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Weekly Column

It's Deja Vu All Over Again: We've Seen Microsoft's New Live Strategy Before

Status: [CLOSED]
By Robert X. Cringely
bob@cringely.com

An upstart Internet company threatens Microsoft and the entire Windows platform. The basis of that threat is the new company's almost effortless command of Internet technology, which can be used to replace Windows with a browser-based architecture to supplant at will any and every part of the venerable operating system. The same goes for Microsoft Office. Bill Gates is intimidated and therefore inspired. Redmond quickly changes course, abandoning a monolithic and exclusive product strategy for a dynamic and inclusive one that embraces outside technologies in an attempt to out-start the upstart and thereby retain control of the software industry.

That about covers last week's announcement by Microsoft of Windows Live and Office Live to counter the ambitions of Google, right?

Nope.

It actually describes December, 1995, when Bill Gates awoke over a weekend to the potential of the Internet and the threat posed by Netscape, the Google of its era. Microsoft's answer was to license Java from Sun, put Java in Internet Explorer 3, which it then gave away for free (Netscape cost money), and finally to turn MSN from a money-losing online service into a money-losing Internet portal.

Welcome to 1996 as history repeats itself. What was happening at that time with Microsoft, Sun, and Netscape feels a lot like Microsoft, Sun, and Google today.

And the set-up IS similar. Microsoft, fat and complacent, was caught up in its own internal technical bickering and unable for several years to release a new version of Windows. Meanwhile, Open Source Internet technologies moved forward and broadband became, if not ubiquitous, at least the norm. While folks in Redmond argued over what new features to put in Windows and Office, those very features became available in the form of web services. Now all it takes is a powerful integrator to put everything together in a package that isn't monolithic in the sense that Windows is, but just works well together. Google is that most likely integrator.

What scares Microsoft about Google is its lack of clear advantage over the younger company. Microsoft has always counted on market share, money, and muscle. Windows market share remains immense, but Google services transcend operating systems, making it impossible for Microsoft to compete with Google the way they did with Digital Research's CP/M, IBM's OS/2, or Novell's Netware. Microsoft has plenty of money, sure, but so does Google. Google may have less than Microsoft, but they have enough to do whatever they choose to do, and Wall Street has shown it will give Google more money anytime. As for muscle, Google matches or exceeds Microsoft brain-for-brain, and has the same kind of outsized corporate persona Microsoft has, though minus the bad-guy image of a monopolist bully.

Google has the mojo.

This actually makes Microsoft the underdog in this current battle. And Microsoft is eagerly embracing that role because doing so motivates the troops while negating some of the company's bad-boy image. Besides, it fits Microsoft's corporate paranoia that has had the company ALWAYS feeling that it was an underdog. What the world saw as bullying, Microsoft saw as survival tactics. Of course, bullying is still bullying no matter the excuse.

We're early in this particular game, but so far events are transpiring just as they did in 1996. Microsoft has seen the light, come up with a new strategy, and is attempting to race to the front so it can guide the industry in the direction Redmond wants it to go. But as in 1996, it is one thing to announce a product strategy and another thing to deliver one. Windows Live and Office Live don't have much to show yet, and most of what they do show is salvaged from here and there and given a new name. Microsoft is 12 to 18 months from having viable product offerings in this space UNLESS they pull out the old checkbook, which they will.

Here's how it goes inside Microsoft:

Bill Gates: "We need web services!"

Jim Allchin: "What are you talking about? We'll just build them into Longhorn, which will ship in 2003, 'er 2007."

Bill Gates: "Off with his head!" (Allchin is carried from room.)

Bill Gates: "We need web services!"

Ray Ozzie: "I'll give you web services. This is Microsoft, home of a million technologies. I'll be right back." (Leaves room.)

Ray Ozzie: (returning) "Sorry, no web services after all. They were perceived as being in conflict with Windows and Office and therefore purged."

Bill Gates: "Bring me the checkbook!"

And so Microsoft business development minions are scurrying everywhere looking for companies to buy that have products to redeem the promises Microsoft has already made.

Google, meanwhile, prefers to build, not buy, though if buying will gain them six months, then they'll buy. But much of what Google is proposing to do is fairly mundane stuff made only exciting by the scale upon which they propose to do it -- a scale that right now is probably beyond Microsoft's ken. Google's core expertise isn't so much searching or advertising as it is the creative clustering of cheap computers. Microsoft will probably end up buying similar expertise, though they haven't shown yet that they even know where to look for it.

Now here is what will and won't happen over the next several months. Microsoft WILL claim to open its APIs to promote competition and play nicer with the world. But they WON'T actually do it. They will claim to have an open standard, but there will be proprietary extensions. In announcing Microsoft's Live strategy last week, Gates was essentially describing the worst fears of its competitors while at the same time begging companies not to sue him. But for all the hype this is hardly a new goal for Microsoft. The company has wanted to go this route since 1999, but has been stymied by a simple lack of execution. Microsoft wanted then and still wants today what they used to call "stateless computing" -- something they have always thought of in economic, rather than technical, terms. This is .NET reformulated. But for the moment it is pure vaporware.

The big question for Microsoft is whether they can compete in this new market without having to cheat? I don't think they can. Putting it simpler, since all cheating isn't illegal, can Microsoft really implement Windows Live and Office Live without breaking the law? I think they CAN, but I doubt if they WILL. I think that in Redmond the stakes will ultimately be perceived as too high not to cheat. Or maybe they simply don't know how to pay fair. Either way, expect trouble.

Now back to Google.

Don't forget that Sun is now officially in bed with Google. Sun COO Jonathan Schwartz's latest blog entry basically lays out the strategy (it's in this week's links). Combine his post with Google registering the domain "gdrive.com" and you'll see where they are going -- an Open Office thick client that receives "added value" from integration with Google's network services. Sun and Google are obviously and publicly in bed, but there is another player involved: IBM. In the Massachusetts legislature, where Microsoft is trying to get a law passed to keep the Open Document format from prevailing, the corridors this week were teeming with lobbyists from Big Blue.

Obviously Sun, Google, and IBM are all working together on this on some level. They all believe if they can break Microsoft's grip on Office users, then they have a shot on lessening Redmond's operating system dominance.

And where is Yahoo in this? That's what I am wondering.

All this wheeling and dealing is actually good for consumers. We're about to see two waves of technical change over the next three to four years that will completely change the landscape of computing. Microsoft will spend whatever it takes to retain control, which could mean ANYTHING. Seriously, ANYTHING. Windows for free? Don't be surprised if it happens.

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