InformationWeek
Defining The Business Value Of Technology
February 14, 2000
Changes Have Been Many At Microsoft In Past 12 Years
My first day on the job, I covered Microsoft's delivery of the first development tools for OS/2, and my first interview was with Steve Ballmer, who was then VP of the company's systems division, and is now, of course, CEO. I remember wondering what this guy was on. He had to have been the most enthusiastic and energetic systems guy I'd ever seen, and he was pumpin' OS/2 like a religious zealot.
Back then, IBM was considered invincible and no one doubted that OS/2 would soon become the new desktop standard. IBM was instead about to go through the most wrenching period in its history. The company survived, and today it grosses even more than it did back in 1990, but it lost control of the PC business, a failing that continues to plague the company.
Indeed, since 1988, a lot of companies have seen their stars fall, changed names and product lines, or been bought out. Where today are Gupta, Ashton-Tate, Borland, Central Point Software, or Aldus, to name just a few? Lotus now is part of IBM. Corel has scooped up WordPerfect and Borland (later renamed Inprise). Aldus is owned by Adobe Systems. The list goes on. In the meantime, despite all the companies that have vanished, thousands of new ones have been founded, leaving us with more technology businesses than at any point in history.
When I began covering Microsoft, I left a consulting job where one of my tasks was to use what we now call the Internet. It was as friendly and easy to use as the Unix command line you used to get to it. You had to "ftp this" and "telnet to there," and there were no pretty graphics. Today, that's all changed, thanks to the visionaries who invented the Web and other technologies, as well as a handful of folks at the University of Illinois in Urbana-Champaign who came up with something called Mosaic, the first real browser.
Now, we're seemingly in the midst of a new gold rush. World economies are changing with E-this and E-that, and it's getting harder for established high-tech companies such as Microsoft to attract good young talent because job candidates can do better by going to a dot-com startup. The wide and rapid acceptance of the Internet has even achieved something that everybody dreamed about and nobody had been able to accomplish: universal connectivity. One of the most common phrases heard nowadays, whether in a social or business setting, is "What's your E-mail address?"
Out of this gold-rush mentality come two other important trends: an increase in the pace of innovation and a magnification of capitalism's tendency toward consolidation in maturing markets. WorldCom bought MCI. AT&T bought TCI, renaming it AT&T Cable services. America Online bought Netscape and, now, Time Warner. Suddenly, everyone is in the communications business, whether they're content providers or supplying the pipes and other infrastructure.
Microsoft has also made content plays, but it hasn't been so successful in breaking out of its traditional realms of operating systems and applications. Microsoft Network has turned into, as AOL's CEO Steve Case once so aptly predicted, "Microsoft's Vietnam." Windows CE may yet appear on TV set-top boxes, but it's in distant second place on handheld PCs. While some of Microsoft's content-oriented operations are doing well, others have been long-term "investments," meaning they're still financial black holes.
Meanwhile, Linux has garnered a ton of support and credibility, especially from the largest technology players such as IBM, thus threatening Windows NT/2000. PC vendors are making so-called "Internet appliances" available sans Windows, without fear of retribution from Microsoft. People are also beginning to access the Internet from their cell phones as well, and at last month's Consumer Electronics Show, the latest rage was watches with cell phones and browsers built in.
Speaking of browsers, Mozilla's open-source version of the Netscape browser is available for downloading, albeit in an alpha version. Still, during the past year, the Mozilla project had been feared dead because it was such a huge code base that some of the organization's founders believed it would never yield a functioning product. Now the upgrade, and AOL's ownership of Netscape, may breathe new life into the browser wars--a war Judge Thomas Penfield Jackson has already written off as lost to Microsoft. In fact, AOL-Time Warner could declare a new Netscape browser as the standard on its online service in the not-so-distant future, which would wipe out much of Microsoft's browser dominance. Microsoft is holding off on the latest beta of Internet Explorer to rethink its basic direction, and rumors are flying that the company might decouple its browser from Windows in a move to get the government off its back.
When I first began covering Microsoft in 1988, I had no reason to doubt that antitrust laws still worked. That doesn't seem so clear now. Much in the industry has changed radically, even in the year and a half since the government filed its latest lawsuit. And if you look back just a little further, to when Microsoft's competitors complained to Congress that Microsoft had to be restrained or it would soon control the Internet, in hindsight, that was a questionable assertion even then. Today, it seems impossible.
So it appears to me that, even if Microsoft weren't already fighting for its life in Judge Jackson's court, it certainly looks like it will be out in the marketplace. The judge gave lip service to many of these "potential" threats in his "finding of fact" in November, but then discarded them all as too far in the future to pose any real challenge to Microsoft's dominance. Using the 20/20 hindsight provided by the past dozen years though, "living in Internet time" may mean that the accelerated pace of change will outstrip even the fastest-moving justice system.
his week marks my 12th anniversary of covering Microsoft. Back in February 1988, it was a whole different industry. Windows was still unusable shelfware. DOS ruled, and companies such as WordPerfect, Lotus Development, and Borland International were dominant players.
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