Competition, NT Server and “Baby Softs”

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The computer industry thrives on change. That’s a good thing, because we’re probably going to be looking at a lot more of it over the next couple of years.

There are several factors that are ensuring this trend continues, including the explosion of Internet commerce, the recoil effect of Y2K mitigation efforts and the Linux wildcard. But an equally influential factor will be the new and different Microsoft that emerges from the government’s antitrust trial.

The changes that I foresee will be as fundamental as everything we’ve experienced during the past 10 years. These changes, too, will impact our society -- and subsequently the worldwide society -- in ways yet to be realized. Consider the possibilities:

Internet Driven Changes: Much has been written about how the Internet is changing the way we work and live. In the most basic sense, the Internet is nothing more than a delivery mechanism over which we send the same content that we used to send through other channels, albeit, with much faster delivery. Is it coincidental, or does the Internet simply reflect the hustle-bustle lifestyle that characterizes life in North America?

The Internet will revolutionize our life at home in a far greater way than just surfing the Net in the evenings for entertainment. The next big thing will be home networks. In fact, International Data Corp. says 34 percent of homes that have PC technology have two or more active systems, and the number of multiple-PC homes is growing faster than the penetration rate of PCs. Right behind home networks comes 24x7 connectivity to the Internet -- without dial-up -- a luxury already available to users with cable modems.

Y2K Void: Like it or not, the Year 2000 mitigation effort is reaching its annoying tentacles into every segment of computing. ENT’s parent company has it own problems, including a phone system that won’t function next year, desktop applications that need to be upgraded, and a few other inconveniences. Upgrading these systems is consuming budget dollars and manpower that could have been applied to other technology needs -- needs that have to wait until next year. Luckily this epic repair job is coming to an end. Look for 2000 to be a year where many interesting new projects get initiated.

The Linux Wildcard: There’s an important lesson being taught to Microsoft by Linux, and that’s that the tables can be been turned more than once. Back in the 1980s, Microsoft, Intel and PCs were the solutions that wrested our computing destinies away from the domination of IBM, Digital Equipment and Hewlett-Packard. A couple of brash young startups provided an alternative and a bottom-up way of controlling computing needs. Some users migrated to Microsoft because it was the underdog, the people’s champion.

Somewhere along the way, Microsoft has accidentally transformed its image and became today’s IBM. Linux is exhibiting some of the same grass roots adoption trends that Microsoft rode to success during the 1980s. Now Microsoft has to compete with a "process" rather than a vendor -- an interesting problem.

Post Antitrust Microsoft: Irrespective of the outcome, the antitrust trial will forever change Microsoft as we knew it. If you consider the rocky road that the Microsoft defense team has been traveling and its seemingly bungled defense presentations, it appears the outcome will be worse rather than better.

Outcome 1: Microsoft gets broken up. Extreme? Yes, but not out of the realm of possibilities. Microsoft already breaks down its financials into platforms and applications. Applications includes the Office suite and interactive products; platforms includes the operating systems, developer tools and the BackOffice suite. These two chunks are roughly equivalent in size for Microsoft -- about $7 billion in revenue each. But it could be worse if the BackOffice products and developer tools were excised from the operating system group, thus creating three "Baby Softs."

Outcome 2: Microsoft wins outright and is vindicated. Would the company go right back to a policy of embrace, extend and exterminate? Maybe, but only if Microsoft was so brazen as to believe it couldn’t be hauled back into court again. I don’t think they would go back to business as usual. Consider the toll this trial has taken on upper management. I can’t believe the Microsoft executive team would willingly invite another round of stress and conflict with the DOJ, and in the process zap the executive team’s mental bandwidth.

Outcome 3: Microsoft is ordered to pay some form of retribution to parties injured by its practices. This seems the most unlikely outcome if for no other reason than the logistics of defining what companies and individuals were truly injured. Good luck with that one.

At the funeral for my 87-year old grandmother, the minister presented a eulogy that observed how much the world had changed since she was born in 1910. Back then, there were no antibiotics, no talking films, no supermarkets, no satellite weather images, and of course, no computers. As distant as 1910 seems to us, so will the early days of the PC seem to our grandchildren. This is history in the making: Don’t be surprised when your grandchildren ask what it was like during the Internet revolution in 1999.

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