September 24, 2004

'Microsoft negotiates'

Author: Robin 'Roblimo' Miller

These two words were part of a recent NewsForge headline, and to me they were the two most important words in it. For many years Microsoft execs have taken an "our way or the highway" attitude toward almost everything. Now they seem to realize that, like it or not, Microsoft is not the only software company in the world, and Windows is not the world's only operating system.There is still plenty of institutional hatred within Microsoft for Linux, free software, and open source. The GPL is still evil and will destroy the software business if it continues its viral spread. But the fact that Microsoft is willing to negotiate with people who produce that evil code at all represents an admission, however grudging, that open source is popular enough with major IT users and vendors that it must be accepted as a fact of life not only today but for the foreseeable future.

Sometimes respect is better than love

Microsoft's Windows operating system and Office software dominate the world's computer desktops, but when it come to servers -- especially those that run and supply content for the Internet -- Microsoft products have not won overwhelming acceptance. While there are surely teams of marketers in Redmond working on this "problem," there is no way Microsoft can sell significant amounts of backend software to enterprise users unless it interoperates with Unix, Linux, and other operating systems.

There is no way Microsoft can unilaterally impose standards on the Internet itself. It has tried to do this in several areas, and it has failed. Like it or not, the company must respect the reality that open standards -- and open source software -- are important factors in the IT world.

Still plenty of room for Microsoft growth

The world's computer-using population is growing rapidly. Penetration in the U.S. and European markets has slowed because nearly every person or business that wants to own computers already does. Growth here is likely to be based on new features, including increased use of multimedia, which will spur broadband adoption, which will lead to more multimedia. But this replacement/upgrade market pales in comparison to potential "new user" markets in the rest of the world. China already has more cellular phone users than the United States, and cellular phones are still priced far beyond the average person's reach there. Computer penetration in China, not to mention the rest of Asia, is tiny. But Asia's population is so much larger than North America's and Europe's -- combined -- that computer purchases by only a small percentage of Asian businesses and individuals will soon make Asia a larger computer market than North American and Europe.

Latin America, the Middle East, and Africa are also rapidly building their IT capabilities. And all of these areas are great markets for Microsoft, even if Linux and open source manage to gain a higher percentage of their market share than they've managed to get -- so far -- in North America and Europe.

But there will be many conversations like this:

Microsoft rep: Our new Shorthorn desktop is not only optimized for your language but has many new graphics and multimedia tools others lack. It is ideal for your executives and knowledge workers.

Minister Lee: It looks lovely. Will it network with our Linux servers?

Microsoft rep: Of course. All our software works with industry-standard servers.

Minister Lee: What about sharing files with our Linux desktops? I've heard that your office software often produces documents that are difficult to read with standard and KOffice software.

Microsoft rep: (seething inside but not showing it) We have a new interoperability module that allows Microsoft Office to work with inferior file formats. We'll throw it in for free.

Minister Lee: Very good. We'll want to order 10 test licenses, and if all goes well we'll talk to you about buying as many as 500 desktop software packages for our new division headquarters.

Microsoft rep: 500? I thought you were going to install at least 1,500 desktops in the new headquarters!

Minister Lee: Oh, yes. We are. But most of them will be single-function terminals connected to a server that runs Linux and a custom software suite that only runs on Linux. The centralization makes maintaining and upgrading our software easy, and cuts desktop computer repair costs to almost nothing. And I ask about reading other file formats with your software because our software vendor uses zipped XML and so do we. It is good that your new office software can read our files. I look forward to testing its many fine features.

Microsoft rep: (rushing now; he needs to take a heartburn pill) That sounds like a very sensible plan, Minister. I must go now. Please call me if I can be of assistance.

Perhaps in many cases the numbers will be reversed, and only 500 computers will run Linux and 1,000 will be candidates for Windows. This doesn't matter. The important note is that in a growing number of cases, especially in Asia and other parts of the world where computer use is rapidly expanding, Microsoft will be forced to make its products work with other software and other operating systems if it wants to make sales to companies or government agencies that aren't locked into Windows, and it is likely to find many that aren't.

Note that Microsoft will still make new sales -- lots of new sales. The company will grow. It will get new users. It will no doubt bring new products to market, some of which will fail and
some of which will succeed. And as long as Microsoft grows, shareholders will be happy.

In fact, with all the new markets Microsoft is likely to open in the next decade, its shareholders are unlikely to notice -- or care -- that it will be sharing those markets instead of dominating them, and that Microsoft will be negotiating with standards-setting bodies (and open source developers) instead of dictating to them.


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