- Open source databases: the 97-pound weakling
- Multi-core to leave developers in dust?
- Cloud computing begins to emerge from the haze
- Is desktop virtualization's promise overstated?
- Can Ballmer pilot Microsoft through a changed tech course?
- Is counting open source code contributions really useful?
- Novell's open source collaboration play
- Microsoft's mobile mistake
- Salesforce.com for sale?
- Is Facebook the new Hula Hoop?
February 28, 2008 | Comments: (0)
Can Ballmer pilot Microsoft through a changed tech course?
Under pressure from Wall Street, European regulators, users, and a host of nimble competitors, Microsoft's brain trust is trying hard to steer a new course. It won't be easy.
Microsoft faces pressure, threats from all sides
A decade after the United States dropped any serious inquiry into Microsoft's business practices, the E.U. continues to fine Microsoft to make it change its cowboy competitive ways. Just yesterday, it fined Microsoft another $1.3 billion for anticompetitive practices, for a total of $2.5 billion to date.
Customers have responded to Microsoft's long-delayed Vista desktop operating system with a resounding "no thanks," and the company's effort to get its own office-productivity file format approved as a standard by the International Standards Organization has been rejected.
And despite successes with SharePoint 2007 and good reviews for the new Windows Server 2008, Microsoft has been increasingly embattled by open source alternatives such as Linux, and it faces a growing threat from Google in the on-demand delivery business.
The bid to take over Yahoo, a move to reinvent Microsoft's faltering Web advertising business, is running into opposition from Wall Street, which thinks that merging two troubled companies makes as much sense as transplanting a diseased heart into an ailing patient.
And while these wounds were still smarting, Adobe shot another arrow Microsoft's way, announcing its AIR development platform, one more step away from the Microsoft desktop and toward computing in the cloud.
These forces have led Microsoft's CEO Steve Ballmer to claim it's now behaving differently, though there is some skepticism about how real that commitment is.
Can Ballmer steer Microsoft out of the roadblocks?
The highly competitive Ballmer, you might say, is the man who cried "nice." And like the boy who cried wolf, no one believed him. The software giant's attempt to make nice with much of the developer community by opening up its APIs for key products was greeted with a jaundiced eye by regulators at the powerful European Commission.
However sincere Microsoft's stated change of heart may be, it is becoming clearer and clearer that Microsoft -- which knows it has to change -- is still struggling to find a fresher path.
What's a poor CEO to do?
Now that Bill Gates has effectively left the building, Ballmer is free to transform Microsoft, a job made all the tougher by the enormous reservoir of mistrust the company has engendered over the years.
Case in point: the open APIs. Microsoft will give its competitors free access to the application programming interfaces and protocols it uses to ensure interoperability between its own products, a very significant change in business practices.
"The change of strategy indicates Microsoft now believes an open approach is a better way of fostering a development ecosystem -- and that it has accepted that, in a world of Web services and software as a service (not to mention antitrust laws), it can no longer have things all its own way," commented Matt Aslett, an analyst with the 451 Group.
The move was obviously a response to pressure from the European Commission, which in the absence of an aggressive U.S. Department of Justice, has become the software giant's most potent critic.
But the Europeans weren't overly impressed with the gesture, saying, "The Commission notes that today's announcement follows at least four similar statements by Microsoft in the past on the importance of interoperability." Less than a week later, the EC fined Microsoft that additional $1.3 billion.
It's worth noting, though, that Microsoft pledged not to sue open source developers for development or noncommercial distribution of implementations of the server and communications protocols -- a huge move for any Linux or open source developers who may have feared Microsoft's big legal stick.
And for a company that literally wouldn't use the term "open source" on its Web site until fairly recently, that is quite a change.
Sharing the road is just the beginning
Playing nice, even if Microsoft convinces regulators that it means it, with other technologies along its route is just a beginning.
Microsoft remains tied to the desktop, the source of the vast majority of its revenue and profits. It's not that Microsoft doesn't know this. You can go as far back as the Gates "we missed the Internet" memo for evidence, but the company still can't make a real break with the past.
