The Pebble and the Avalanche

The Great Yahoo! Beer Money Caper

Microsoft's quest to purchase Yahoo! continues to puzzle me. First, there's Yahoo! itself as a company; I can't quite figure Yahoo's business model and why the company might be worth $45 billion — I can't help but thing of advertising revenue as just beer money. And Yahoo! itself evolved from a simple list of Internet resources into a huge aggregation of barely related resources. (I stopped reading Yahoo's new pages when Google News provided a more interesting new feed.)

The other question is about Microsoft itself. As others have pointed out, a hostile takeover rarely works in the Internet world. As far as I'm concerned, however, I can't imagine that Yahoo! would survive a Microsoft takeover even if it were friendly. Despite Microsoft's deep pockets and rigid control over the desktop, Microsoft's internal efforts to create a popular web site relevant to Microsoft's business model failed utterly. Microsoft clearly intends to modify Yahoo!'s operation to support Microsoft's goals (so I expect that Yahoo! will one day suddenly stop working with non-Microsoft browsers, for example).

This entire operation reminds me of AT&T's purchase of NCR. AT&T failed to create its own computer business; they purchased NCR instead, installed the managers who had failed at running AT&T's internal attempts, and promptly ran NCR into the ground. In the end, the mistake destroyed AT&T: AT&T's "trivestiture" allowed them to dispose of NCR while distracting investors by with the creation of Lucent.

Pointless aggregations are not a sign of strength. Disaggregation fosters innovation; random aggregations and forced integration generally fail miserably. Microsoft is about to make a company-killing mistake.

Topics:  · business · internet · microsoft

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Will Microsoft Disaggregate Windows? Will It Matter?

This article discusses the "modularization" of the Windows operating system. The author raises the question of whether the disaggregation will be technical in nature or simply marketing.

In my opinion, Microsoft isn't capable of anything but a marketing effort. That is, will make it possible to buy single components, such as email, rather than bundle them all into the operating system. The impetus for the decision will be to extract money from the consumer; two purchases instead of one, and the ability to mandate intermediate purchases between upgrades to the entire operating system. Even though, e.g., email wouldn't be bundled I believe I can guarantee that email will still be tightly integrated into the operating system. In other word I believe Microsoft will disaggregate their marketing efforts but not their technology, competitors will still be shut out, and the consumers will remain with few choices.

Topics:  · microsoft

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Microsoft Learns from Mistakes, Replaces with New Mistakes: Microsoft vs. ISO

I remember when Microsoft introduced the SALT "standard," which — Microsoft employees explained — was an industry standard, instantly, because Microsoft issued it. SALT's purpose was to sabotage VoiceXML, a true industry standard. Eventually SALT vanished without a trace and the entire Microsoft program was an exercise in futility.

Microsoft learned from these old mistakes; they've decided their next effort to sabotage an industry standard should go through a real standards body. Many large organizations, in particular governments, now realize that using a proprietary Microsoft format to run their business is foolish at best; among other things these documents become unreadable as time goes on and Microsoft fiddles with the format to make old documents incompatible with the new systems. Microsoft is absolutely desperate to prevent Open Document Format, ODF, from replacing Microsoft's proprietary Word, Powerpoint, and other Microsoft Office formats. ODF is a full ISO/IEC standard.

To sabotage ODF, Microsoft introduced "Office Open XML," OOXML, which they've placed before ISO. The OOXML specification runs to 6,000 pages and makes many people nervous, both because of its technical content and because of its licensing arrangement. And there's the subtext: six thousand pages of specifications is another way of saying that only Microsoft, the custodian, will ever be able to implement the specification.

What's interesting is that Microsoft is apparently cutting corners to get OOXML adopted; well, "cutting corners" is the polite language. We'll see what the courts have to say about it; Microsoft's attempts to dominate the market have a tendency to run afoul of the law. As always the reason is quite simple: Microsoft impedes market and technical progress, and people won't accept those impediments in a fair and open marketplace.

Topics:  · microsoft · standards

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Microsoft Can't Help But Violate Anti-Trust

The European Union is investigating Microsoft yet again for a new set of alleged anti-trust violations.

For those who didn't read the book: Microsoft's business model depends on forcing people into its ecosystem. They use their desktop operating system to sell their email programs, Internet browser software, their media players, and more importantly the support software that business purchase to interact with all these and more. Microsoft is also struggling to find ways to use their desktop operating system to grab hold of the Internet, although they haven't succeeded yet.

Since progress and innovation — the very idea of a desktop operating system, email, the Internet, and the like — all come from disaggregation into separate components, Microsoft's business model of monolithic re-unification depends on fighting innovation instead of encouraging innovation. As such, it will be no surprise to see Microsoft in court again sometime soon, explaining how they used illegal tactics to prevent innovation in computers specifically and society in general.

Topics:  · microsoft

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Buy Movies Legally, Seller Goes Bankrupt?

Here's an interesting tale of a man who purchased a new monitor, hooked it up to his Windows computer, and promptly found that the computer refused to let him see any of his movies. The culprit is digital rights management (DRM) software, which worried that he might pirate a movie because his monitor worked so wonderfully. The upshot is that because he purchased movies legally, he is in worse shape than if he just pirated them from the Internet.

