According To Microsoft's Own Numbers, Microsoft Costs The World Economy $500 Billion
from the money-could-go-elsewhere dept
It’s always amusing when you see studies done by companies about how much money is “gained” or “lost” from certain activities — as if the actual money wouldn’t or doesn’t go to other sources if diverted. So, when Microsoft hired IDC to write a report hyping up how Microsoft and its various partners “generated revenue of $580 billion in 2010,” the idea was clearly to suggest that Microsoft was very good for the economy. Yet, that’s only one way to view it. Glyn Moody, quite reasonably, points out the other side of the story, which is that if that money weren’t spent on Microsoft products, it could have gone to much more productive uses. By his (somewhat tongue-in-cheek) back-of-the-envelope calculation, this study really seems to suggest that Microsoft cost the world economy somewhere in the range of $500 billion:
Red Hat’s CEO Jim Whitehurst makes an interesting point about the cost of software:
He said that he did think that Red Hat could get to $5 billion in due course, but that this entailed “replacing $50 billion of revenue” currently enjoyed by other computer companies. What he meant was that to attain that $5 billion of revenue Red Hat would have to displace software that currently costs $50 billion.
That is, open source software typically costs only 10% of the equivalent proprietary products. This isn’t about “destroying” wealth, though: customers are left with the other 90% to spend on other things. It is still in the economy, but spent elsewhere.
Applied to IDC’s figures for Microsoft, this would imply that the $580 billion revenue might well be replaceable by a tenth of that – let’s say $80 billion, to be on the safe side. Which means, of course, that the effective cost of the Microsoft ecosystem to the world in terms of money spent needlessly is around half a trillion dollars.
Seems only fair. If Microsoft and others are going to claim “ripple effects” for unauthorized copies, it seems reasonable to point out that there are ripple effects to people paying for Microsoft software, rather than spending it on other, potentially more productive, uses.