While I agree with your overall arugment and position, your comparison with 37signals falls flat, because they are actually allocating more or less hardware, depending on the plan you choose. It’s not a completely arbitrary decision on their part.
For hardware limitations imposed by packaged software, you’re spot on.
hilariously great! today I must say you were the venus williams of the blog writers. witty, powerful and with style 
A nice theory, but not quite true. Open-source software comes in many editions. Even Free Software comes in many editions, if you want to get into that nomenclature debate.
For example, the company I work for has a product that’s based around a set of GPL-licensed programs. You can download the sources from the FSF and some other places, and build it yourself, to make it do whatever you want. Or we offer three other versions. You can download a copy from us, for free, that’s not got some of the spiffy tools but works fine. You can pay us a little bit, and get a pre-compiled version that has a shiny GUI and does a single-click install on Windows or Linux. Or you can pay us a lot, and get a no-limit support contract that goes with it, and bug-fix updates whenever you need them.
I don’t know that this really affects your point that much, except to say that, in our domain, quite a lot of our users find that trying to do the compile-it-yourself version really takes rather more of their brains than downloading something that just works.
37Signals meanwhile uses the same software, but your use uses up significant resources.
Er, I hate to be the one to break this to you, but they’re doing the same thing. Wolf in sheep’s clothing.
Consider the $99 plan vs the $49 plan.
Do you really believe those extra 10 GB and 65 projects cost 37signals $50 a month to deliver to you?
Similarly, do you really believe that the cost of supporting 48 GB of memory versus 32 GB cost Microsoft $1000 per customer to build?
Jeff, I gotta wonder … you based your entire business on a technology stack produced by the most weasely company existence, and you’re only now realizing it? It’s hard to understand how you weren’t aware of that to start.
The real answer to your quandary is to not decide between footloose and greasy bacony goodnes (as both are great), but rather to decide NOT to use Microsoft products in the first place. I know you’ve got a lot invested in the MS stack, but the sooner you cut your addiction to them and switch to a perpetually awesome stack, the happier (long term) you’re going to be.
I looked up the prices. Ouch! $2,200 just to flip the bit that says ‘yes, you can use 48GB of memory’? I’d seriously think about just buying another server with 32GB…
I am reminded of the “Microsoft iPod Human Ear Edition with Subscription Upgrade” that circled the tubes a few years ago. Or, I remember you did a similar rant regarding SmartFTP Standard or Professional editions, and I ended up doing the same thing: bought standard, then I needed SFTP one day, and had to “upgrade” (pay more money) to retrieve my secret Konami code to enable SFTP.
In software, this kind of market segmentation just feels a little more sinister, I imagine because there’s no physical product involved. (Meanwhile, in Home Depot, I can choose from among three different Toro leaf blowers, but that’s not so bad because they’re three different physical units, even if they probably are sharing 90% of their parts in common.)
Yes, Microsoft’s greatest fault is its marketing department. I mean, “.NET 3.0 and .NET 3.5 are just DLLs on top of the 2.0 with some service packs, but .NET 4.0, now that’s a biggie, hoo boy” pretty much sums up the latest idiocy. Or remember when they kept slapping .NET onto the end of everything? Passport.NET, Windows Server.NET…
The thing that cracks me up the most is that almost all of the pages have to have a “How to Buy” button because, well, it can be difficult figuring that out. Do I hunt down a sketchball vendor online? Do I really have to go through one of these idiot small business specialists? Do I need to spend three days researching what the heck Open Licensing is and how to get into it?
Some days I just want to pack it all up and move to the mountains.
@Jeremy: If Jeff is referring to the SO/SF/SU server(s), then switching away from MS would be prohibitive – it would need to be a total rewrite in a new language. It would be cheaper to just keep paying the $2,200+ for getting the “necessary” (necessary only since MS says so) server license instead of rewriting.
Grocery store coupons do the exact same thing. For people who’s time is less valuable, a.k.a. unemployed members of a household, it’s worth it to clip coupons. For wealthier, busier people, it’s not worth the time and effort to save a few dollars.
You are so dead-on about this segmentation of a product for B.S. reasons. It’s so frustrating trying to figure out which version of Vista, Office, or Visual Studio to use.
I don’t, however, share your enthusiasm for OSS. In a perfect world, all OSS would indeed be awesome, but I’ve dealt with quite a bit of OSS projects I would describe using another word that starts with aw: AWFUL!
