Penguin
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An Acronym for Fear, Uncertainty, Doubt.

It is a marketing tactic used against superior competitors in a weaker market position, such as by telling your customers that the competition is inferior, that the next version of your product that will be released tomorrow will have all the same features and more, that the competitor won't be around in 6 months, and other half- and blatant untruths more. The goal is to make people insecure about your competitor and give them the feeling that betting on you is the safe option. The first company to employ FUD was IBM; Amdahl is credited with coining the phrase after he left IBM to start his own company. Funny how times change.

A good example of is MicrosoftCorporation's recent document called CompetitiveComparisons, and their recent "Get the facts" campaign. Other examples that try to discredit Linux are listed on the MicrosoftQuotes page.

See also: LinuxFudDispelled

Historical examples

Digital Research launched their DR-DOS, which was better and cheaper than MS-DOS 5 and received favourable reviews all around. Microsoft then released a beta of Windows 3.1 that produced a warning message when run under DR-DOS, and announced MS-DOS 6, which would do DR-DOS did and more. In reality, MS-DOS 6 was vapourware at the time, and it is questionable whether the materialized product was better than DR-DOS. However, everyone was saying that DR-DOS is great but you may have problems running Windows on it, and together with a dealer package designed to make it cheaper to bundle MS-DOS and Windows, DR-DOS was dead in the water. This may have been the making of the Microsoft monopoly.

AMSTRAD was a UK consumer electronics manufacturer who product design rationalization allowed them to sell decent electronics at rock-bottom prices. When they decided to launch a range of home consumer PCs, they found a 35W PSU to be sufficient even with a HardDisk and tape streamer attached (low end PCs of the time usually came with twin floppy drives), so they decided to upgrade the monitor PSU and supply the entire computer from it. Since there was no PSU in the computer case and its electronics only dissipated about 20W, AMSTRAD PCs required no fan in the case and so were quieter. They were a great success -- so great that they began to find their way into offices where equivalent 'traditional' models typically cost 50-100% more and made a lot of noise. So the FUD spread: "The AMSTRAD has no cooling fan! With a hard disk it'll melt! Your crashes are because your AMSTRAD is overheating!" That was easily refuted since AMSTRADs worked well, and the case would be cool even after using them all day. New customers were still getting scared away because AMSTRAD PCs had no fan when all others did. So in the end AMSTRAD fitted useless fans in the back of the case where the PSU normally goes, and everybody was happy. People in the know cut the wires to the fan and never had any problems, but the majority just accepted the constant fan noise as a necessity.