The Path Forward for Microsoft

Later this month, Microsoft will launch what I anticipate will be the last dominant version of Windows. It’s just hatching from its infancy, but the next generation of computing is upon us. Others have written more intelligently about the evolution of the PC and can make subtler and more powerful distinctions about the various discrete eras of personal computing.

Whatever the others may be, some of those eras were the advent of the GUI and the advent of the Internet. We’re now entering a second era of the Internet, where the Internet becomes the dominant medium for all media, so to speak, and where the innovations and nuance of the Internet are not resulting in second generation ideas.

Microsoft will not be able to remain as dominant in this next era for many, many reasons.

First, Microsoft was late to the last generation, the Internet generation. Internet Explorer didn’t even exist during the first years of the web. Microsoft had virtually zero Internet enabled applications and only a company-wide memo by Bill Gates identified the Internet as the future and re-focused the company.

They were also late to the GUI. The first lame version of Windows did come out in 1986, but that was 2 years after the Macintosh and several years after the Apple Lisa and the Xerox.

They didn’t invent the GUI, and they didn’t even invent any single Internet app. They copied search. They copied chat. They bought in to webmail. They copied maps. They copied the browser.

These products have all been sucessful because of Windows. It makes Microsoft’s copies easy to use (just like it made Microsoft’s copy of WordPerfect run, and Microsoft’s copy of Lotus 1-2-3 and Microsoft’s copy of …. well, I think they might have invented PowerPoint and Flight Simulator…).

But now most of what you can do in Windows, you can do on Linux, for free. You can run OpenOffice on Linux. Google’s stuff too. Ad-based software and opensource are taking over what used to be the totality of the computing world: the desktop. In other words, desktop software is no longer a revenue stream. Sic transit Microsoft Office.

These are some of the consequences of the Internet: rearranging the revenue stream for desktop software while marginalizing it at the same time. Consequentially, the OS becomes more fungible. Sic transit Windows.

Second, with one exception discussed below, Microsoft doesn’t generate content. Content is what generates revenue, to look at it, use it, and advertise it or search for it. Original content, the abstract atomic widgets of the ideas economy. The Killer App or the Killer Movie or the Killer toy and its logistics are what creates money. As these ideas are atomized into finer and finer grains, something like a word processor will be some kind of collectively generated whole composed of a series of parts selected by the user.

Third, their corporate culture is risk-averse and bloated. Bill Gates can’t write a memo and say, “We’re making Windows free in 2012 and Office free in 2008,” or “We’re going to make Windows a front-end for Linux.” It can’t happen.

Microsoft’s position in games is one aspect of computing that will erode slower. First of all, most gamers have to have a Windows PC. Linux can do a lot of stuff for work, but for play, the only thing better than a console is a good Windows PC. They also generate XBox games, the original content. They can leverage that. Microsoft=Games. Unify the Xbox and some future windows.

Governments are starting. When are businesses going to get smart and quit paying several hundred dollars per user for software that’s free? Eventually the market will make that happen.