Yeah, the price is free, but to me, my time is more important than anything else and I wasted way too much of it trying to get some OSS to work.
While I agree with your distaste for the marketing game, it seems like a stretch to apply this to OSS.
So basically you blame Microsoft for making the charts too complex.
I agree – marketing department at Microsoft is good in milking customers but bad in customer satisfaction.
If MS marketing department made product comparison charts more user friendly, then marketers still could get all the money but customers wouldn’t be frustrated as you are now.
http://www.microsoft.com/windowsserver2008/en/us/compare-specs.aspx
Looks like you need/want Enterprise
Jeremy: “I know you’ve got a lot invested in the MS stack, but the sooner you cut your addiction to them and switch to a perpetually awesome stack, the happier (long term) you’re going to be.”
Yup, what any successful solution needs is a complete rewrite and redesign on a different platform that is potentially superior in some way.
Bacon is delicious, but I also love that Footloose song…
If you love Bacon and Footloose then you need
Windows 7 Kevin Bacon Edition
Nick
@ascagnel
True, it’s cheaper if you’re JUST looking at the cost of the Winblows license for this one machine. But just an OS does not a web stack make, and one machine does not a (large) site make.
My point was that both the financial cost and the heartache of using the MS stack is only going to grow and grow over time. The sooner he bites the bullet and re-jiggers his code (.NET stuff is significantly different from other platforms, but switching wouldn’t have to require a TOTAL rewrite), the sooner he can start realizing the true value of an open source stack.
(… And thus the sooner he can hit the “break even” point where the savings he gets from OSS finally eclipses the cost/withdrawl symptoms he had to pay to cut his addiction to MS.)
As someone said above, there is a huge difference between tiered pricing for hosting and for your server. In the case of hosting, you are receiving actual value for your money. You pay more money; you get more resources. With MS, you are actually paying for less work with more money. Think about it. MS builds an OS, and then they actually put more work in to limit what it can do. It’s not “smart pricing.” It’s just a rip off.
i think you’re spot on with the knock on ms, but comparing to 37signals and other web-based apps is not fair, imho. the reason you get charged more for a premium basecamp account, is that you are then able to use more resources, which the vendor has to pay for. so you can choose a size that fits you, and pay for what you use. this is the good kind of segmentation.
the weaselly kind is when microsoft artificially and arbitrarily limits a software product, in order to sell an un-hobbled version for more money. did it cost them more to make the premium version? no. will they incur more overhead by selling you a premium version? no. so the distinction is only one of their own making. this is the evil part. in fact, it conceivably cost them more to make and offer these other versions. there’s engineering time, design and marketing time, etc.
so by all means, give em hell, but don’t confuse this with meaningful and good product segmentation. expecting all web-based app accounts to cost the same is akin to thinking all cars should cost the same. you’re paying more because you’re getting more. and if you want a cheap option, it’s there.
I think there’s a fundamental difference in charging more for a hosting plan and charging more for Windows: giving you more disk space or bandwidth costs the hosting company more, but Enterprise edition doesn’t cost Microsoft any more than Standard does.
On the other hand, I’m sure they would argue that they couldn’t support Windows development on just those who only need the least capable systems, and there aren’t enough people willing to pony up for just Enterprise, so really, we’re forcing them to do this.
@Bjørn
I assume you’re being sarcastic 
If it was just this one issue of Windows licensing I would agree, but just look at (for instance) this other recent post:
http://www.codinghorror.com/blog/archives/001279.html
The Microsoft “tax” isn’t just affecting the one server that is the highlight of this blog post. And as anyone who has used an MS stack and then … well, not used an MS stack can tell you, the tax doesn’t just stop with OS licenses either. So no, switching your entire infrastructure JUST so that you can use all your RAM on one machine is not a good idea. But switching your entire infrastructure while you’re still relatively small compared to what you hope to someday become, so that you can suffer less now than if you switched later, does (or at least can) make sense. Especially when you stand to gain so much in the long term by doing so.
My first thought about your previous post about adding more RAM was, “I wonder, if he remembered to get the corrected edition with that much RAM”. I would/should have set off alarm bells in any Windows admin’s head. This is test 1, chapter 1, in the study materials for MSCE type certs.