tell you my theory:

Microsoft deliberately releases flawed software in the market: Operating systems that have flaws that need to be patched, hotfixes for numerous bugs etc. Microsoft knows that its buyers are suckers, after all they have bought Microsoft products. Next, every once in a while it releases a news bulletin about how a new flaw has been discovered in Windows or MS Office and how it can be fixed with a patch that can be downloaded from the Microsoft update site. A Microsoft spokesperson and a few well-placed articles in the media meanwhile fan the panic and urge Microsoft customers to use their windows update function to keep their computers current to ensure that their software is updated and that their PCs and their data is safe. So all the world immediately either visits the Microsoft site to download the patch or enable the recommended setting of keeping automatic updates on.

I am sure Microsoft has tied-up with Internet Service Providers around the world. Their sales pitch to the ISPs is simple. "We release flawed software first. Then we release patches and hotfixes for our software, hmm. . . at the rate of say about 5 a week. Actually we can, and we often do, release more. We have enough bugs in our software to keep us going for a decade. After that we release a new flawed version. Any ways think how much data transfer that means for your customers. So give us 50% percent of your revenues. What? Ok 35%. No? 25%. Think about it. We ensure you stay in business for many years. No, no, let me assure you that Microsoft will never release a complete and flawless product ever. We are looking at percentage earnings from ISPs as a major avenue to bolster our bottomlines. 15%? You've a deal. Bill will be happy. I think as a bonus, Microsoft will announce a new service pack to be downloaded."

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