Microsoft: Public Externalities and Open Source?

It used to be that when you thought about computers, you’d think Microsoft Windows. But that has been changing over the past few years. With the recent surges in advertizing from competitors, such as Macintosh, and the disappointment of the most recently released operating system (OS), Vista, it is no wonder that Charles Babcock wrote the article "Why Windows Must go Open Source."
Before I get started in telling you they think this will happen, let me explain what open-source is, both technically and economically speaking. And if you already know what open-source and source code are, then simply skip this section.

Open-Source and Source Code explained
Open-source means that the coding, the actual language that makes a program or OS work, is available for developers to look over and tweak. You can think of it like the gears that make a machine work, or the DNA in our cells that tell the cell act as a blue print for all cellular functions. Without those gears, without the DNA, without the coding for the OS, the machine, cell, or computer, respectively, would cease to function.
Now though the coding for an OS may sound like something that would be easily accessible to people, it is not. Just like you need a microscope and some fancy tools to analyze DNA, you need some special tools to analyze the source code of an OS. And thus, only the people who actually work on the OS for Microsoft have ever seen it… legally.
Open source means that the source code is widely distributed to any developer who thinks that he/she could make the OS better, either by adding some cool new features of by stabilizing the already programmed abilities of the OS. Then all those enhancements are collected from the numerous developers (who do on they’re free time and at no cost, mostly) and compiled and released as the next version of the program/OS. Open-source pulls on talents from the pool of the general populace to make a program/OS useful and (hopefully) user friendly.

Back to Economics:
If you’ve ever used or even heard of Firefox, then you are already familiar with open-source programs. And if you’ve ever heard of Linux (either as Ubuntu or Fedora, or any other Linux distro…aka Linux operating systems) then you are familiar with an open-source operating system.
You might be saying, “That’s great. I had o idea there were free operating systems for my computer! Why are more people using it?” and that’s where the economics of it comes into play.

Positive Network Externalities

As you can see from the above graph, (image from the CSnews article by Thom Holwerda) Windows (both licensed and unlicensed) is the operating system that holds the largest market share, followed by Linux and Apple. And just as with cell phones, fax machines, the internet etc, the more people using it creates a larger demand for the product.
So even though there is a free alternative to Windows and Mac, with programs that have a similar utility at no extra cost, there are still relatively few people using it. Why? Because who wants to spend more time (time = $) learning a new OS, new programs, and then have spend even more time dealing with problems that come from using a different OS than everyone else (aka file types and conversions). This gives Microsoft Windows a very strong positive network externality. Although, I must admit that more people are being to switch over to Mac (mostly because it is a fairly stable operating system.)
This network externality is why the author of

says that Microsoft “must” become open source, with an increasing portion of Microsoft’s revenue coming from the products (i.e. software such as MS Office) that Microsoft develops not only for its OS but also for others (such as MS Word and Excel on Mac). By turning their OS into an open source OS, it can pull on the creative talents of the general population while relocating more of their resources to the major revenue producing sections of their company… in other words, stick with what makes the most money, like programs for the OS.
So will we see Microsoft turn their operating system over to the general developing public? I doubt it. Even though it seems to make economic sense, I highly doubt that Microsoft will turn any revenue portion of their corporation over to the general public.