Sure, Microsoft makes huge amounts of money, but from Wall Street's perspective, it's like a utility or phone company stock your parents might have owned in the 1960s: safe, but really, really boring. That's why the share price has been relatively flat for years.
Ballmer wants to change that, and the obvious place to start is with the company's ailing Web business. Give the man his due. By willing to pony up more than $40 billion for Yahoo, he's admitted that Microsoft on its own will never be able to compete with Google. But many on Wall Street believe (just check the stock charts) that Yahoo is too sick to play doctor to Microsoft's patient.
It's not at all clear how the Yahoo game will end or what the combined companies would look like. But nearly every month produces evidence that (and I hate this phrase) the paradigm is shifting.
Just a few years ago, the idea of building something like Adobe's new AIR platform would have made no sense at all. But now that high bandwidth is common (if not ubiquitous) and advances in hardware and programming languages make for powerful yet tiny applications running on tiny handhelds, Scott McNealy's old boast that "the network is the computer" is closer than ever.
Opening the APIs and opening up the wallet -- if not for Yahoo, then for another major player -- are smart moves. But the road to change is full of potholes -- and other drivers and the highway patrol. Hang on tight.
I welcome your comments, tips, and suggestions. Reach me at bill_snyder@infoworld.com.
Posted by Bill Snyder on February 28, 2008 03:00 AM
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Thank you so very much for this article. It points out exactly what is blundly clear since 2001, 2002... Microsoft is going Down.
It's bad policy to let MS get away with it's practices, as US Government did (not surprised though!).
I just LOVE Neelie Smit Kroes. I did not like her in Dutch politics, now I am in Love ; -)
Me, as an ICT expert and trends analyzer for years, hate it that I have to do all my Internet on an Internet Explorer based system. And then 6 other browsers, just to achieve 99,8% completely working web pages (applications). I hate this. I want to use one of those, may I say "horni", newly released Mac OS's. And I truely miss the Netscape days. It was an Open company, it made fast, stable products and Innovated time after time. We all LOST that, because MS insisted that IE was an integral part of the Operating System. All the non-nerd people that went online in that late 90's, just knew about one browser, the one that just "was there" with the (forced upon them and hardware manufacturers - something else that should STOP!) pre-installed operating system from the stores... Yes, Windows with Internet Exploder 4 & 5.
Even a working Windows distribution without any trace from Internet Explorer (by a German professor) was initially denounced by Microsoft. It could not be. Read: YOU MUST USE IE so all the webpages will be created for IE (and with Microsoft software - the only wise IT choice, just to prevent as many incompatabilities as possible, or even to prevent pointing to 3th parties when problems arise. Man, funck that!!
Microsoft became the monopolist on all websites... They have paid a bargain price of, what, € 1,5*10^9? Payable only after you have succesfully taken over the market. Any company would sign a deal like this, don't you think?
All those Americans whom say "it's unfair, after all this time, it criples the market, meheh, meheh, meheh!! :P Think again! And I truely hope the EU (Neelie) is not done wipping...
Microsoft OS till Windows 2008 (x64) are just NOT fit to use the Internet. Terrible resource demanding file system, lot's of swapping for temp files, bad memory management, big hick-ups, ... The new Mac OS had NONE of these limitations and an ULTRA fast browser Safari (even on Windows it's very very fast). I would save literally HOURS per day not waiting on the OS and or the browser(s) as I would on (pre-2008) Windows systems.
It's all taken away from me, all due to Redmond. The punishment should continue I say!! :>
Comments? Bring them on ; -))
>>>> γιδω >}|
Posted by: γιδω at February 28, 2008 05:00 AMI guess I don't see the big threat to Microsoft here. Google is outflanking it on Internet search, yes, but how many people really use much-hyped web tools to do anything of significance? Not many, and what this really means is that MS has finally encountered substantial limits to its own growth. There's much less to this story than meets the eye here.
