Is the business model of free a wise business model?

I’m not sure this is a wise move…..

“Microsoft is another example of
smart use of the free model, says
Anderson. The company protested
quietly but took little legal action
while its Windows operating system
was widely pirated in China. Microsoft
executives were betting that each
pirated copy of the operating system
would help build a base of customers
who would pay for the convenience
of Windows support when they could
afford to. “Looking the other way,”
says Anderson, “Microsoft let pirates
be their best marketers, so that some
day that piracy would come back as
revenues.” Anderson says that the
Microsoft example perfectly illustrates
two major types of customers in
the world of free. One group is price
sensitive, and looks for the lowest
cost no matter what. The other is risk
sensitive, willing to pay—sometimes
a lot—for support, reliability, and

I would really not like it if some VP somewhere made a conscious decision to look the other way and then use WGA to get back revenues.

What I see is that some of those legal Microsoft customers feel that the risk of WGA is not worth the benefit.  If the business model of WGA i is to catch some of those pirates and yet to hopefully not annoy too many legal customers, I’m not sure that’s a wise strategy.


One Response to Is the business model of free a wise business model?

  1. Joe Raby says:

    Most of what the original author states is completely out of context. China is hard to deal with. That’s not a racist statement, it’s political, and China favours their image of sovereignty over outside influences, such as western Capitalism. Microsoft knows this, so they tread lightly where actions of discourse would be seen as a foreign hostility towards that soveriegn rule, even if, (and probably especially so) that means protecting their citizens against something that the international community deems more of an issue than their own government (ie. software piracy). When you travel to a foreign land, you have to respect their culture, not judge it based on your own beliefs. There are consequences of doing business with a country that doesn’t have the same belief system as yourself.