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The Pulpit
The Pulpit

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Weekly Column

Of Mice and Microsoft: Linux Takes Another Step Forward While Steve Jobs Attempts Rodentophelia

Status: [CLOSED]
By Robert X. Cringely

It was a media event. Atop a parking garage at Microsoft's outpost in Silicon Valley, Linux users gathered to demand refunds for the copies of Windows that had long been erased from their hard drives. Microsoft served iced tea and lemonade, but nobody came away with any money. Figures.

Until a few years ago, Microsoft sold Original Equipment Manufacturer (OEM) licenses for DOS and Windows based on the idea that manufacturers paid the same fee whether they loaded the system software on every PC sold or just some of them. Since they were paying for it either way, this means the PC makers loaded DOS and Windows on every machine, often to the exclusion of alternate operating systems like IBM's OS/2. This technique led to Microsoft's first brush with the Feds in the early 1990s, and resulted in a consent decree that made PC makers pay only for the copies of DOS and Windows actually loaded on individual PCs. Only nothing really changed.

These folks atop the parking garage in Foster City were protesting the fact that most PC makers still load Windows on every PC they sell, whether the customer actually uses that software or not. So the consent decree didn't really accomplish anything except perhaps in the minds of Microsoft's lawyers. In a sadistic bit of legalese, they finesse this point with the Windows license agreement. To use their new computers, purchasers either have to click on the box saying they want this copy of Windows, which they won't actually own (Microsoft does, this is just a license to use the code), and that they'll follow a long list of prescriptive behaviors that nobody can tell you because nobody actually reads the license.

If you click on the "no" box, or the "Hell no!" box, which is even better, your new PC does nothing. This is the point where the fine print says you can get a refund from your hardware maker for the Microsoft software you are promising never to use. The problem with this is that hardly any PC companies have procedures in place to actually give back the money.

This part confuses me. Why can't the PC companies sell machines without Windows? There are at least eight million Linux users in the world, and millions more users of alternate OSs like DR-DOS, OS/2, PC-DOS, FreeBSD, NetBSD, BSDi, QNX, BeOS, you name it. We are probably talking about 12-14 million PCs, nearly all of which at one time had on them a copy of DOS and/or Windows that the purchaser didn't really want. This is about five percent of the PCs in actual use today. If I ordered from Dell and wanted my PC to have a video card that less than five percent of buyers choose, could they give it to me? Sure they could. If I wanted Microsoft Office Small Business Edition, could they give it to me? Sure they could. If I wanted Windows NT Server, which sure as heck is on less PCs than is Linux, could they give it to me? No problem. So why can't they build me a PC without Microsoft system software?

Here's where we get into some wonderfully clever excuses. My favorite is that the PC manufacturer's diagnostic and testing software requires Windows. In most cases that diagnostic code requires DOS, not Windows, but I'd still give the manufacturer the benefit of the doubt IF THEY ACTUALLY TESTED ANYTHING. Remember how the ads used to talk about PCs that were "burned-in for 48 hours?" They don't do it anymore. In this age of statistical quality control, most PCs aren't turned on until you turn them on. The system software isn't loaded in the laborious format-and-copy routine that you and I would use; it is cloned from an identical drive in a copying device that isn't even a PC. That's how they clone that drive with Windows NT Server, but somehow can't seem to clone Linux.

Microsoft loves this. They loved the demonstration in Foster City. At a time when the company is under fire from the Feds, here is evidence that there is viable competition for Windows. And for a change, Microsoft isn't the bad guy, since it is the PC manufacturer who is responsible for giving that difficult-to-get refund. "Blame your PC maker!" said Microsoft. We're with you! Have a lemonade!

What's actually going on here is fear of Microsoft keeping PC companies from helping their customers. These companies have no reason in the world not to have a system in place for refunding that money except, I suppose, that it would show the greatly differing deals Microsoft gives to its OEM friends and enemies. The fact that to a company they don't suggests that they all fear Microsoft reprisals. Doesn't everyone?

But I'd say this particular phenomenon is going away. Everyone from IBM to HP is suddenly cutting Linux deals. And with Microsoft's at least public endorsement, now the same companies are going to find a way to give software refunds, too. It should be fascinating to compare the amounts.

From a media event to a backroom deal, let's turn now to something that is far more significant even than scarfing free drinks form Microsoft. There is a rumor amok that Apple is about to be bought by Disney. It is actually supposed to be a three-way deal with Disney buying both Apple and Pixar for about $12 billion. Steve Jobs would go from being interim-CEO-for-life at Apple to heir apparent at Disney. I have no inside information on this supposed deal, but as always, that sure won't keep me from speculating on it.

First, let's look at this from the perspective of Steve Jobs, then of Michael Eisner, the Disney CEO. I am taking the perspectives of the company leaders because any deal like this would be personality-driven. It makes no business sense.

Steve Jobs is interim CEO at Apple for several reasons. One is to make him unfireable. Another is because there has been to this point no viable endgame for Jobs at Apple. The perfect scenario, of course, would be for Jobs to make Apple the next Compaq, but that won't happen. It simply can't happen. The economics isn't there to support such an outcome. Apple will always have higher development costs than Compaq. This is not going to change. Jobs has made it appear to change somewhat by gutting the Apple R&D budget to improve earnings, but this has been a conscious decision for the company to consume its seed corn. It cannot last. My sense has always been that Jobs was positioning the company to be sold.

Jobs likes the idea of being a movie maker, but he doesn't like Pixar's dependence on the success of specific pictures. The outfit simply doesn't have economies of scale to allow it to easily survive a flop. That's why Jobs would love to roll Pixar and Apple into Disney.

Jobs is envious of Ted Turner. Turner sold his company to Time-Warner and in the process became T-W's largest shareholder and biggest gadfly. Ted Turner can do anything he damn well pleases at Time-Warner. Jobs's 60 percent of Pixar and his substantial Apple options would make him the largest shareholder in Disney. Then he could out-Turner Turner.

But why would Disney — or more correctly Eisner — be interested in Apple and Pixar? Buying Pixar helps shore-up Disney's animation operation, make the company look smart to the market at a time when Disney hasn't been looking so smart, and gets Disney out from under its current contract with Pixar. Jobs did a good job of negotiating that deal, and Disney is feeling had.

Moreover, Disney is both stalled and worried about new technology hurting its existing businesses. Apple's software expertise — especially QuickTime — is attractive. If Disney could flog Apple's hardware business to Sony or some other Asian manufacturer, this might even make some sense.

Michael Eisner needs an heir apparent. After the death of Frank Wells, he turned to superagent Michael Ovitz for that role. Ovitz, like Jobs, is a svengali. So Eisner likes charismatic salesmen. This is the single greatest reason why I tend to believe this rumor. Eisner could not resist Jobs in seduction mode.

The irony in this is that Gil Amelio, Jobs's predecessor at Apple, literally couldn't give the company away. Yet if this deal actually happened it is predicated on Apple being worth about $7 billion. This would have made Apple's turnaround the best and most spectacular in U.S. corporate history. Now THAT'S an endgame.

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