Posted by: Rob McMillin at February 28, 2008 11:50 AMI appreciate your comment, Rob, but I'd say that Steve Ballmer would disagree with you. After all, you don't offer to write a check for $44 billion if you don't feel someone breathing down your neck.
Posted by: Bill Snyder at February 28, 2008 12:22 PMTo the ignorant, childish and clueless Microsoft haters:
Against industry trends and the constant parroting of naysayers like people on this post, Microsoft continues to grow and grow. Microsoft just recently posted 15% growth in Net revenue up from USD$44b to USD$51b and growth of 12% in Net income up from USD$12.6b to USD$14.1b. Apple dissappointed and so did Google but Microsoft beat all analyst expectations and the ignorant naysayers.
Let's see - Google is a one trick company - they have monetised search, big deal nothing else. What is their innovation? Apple - Mac OS only accounts for 3% of computers desktop operating systems and Linux 1% but you wouldn't think so from all the anti Microsoft comments from people living in fairy land. Guess who propped up Apple when it was on the verge of going down the gurgler? Microsoft with USD$200m. Microsoft is the only constant in the business and they continue to grow! Does this sound like a company which does'n meet it's customers expectations and business and industry needs and is "going down"?
Microsoft continues to innovate, invest, acquire and deliver wanted products and technologies if hasn't how do you explain their continued growth?
Linux was meant to be the death of Microsoft = Linux market share has been going backwards.
Microsoft has come from nowhere and is now considered one of the top 3 players in Business Intelligence - Gartner report. They are now also considered a leader in Unified Communications as well. Cnet is already saying the 2nd generation of Zune is a legitimate rival if not better than iPod and Xbox already proved you can come from behind in a mature industry just like Microsoft has done in Business Intelligence, Unified Comms and many others.
Microsoft invests USD$6.5b on R&D this year and it continues to innovate and make good and successful acquisitions. Examples - aQuantive, Danger (Mobile) and many many others. Look at innovation such as Surface, PhotoSynth, .NET, Silverlight, Software plus Services for Exchange, Office, Unified Comms and others and wait to see what's around the corner.
The latest report of Open Source Office Apps and Google Apps sees only 0.03% of US consumers switching to office apps in the cloud and against this Microsoft has posted record growth in Office sales.
More than 50m mobile phones with Windows Mobile are being shipped per year with growth of more than 300% per annum - how many iPhones have been sold!? No comparison.
As usual the ignorant clueless naysayers simply say "you must work for Microsoft" because I am defending them. I am defending them as I happily invested in them many years ago and my company is very satisfied with their products, technology and servicing. As a consumer I have had no issues whatsoever with Windows Vista on my home PC except for the lack of drivers from Creative for my soundcard - not Microsofts problem.
So before you continue to make uniformed and ignorant childish comments - get some facts and stop swallowing Google and Apple press releases.
Posted by: Martin_Australia at February 28, 2008 05:47 PMMartin_Australia,
Thank you so much, well said. I 2nd it.
Martin, the latest statistics I read had Apple share at about 8% and growing. Some states it is as high as 16%. Let me put it this way, I've been a professional PC guy since 1989. Last year I switched, my brother switched and some that come to me for advice have switched. The large organization I work for is also investigating alternatives in certain areas such as the eeepc(linux). Also MS did such good job with MSN that they want to do it to Yahoo. I hope not. Web based apps should finally release the MS stranglehold monopoly on people. MS has a place in the market, just not alone.
Posted by: phil at February 29, 2008 08:40 AMTo phil:
The world-wide market share for desktop operating systems is Windows 96%, Mac OS 3% and Linux 1%. Yes, in the USA Mac laptops have grown to 8.5% market share of laptops, not desktops. These are the FACTS.
Global Linux market share has gone backwards since 2004. These are the FACTS.
This is the point of my post - the facts are the facts and your opinion and personal experiences are NOT representative of the broader industry and consumer base and neither are most of the biased opinions of technical 'journalists' and bloggers on sites like this and many others.
Posted by: Martin_Australia at February 29, 2008 03:03 PM
