Microsoft:
The Road Ahead
Microsoft:
The Road Ahead
by Nicholas Minns
Interinvest Review & Outlook
According
to management guru Peter F. Drucker, we are presently experiencing the first
information revolution since the invention of the printing press. Ushered
in by the advent of the computer, this revolution in information technology
has transformed the way businesses are run, the way we access and process
information, how we shop, pay bills, and the way we communicate with each
other.
No
single company in the world has so associated itself with this revolution
as Microsoft, which provides 90 percent of the world's computers with its
proprietary operating system and applications software and with 60 percent
of browsers. This means that for every ten computers sold, nine are pre-loaded
with Microsoft software. It is beyond the scope of this essay to describe
how Microsoft built this dominant positionWendy Goldman Rohm's The Microsoft
File does that very convincinglybut suffice it to say the company's
vision of a personal computer on every desk and in every home is cause for
concern. The U.S. Department of Justice (DOJ) is concerned; its anti-trust
case is currently in the courts. At the same time, Microsoft faces significant
challenges in its own field. The first comes from a new operating system
called Linux that is being hailed as a viable competitor to Windows NT in
the mission-critical systems of large corporations. The second is the platform-neutral,
network-centric model of the Internet itself that, in many ways, defies
the proprietary mindset and monopolistic practices of the software Goliath.
Is
it conceivable we are seeing the beginning of the demise of Microsoft? Before
dismissing this notion, consider what happened following Gutenberg's invention
of the printing press around 1455. The thousands of monks who had, up to
that time, laboriously copied manuscripts, were replaced over the next 50
years by a relatively small group of craftsmen known as printers. These
men were revered throughout Europe, courted by kings and princes and showered
with money and honors, just as the founders of the leading computer and
software companies are today. But, by 1580, the printers had lost their
preeminence to the publishers. Could Microsoft share the same fate?
While
holding a monopoly is not in itself illegal under the Sherman Act, the "intent
to monopolize" is. The DOJ has produced evidence that Microsoft leveraged
its monopoly to crush competition, and the hair-splitting tactics of Microsoft's
executives on the witness stand have severely damaged the company's credibility.
In anticipation, perhaps, of a conviction, Microsoft has already reorganized
the company from three groups based on technology to four geared to customer
service. As the DOJ will want to demonstrate, anti-trust law has teeth,
expect a settlement to affect Microsoft adversely.
The
Linux operating system was created by an open source movement led by a young
Finnish computer science student, Linus Torvalds, in 1991. The challenge
to Microsoft is threefold: Linux is more stable than Windows NT, it is free
(it can be downloaded from the Internet), and it is constantly being developed
and improved by an effective online community of programmers. Recently,
such computer vendors as IBM, Dell, Hewlett-Packard, Silicon Graphics and
Compaq, endorsed Linux as a platform for business applications. Intel has
shown considerable interest and SAP, the world's largest enterprise software
company (and a close partner of Microsoft), announced it will create a line
of products based on Linux. International Data Corporation (IDC) estimates
Linux commercial shipments will increase at a compound annual growth rate
of 25 percent from 1999 through 2003, faster than the total shipments of
all other comparable systems. While the phenomenon may appear recent, more
than 10 million usersfrom NASA, universities, Boeing, and the U.S. Post
Office to New York's Yellow Cab Taxispresently run Linux.
Finally,
challenging Microsoft is the rapid acceleration in the development of the
Internet. With IDC estimating the Internet will pawn a near one trillion
dollar economy over the next four years, new models of computing will undoubtedly
emerge. Already, growers are transforming into portals (your virtual home
on the World Wide Web from which you will be able to conduct your daily
business), which in turn will replace the desktop as we know it. New programming
languages like Sun Microsystems' Java and Jini will allow the development
of alternate kinds of applications. Microsoft will certainly be competing
in this vast market, but it will have to compete on quality and innovation,
not leverage.
The
cover of Bill Gates' first book, The Road Ahead, shows the author
beside an empty highway that stretches into the distance. That was in 1995.
Today, Microsoft faces serious obstacles on the road. Although the company
remains strong in many ways, its demise is no longer beyond the realm of
possibility.
Source: Nicholas
Minns, Interinvest Review & Outlook, P.O. Box 1585, Boston, MA 02104,
1 year, 12 issues, $125.
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