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Microsoft's Surface proves software is dead

Ballmer finally gets with the program

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Open ... and Shut Did Microsoft finally get the memo on software licensing? While Microsoft's legal department continues to believe that software licensing is the industry's best business model, its mobile team now acknowledges that software is just one piece of an overall product, and not even the part that consumers buy.

With the launch of its end-to-end Microsoft-designed Surface tablet, Microsoft has declared what much of the rest of the industry already knows: software is dead.

Redmonk analyst Stephen O'Grady best explains this come-to-Jobs moment for Microsoft. As O'Grady points out: "The market has not generated a large technology vendor oriented around selling software in twenty-two years," as companies like Facebook, Google, Red Hat, and more have learned to sell services based upon or built around software. But the software itself? Free.

Not just free as in beer, to paraphrase Richard Stallman, but also free as in freedom. The new "software" kings give mountains of code away through open-source licensing, because they recognise that their economic value is not in the software itself. Not content to just open-source its software, Facebook has taken to open-sourcing its data centre designs, too.

Not every company hankers after openness, of course. Apple is more closed than Microsoft ever dreamed of being. But Apple has for years set the pace on reducing the value of software as an economic driver. Apple sells iPhones, not iOS. Yes, it takes margin on all the apps sold through its App Store, but Apple's own software is inextricably tied to its hardware. The software is, in effect, free.

Google gets at the same result, but from a different angle. In mobile, Google has open sourced Android, allowing anyone and everyone to build Android-based smartphones and tablets. The software, again, is free.

Now Microsoft is following suit with the Surface tablet. The Surface isn't cool because of its technology, though the technology is cool. No, the truly impressive thing about the launch of the Surface tablet is, as Reg-correspondent-turned-Bloomberg-hack Ashlee Vance writes, that Microsoft would finally risk annoying its OEM partners to build a holistic product that embeds software but doesn't attempt to sell that software.

It's a strategy that Microsoft has been getting right in other areas, including the Xbox and its Azure cloud computing platform, but this is perhaps the most glaring example of Microsoft finally getting a clue. The industry has very definitely moved away from software as a business to software as a service. At long last, Microsoft is a poised to be a competitor again. ®

Matt Asay is senior vice president of business development at Nodeable, offering systems management for managing and analysing cloud-based data. He was formerly SVP of biz dev at HTML5 start-up Strobe and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register.

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