Friday, October 12, 2001

Belly of the Beast revisited I went to a presentation by the very pleasant Kurt DelBene (Del-Beh-neh) this afternoon. Kurt is a VP of authoring and collaboration software at Microsoft (he's worked on Outlook, Exchange etc.) He spoke of his work and Microsoft's plans in the future. Here are my reactions:

Why Microsoft does not think it's a predatory monopoly
Kurt paraphrased ex-GE CEO Jack Welsh and said "once you have a large % of a small market you must redefine your presence as a small % of a broader market." Basically, in Microsoft's eyes, the desktop is just a small outpost in the much larger world of all information creation, collaboration, distribution, management, and presentation. Please note the immense scale of this goal. Any action they take on the desktop cannot be monopolistic seeing as how they have all the Internet, photography, video, graphics, publishing, recording, broadcasting, and editing markets to conquer, as well as creating the digital rights management market, and swallowing the "knowledge management" market. Microsoft sees themselves as a small fish in a big pond. The pond is all information that could potentially be digitized in the universe. Just some insight into where they're coming from.

Microsoft is hurt by the falling upgrade rates
It's a big problem that people aren't running out to upgrade their operating system. Microsoft desperately needs a 2 year turnover cycle (including theri cash cow Office) to continue delivering the sort of growth their shareholders' expect. Their recent licensing moves, whatever they may claim, are entirely designed to solve this "problem" once and for all. Anything else they claim is a lie.

Microsoft wants to make peoples' lives better with software, but they don't know how to do it
Microsoft honestly wants to make peoples lives better with software. They really do. They also have no clue how to do this. As someone who has watched hundreds of people struggle with technology, I know how frustrating it can be, but the solution is often less technology, not more. Microsoft thinks the answer to every technological frustration is more technology.

Microsoft's current business model makes it impossible to deliver software that people actually want
Microsoft makes money by forcing its installed base to buy "upgrades." When first approaching a market, they work hard to improve their product and have it match customer needs. Once this is done and they've built and installed base, their economic incentives drive them to force upgrade after upgrade. But once Microsoft squeezes all competition out of an area, real innovation stagnates and the drive to force upgrades begins. Word 3.0 was great, but its degraded ever since. And since more technology is often worse, the quality of products (and the customer experience) falls.

Windows XP is a good example of this at work. Every change from Windows 2000 basically makes life better for Microsoft, but worse for the customer. I don't think they can see this.

Growth in the mid-market
Microsoft's hungry for growth, so hungry that they want to sell end-to-end business solutions to the small and mid commercial market (this was also the logic behind the Great Plains acquisition). This may indicate that big customers are smart enough to buy best of breed systems from separate vendors and integrate them together, instead of behind beholden to any one company. Small to mid-sized businesses may not be so smart. To get any productivity benefit, businesses have to take responsibility for their own technology and not leave themselves to the tender mercies of vendors.

Digital Rights Management is being built into everything
Part of the selling point of Microsoft's complete end-to-end hegemony of all bits is digital rights management. If you take photos with your digital camera and put them up on a website, Microsoft wants you to have the ability to 1) control who views photos, 2) control the digital bits of the photos so others can't copy them (by taking screen shots or downloading jpegs etc.) Such a system also creates a controllable network, controllable by Microsoft, in the way the world's best collaborative system (TCP over IP) is not.

Their execs don't seem to understand Web standards
Microsoft execs like to promote their use of XML as proof that they're following standards, even though XML is just a standard way of defining other standards (which can be closed and proprietary). I don't know if Kurt (who's a nice guy) was blowing smoke here, but he seemed to honestly assert that just because something is in XML, it's standard in a meaningful way (i.e. open and interoperable). He also confused what UDDI, SOAP, and WSDL actually do (you can learn that stuff here). Sadly, few of my business school classmates seemed to notice.

Microsoft is still waiting for Linux to implode (and they hate the GPL)
Kurt expressed surprise that Linux had not imploded yet (as do we all, at times) and said, with quite some feeling, and the GPL was bad. The GPL is bad if you're in the software development business -- it makes it impossible to sell software as a product, even for third-part developers. While free-software zealots may not agree, they're simply mistaken. Microsoft understands this part of free-software economics quite well (but not other parts). I'll focus on this all next week.
Link to this column


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