Microsoft is not long for this world

Tuesday, 26 November 2002

I have a friend who is a senior consultant at Microsoft. We swap corporate gossip because I’m a current nobody at… not gonna do it. Oh, hell. Amazon.com. There, you happy? He’s happy to be there. I’m happy to be home tonight.

We made some oral NDAs and were talking shop recently — sorry, no trade secrets are to be found here. I was impressed with some of the efforts Microsoft is making to improve their products before they’re caught out again with how sucky some of them are. This is unusual for Microsoft. They usually won’t address problems until they are widely publicized by third parties. It’s expensive to fix problems. It’s also unnecessary from a business standpoint. It’s not a significant problem till it hits the news and what are users going to do anyway? Go to Linux and learn how to install packages without a GUI?

In the middle of the conversation I had the insight I’ve been looking for for several years. I’ve been pounding my head trying to understand how a company which makes second-rate products at first-rate prices can continue to thrive?

In every category of software which Microsoft has released products, better products exist. They are usually cheaper too. No widely used OS is less stable or slower than almost every single version of Windows. I can’t believe any business ever put up with computers that crash on a daily basis.

More importantly in the age of networks, extranets, and every box with an IP: no current OS has more dangerous or more constant security problems. How the hell hard is it to check your strings are 255 bytes or shorter for the love of Steve Wozniak!? Can’t anyone in Redmond count that high?

Back to my insight: Microsoft always wins because that’s what, exactly what, they set out to do. Their plan, their purpose, their only goal is to win. Not much of an insight, you say?

Winning doesn’t take the best software. It takes the bare minimum that functions and can get to market in a hurry and be impossible to reverse engineer. Winning doesn’t take low prices. It takes leverage to force hardware vendors to bundle your products so that you can charge customers anything you want. Winning doesn’t take innovation. Innovation is expensive and time consuming. Winning takes patience to see innovation around you and then steal it once you see which parts the market is really going to go for. Winning just takes being the first to market, initially.

Playing to win is important. Playing only to win is the behavior of a troglodyte. Playing only to win means you can never be the best. Playing to win may be good tactics but it is putrid strategy. Never being the best, while simultaneously being the biggest, is going against natural selection. Going against natural selection is a short ended game. A few generations in it at best.

So I finally know Microsoft won’t be here much longer. Not as it is, in any case. But Gates can’t lead forever and I don’t think the corporation will find another benevolent dictator to match him. How much longer will it stand? How about 15 years. That seems long but they have the capital to stay in the game as losers for even longer.

You think it’s just a theory. But there’s recent evidence that playing to win isn’t even good tactics anymore. If your main goal is brutish, your corporate culture will follow. If your employees are brutes in the high tech game — well, all the mass marketing CDs the USPS can carry won’t save you then.

The Japanese like OS X. This is Apple’s new operating system. It’s not that new. It’s mostly BSD underneath. This is the stepchild of UNIX. BSD is free. BSD (and its close kin, the *nixes) has thousands of very smart kids who hack on it because it’s free, it’s fun, and it’s rewarding to make things. Free developers who love their work. I wonder what the average salary in Redmond is. I don’t think it’s that low. I wonder how happy the average perma-temp developer at Microsoft is. I think it is that low. I think that’s why they have a hard time bothering to count to 16 squared.

The Japanese also play video games. Largely those made by the Japanese because they have been doing it quite well for awhile. Microsoft decided that because Redmond was full of restless Nintendo employees they would also make video games. They decided to win.

To do this, they paid off a few developers to take their wares to Xbox-only. They put money into a proprietary hardware system with more computing power than the competition. They did the marketing and they tried hard to only miss a couple launch dates. They used all their usual winning tactics.

How are they doing? You already know. They’re getting creamed. It’s by a factor of somewhere between 20:1 and 10:1 depending on which sales figures you go by. While a single game like “Grand Theft Auto III” for PS2 sells 6 million copies, there aren’t even 6 million Xboxes out there.

They’re getting creamed because their tactics only work when they’re already in charge. Sony is in charge of the console market. When you are not in charge and you make mistakes — like shipping controls to Japan which are too big for the average Japanese player’s hands and sensibilities — the market punishes you. When you’re not the only game in town, the market will punish you quickly and severely. The Xbox is so far a very expensive mistake. Microsoft loses money on every console and isn’t making it back with the games.

The PC OS market isn’t a one pony show the way it used to be. With Linux’s rising availability of GUIs and support and Apple’s return to sanity with OS X, the game isn’t what it was 2 years ago.

Here’s something from our friend Google. I just did a search, in Japanese only, for Windows XP and OS X.

“Windows XP” 335,000 pages found
“OS X” 226,000 pages found

Looks like the Japanese are using Macs a lot.

You think that’s the punchline. It’s not. This is. I did the same search in plain old vanilla English.

“Windows XP” 3,310,000 pages found
“OS X” 3,810,000 pages found

You don’t have to sell your MSFT yet. But you might consider it during the first big rally of next year.

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