Itchy Thumbs

Completing games then reviewing them

Microsoft, eh?

Posted by D on October 5, 2006

Apologies for the delayed arrival of this latest entry, WoW has been getting in the way a little…

Not really very sure where I’m going with this next piece, just some unorganised ramblings so bear with me.

What on earth is going on at Redmont, Washington? Do Microsoft even have a business plan anymore? Or is it little more than “Quick! Do everything that all our competitors are doing but err… betterer… and err… cheaperer and err… Quick!”. Lately, whenever anything might be a success in the computing world then Microsoft are in there, a little after the boat sailed, telling us all about their great new version. It seems it doesn’t matter whether today’s hot new tech does or doesn’t fit with their current business portfolio either. It almost feels as though they can not bear to imagine that someone else, out there, might be making money out of computing. But can they really be all things IT to all people?

First and foremost Microsoft are a software company, that’s where they made their money and it’s where they continue to make their money; yet increasingly their announcements concern flash new bits of hardware. Microsoft clearly brood jealously over all things Apple and it really couldn’t be more obvious. Apple make both the hardware and the software for their devices. You want one, you have to buy the other. If you have that kind of monopoly sewn up then all the money available in that market is yours. Poster child for this sort of marketing behaviour, the iPod, is an object lesson in this kind of business practice and clearly Microsoft want in. They are desperate to get into the hardware market; we’ve seen a wealth of peripherals, tablet PCs (failed), Xbox (4 years to turn a profit) and now we have Xune.

But does this make sense? Microsoft all but obliterated their competition with the software they developed and the monopoly they constructed around their operating system. They remain orders of magnitude more succesful and more profitable than any of their competitors and all of it was build without going anywhere near hardware manufacture. On ther other hand, Apple remain a very succesful but relatively niche hardware company, nowhere near as succesful as Microsoft and unlikely to be so any time soon. In the face of the Windows monopoly IBM and others long ago abandoned the personal computer market and moved over to building chips, servers and supercomputers. Perhaps the lesson here is that the real money isn’t in hardware? New computing hardware is always going to emerge whether Microsoft have an hand in it or not. If your software runs well on all any piece of hardware then your market share is greater that if it only runs on that one device that you also make.

Or perhaps they’ve decided that the writing is on the wall for software. Maybe it is time to jump ship. MS built their empire on the back of their Windows OS platform. But the cost of a software solution is directly related to the number of times it’s been reimplemented. Unfortunately for MS complete, fully functional Operating Systems have been reimplemented so often that they are now free. Neal Stephenson’s makes this very point in his excellent essay In The Begining was the Command Line. I can even go to the internet or a library and find out how to make an intel processor control a floppy disk drive for free. Anybody can do it! In the face of this, such code ceases to be a commodity and your company can no longer trade on the notion that they have the only viable solution.

Yet Microsoft’s marketing strategy consists of trying to persuade you against all other evidence that this isn’t the case. That it is still worth paying for something that otherwise would be free. Up until very recently they were more or less correct. If you wanted an operating system that was so simple that even your gran could use it then they were pretty much the only (affordable) place to go. Unfortunately for them completely free linux solutions are shaping up to provide all the functionality of windows and be just as user friendly. Who can compete with “free”? Maybe we will see a fundamental shift in the operating system market and maybe MS’s desire to be involved in hardware is one way to insulate themselves against such a phase change.

For the time being MS remain a software company and for the time being the killer app, at home, for Windows is gaming. You want to play games on your home computer? Then you’re going to have to have a machine that runs Windows. But how long is this going to remain the case? Microsoft jumped feet first in to the console market with the XBox several years ago and have put themselves at loggerheads with Sony and Nintendo, two companies which were previously oblivious to MS’s shenanigans. Now Sony and Nintendo have a vested interest in seeing MS fail.

In recent months both Sony and Nintendo have announced the the PS3 and Wii will be based on a linux platform. Sony even going as far as to announce that the developers kit for the PS3 will be comprised of as much Open Source material as possible. At first glance this seem like a sensible cost reduction excercise. Maintanence of development kits for consoles is expensive and time consuming and, given the maturity of programming libraries like SDL and Allegro, increasingly pointless. But there is likely another reason; if game developers are already building software for one linux platform it makes it easy to port their software across to other linux platforms. A fair in road may well be made into Window’s unassailable position as the platform for PC gaming.

In this way Sony, Nintendo and IBM (who are building Sony’s PS3 cell processor) get a stick with which to beat the whole of Microsoft. As long as the whole of Microsoft remains so incredibly profitable there is little chance of Sony or Nintendo out competing XBox alone. MS can always throw more money at the thing. Look at the opening years of XBox’s business plan, it took the best part of 4 years to turn a profit. You try starting a company that deliberately sells it’s products in such a way that it functions at a loss, in order to out compete it’s competitors, and see how long you survive before your government’s competition commission comes knocking at your door. So it’s unlikely that the PS3 can out compete XBox on market share terms alone and supporting linux might well be a good bet to financially attack Microsoft as a whole. A similar line of reasoning applies to Sun’s involvement in Open Office. They aren’t intrested in giving you this free from the goodness of their heart. As long as MS Office remains the market leader for business work then Windows is the OS you have to have for business. If Sun and IBM can provide a free office solution that is just as good or better, then the need to have Windows as your OS evaporates. Supporting linux and the Open Source movement is a direct attack on the whole MS (closed source) business model.

And now for something tangentally related – Trusted computing. I can not shake off the notion that the current MS model for DRM and trusted computing is utterly insane and self defeating. MS made their fortune by enforcing a completely open hardware market. Their software would run on anything that was IBM PC compatible so hardware vendors were left to try and out compete one another. Computer costs tumbled. This is more or less the reason that the computer you’re reading this was as cheap to buy and powerful as it is. And every computer had a copy of some MS software attached. Their trusted computing model enforces a system where hardware manufacturers AND developers have to pay them a licence fee. This is a fairly risky strategy, always be careful not to bite the hands that feed you. If developers, hardware manufacturers and customers don’t want it it could all come crashing down around their head. If I spend £1000 on computer hardware I expect it to do exactly as I tell it. I don’t expect my OS vendor to have any say in what happens with my computer. Renault don’t get a say in which roads I get to drive down. Insult your customers enough and they will jump ship.

I doubt any of this adds up to Microsoft losing their position of market dominance any time soon but I suppose the moral of the story is don’t be complacent.


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