Four years. That’s how long it has been since the U.S. government first went after Microsoft Corp. for anti-competitive behaviour. The case eventually led to the high-profile ruling by U.S. Judge Thomas Penfield Jackson this week that, in turn, sliced $80-billion or so off the company’s market value.
By Internet standards, four years is an awfully long time. Companies that have been around that long are considered old guard, if not has-beens. Firms that have been around for a decade are dinosaurs.
It’s difficult to see Microsoft as a dinosaur, since it is still a standard-bearer of the computer age.
To the U.S. Justice Department, Microsoft is still the 900-pound gorilla of technology — standing astride the industry like a colossus, using its massive market power and PC dominance to crush helpless companies in its iron grip.
But there is another Microsoft visible between the lines of Judge Jackson’s ruling: a vast company built on a relatively narrow line of products, looking at a future in which its business model has become largely irrelevant. Seen from this point of view, Microsoft’s behaviour — illegal or not — appears to be fuelled by one overwhelming force: fear.
Bill Gates started to feel that fear in 1995, after it had become obvious that Microsoft was missing the Internet boat, and he did his best to try to turn the immense company around with an internal memo titled “The Internet Tidal Wave.” That led to the actions Judge Jackson describes, including the attempt to take over the browser market from leader Netscape Communications Corp. (now owned by America Online Inc.).
As the judge points out, however, despite spending billions of dollars and giving its software away, Microsoft’s attempt never entirely succeeded: After almost five years, it has about 65 per cent of the browser market — a pretty skinny monopoly. And no one really seems to care much any more about which browser they use.
Harry Fenik, a vice-president at consulting firm Zona Research in Redwood City, Calif., told Wired News recently that when his company asked a question about browser preferences in a recent study, “the most consistent response we got was ‘I don’t care.’ “
In reality, the browser wars were just a sideshow, a pale reflection of the real attraction — the Internet itself. Microsoft may control the software used to access the Internet, but it still rules very little of what users see or do once they are there.
For example, despite spending billions and Mr. Gates’s threat to “bury” America Online, the Microsoft Network failed to halt AOL’s climb to supremacy in the on-line service market.
What kind of industry titan lets that sort of thing to happen? The same kind that, despite years of trying, has yet to dominate the market for the server software that powers high-traffic Web sites. Free software from a company called Apache has more than 60 per cent of that market, with Microsoft a distant second.
Even worse, the jewel in Microsoft’s crown is in danger as the system that operates the computers used to roam the Net threatens to become less important.
Inside the Internet, “the platform, like Windows, is irrelevant,” Michael Sheridan, a vice-president at Novell Inc. in San Jose, Calif., told The Wall Street Journal. “We’d be crazy to discount them [Microsoft] but the world has changed.”
So far, Linux — the open-source software some see as a new threat to Windows — seems largely immune to Microsoft’s influence. And the combination of Linux with the emerging world of wireless, handheld, always-on and non-PC Internet devices could be Bill Gates’s worst nightmare.
This week, for example, AOL announced at the Internet World 2000 conference in Los Angeles that it plans to make a range of devices that provide access to the Internet. They include a unit for the kitchen and a tablet-style, handheld device — and both will operate using Linux. “The Windows era is dead,” wrote analyst Kevin Prigel of StreetAdvisor.com after the announcement. Dell Computer Corp. also recently said its Web site server PCs will now be available with Linux pre-installed.
Just as it has failed to crush AOL, Microsoft has also failed to extend its desktop dominance into the handheld and wireless markets. Despite hundreds of millions of dollars spent designing a smaller version of Windows (now called Pocket PC) for use on handheld organizers, Microsoft has so far been unable to take control of the market away from Palm Pilot.
Similarly, cellphone companies such as Nokia Corp. and Ericsson Inc. have formed a partnership to promote a standard for using a digital telephone as an Internet device, but there, too, Microsoft is trying hard to play catch-up.
Obviously, a company with Microsoft’s massive storehouse of cash and industry contacts isn’t out in the cold completely.
Its Microsoft Network services on the Internet get a fair bit of traffic, coming in third behind Yahoo and AOL; it has a couple of wireless partnerships; and it has its own plans for a tablet-style device like the one AOL announced. It also continues to push WebTV, although its $425-million investment hasn’t really paid off.
Microsoft’s biggest foot in the door of the high-speed Internet era is probably its investment in AT & T Corp. and its cable operations.
But analysts say Microsoft’s nightmare scenario could soon come to pass: people connecting to the Internet through their handheld, pager, tablet, kitchen appliance or phone — none of which use Windows or any variation of it — and surfing Web sites powered by Apache and Linux.
The closest these surfers of the near future would get to Microsoft is when they collect their free Hotmail or drop by the CarPoint or Expedia Web sites.
And what if they want to use a word processor or spreadsheet?
Instead of dropping $300 for a piece of software they need once a month, they could seek out one of the new “application service providers” that offer, for a modest fee, remote access to such software.
Sleep tight, Bill. Mathew Ingram is The Globe and Mail’s Western business columnist and a confirmed agnostic on computer operating systems.