Microsoft Windows for free

2000-07-31

Microsoft looks scarily close to becoming innovative. Sure, the ideas may have been developed elsewhere, but with its games console, set-top box and wireless appliance, the company is really making a go of it. The company previewed several new technologies at an analyst briefing at the end of last week. Meanwhile, at another briefing, Microsoft updated journalists on the operating systems state of play – very much in the Microsoft old school. These two lines of attack – old and new – will define the essentials of the company over the next few years.

Forget dot-Net, forget C-Sharp. All those big announcements make nice wallpaper, but they are not really where the action is for a product company. For Microsoft, shareholder value is about shipping product, and in the past it has to be said that they have been remarkably successful at it – more successful, indeed, than any other company in the world.

Traditionally, Microsoft has made its money selling three product lines: operating systems, office applications and development tools. It has wiped the floor with the competition in all three areas, but broad as this market may be, sooner or later it will be saturated. If we look at the operating system announcements, they are in fact (just like their predecessors) details of upgrades rather than anything new. The media player may be updated, the Web browser may support new forms of content but the underlying technology remains essentially the same. With the new release of WindowsME, aimed at replacing Windows 95 and 98, Microsoft are moving closer to a code base shared with Windows 2000 (and its own replacement, codenamed Whistler). Clearly this benefits Microsoft, but is unlikely to cut much ice with the end user. Even the recent forays into new look-and-feels have been little more than a rehash of the old. An OS is an OS is an OS, and that’s all there is to it.

It would be impossibly un-PC (sic) for Microsoft to ditch this model, particularly as there’s life in the old cash cow yet. To all intents and purposes Windows is Microsoft and to question it would be like the Pope denouncing Christianity. So – Windows is still very much strategic, but so is the “great software on any device” tag line – enter the new product lines.

By entering the domain of the appliance – the games console, video engine, wireless PDA or whatever – Microsoft is recognising one crucial fact. With appliances, nobody cares about what is under the bonnet, the external functionality is more important than the internal components. This is the rationale behind other companies (such as \link{http://www.it-analysis.com/00-07-14-1.html,these})using Linux – there is no operating system sell, it is the box that counts. Also, with Linux there is no operating system buy as it is license- and cost-free. Microsoft cannot compete at the OS level as others are giving it away, hence they are competing at the level of the complete device. This is a dangerous game – hardware margins are notoriously lower than software margins – but the company has no other choice.

By bundling Windows with the device, Microsoft is essentially giving it away. In doing so it gives itself an exit strategy from the oncoming drought in the OS space. Perhaps more importantly, it can move on without losing face – a necessity in the technology market, where image counts for far more than people give it credit.

(First published 31 July 2000)