As usual, the culprit in this case seems to be Microsoft, specifically their DRM software which they can't seem to figure out how to support. But I also have to wonder about the costs of doing business. This particular buyer was highly motivated and intelligent, and managed to get at least some of the problem straightened out, even though it cost him time and effort. At the same time, the cost to the companies involved — the company that sold him the movies as well as Microsoft — was also quite substantial. If the customer had made the simple mistake of following the DRM's recommended procedures, he would have had to consume even more technical support from other companies or sustain an actionable, substantial monetary loss. In short, the costs of supporting DRM continue to increase, and there's no evidence whatsoever that all this nonsense is making any difference when it comes to pirated content anyway. If DRM chews into a company's slim profit margins, then even though Hollywood wants to impose DRM management on the company selling movies, no one will be able to afford DRM — least of all the companies that must cope with it.

Topics:  · intellectual+property · microsoft

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Microsoft Fails to Fool Standards Organizations

Several years ago, Microsoft felt threatened by a new international standard called VoiceXML, which allows developers to easily create speech recognition applications. In an apparent attempt to sabotage the standard, Microsoft pushed a competing "standard" out the door — it was standard, according to Microsoft, not because of community acceptance but because Microsoft considered anything it did as a standard. Although the competing went nowhere, Microsoft did manage to introduce fear, uncertainty, and doubt into the marketplace long enough for Microsoft to gain (and squander) a toehold.

This time around, threatened by a genuine open standard for office word-processing documents, Microsoft is waging an international campaign to have its Open XML format adopted by an international standards organization. Luckily, Microsoft's effort failed; unfortunately, Microsoft can continue to push its standard.

The stakes are high: some US states and some European countries are rightfully concerned that their important state documents are in closed, proprietary formats that are impossible to read without Microsoft's help; they've proposed the use of Open Document Format, a genuine non-proprietary standard recognized internationally. This trend threatens Microsoft's closed ecology, and they've been fighting hard to prevent adoption of rules that mandate open formats.

And apropos of a theme that appears in my book: Don't forget to read the discussions of Microsoft's alleged ballot-stuffing and bribery (example) as they attempted hijack the vote.

Topics:  · microsoft · standards

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Microsoft and Open Source, Again

Microsoft just can't seem to co-exist with open source software — not surprising, of course, as Microsoft continues to fight tooth and nail against true open document formats such as ODF to prevent erosion of Microsoft's Office monopoly. According to Groklaw, Microsoft is so spooked by the latest "GPL" license that Microsoft refuses to honor their customer commitments.

Topics:  · microsoft · open+source

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The Fierce Struggle Between the Internet and Your Computer

Your computer's operating system — Linux, Mac OS, or even Windows — is a collection of services that programmers use to create applications. For example, in a word processing application, the application uses services to access the hard drive; other services update the screen. Browsers such as Firefox and Internet Explorer access the Internet through operating system services.

In this article, the authors update the long-standing discussion about how the Internet has become a giant operating system. While this has been true for a long time for other operating systems, the authors claim that now even Windows, under competitive pressure from the Internet, is rapidly relinquishing its monolithic control of your computer by disaggregating into individual services ("APIs"), ones that compete with services provided over the Internet.

The competition, "local" services vs. Internet services, is fierce. Google, for example, has become the de facto service that provides maps; eBay is trying hard to be the de facto commerce service; Paypal (purchased by eBay long ago) is the de facto method to transfer money. All of these companies avoid the enormous costs associated with writing an operating system, and they also have a constant stream of revenue as people use their services. Microsoft, on the other hand, only gets one bite: when you purchase your operating system. That's the reason behind their struggle to introduce "Microsoft Live," subscription anti-virus protection, and other products that even they barely understand: they want a constant revenue stream from each computer running Windows, and as yet they don't have one.

Topics:  · computing · microsoft

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Even More Bogus than Usual

Now it turns out that Microsoft's statements about possible patent violations by Linux were even more bogus than usual. Microsoft based their statements on a report by an independent researcher; now that researcher has spoken up, and claims that if anything his research supports the opposite conclusion — that Linux has no known violations of intellectual property rights.

What's also interesting, as I re-read Microsoft's statement, is that Microsoft doesn't claim that Linux violates Microsoft's patents — Microsoft merely claims that Linux violates someone's patents. That might be typical Microsoft arrogance ("we are the only software company that matters, so it must be our patents that are violated") or it might just be part of their FUD. I'm inclined to believe the latter, and that Microsoft's threat implicit threat to sue or to sic the World Trade Organization on Linux users is even emptier than usual.

Topics:  · microsoft

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More FUD from Microsoft

Microsoft has restarted its campaign to spread FUD — fear, uncertainty, and doubt — about the Linux operating system. A very nice comment on the latest barrage can be found here.

Vista is yet another huge attempt to reverse disaggregation by Microsoft; in this case, by modifying computer hardware and software to incorporate the business models prefered by large media companies. Aside from limiting flexibility and creativity, and even aside from the fact these modifications haven't worked correctly, the expense for new hardware and software falls on the consumer while the consumer gains nothing from them. I'll hazard a guess that the continuing failure of Vista to gain traction in the workplace has Microsoft searching for other ways to persuade businesses to move to Vista.

Topics:  · microsoft

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