November 26, 2003

Why Microsoft Won't Be the Next GE

I Cringely speculates about where Microsoft goes next and concludes that it looks a lot like GE, a conglomerate in a huge number of different businesses that never dies because there's always a some part of the empire pumping profits back to the stockholders and funding the reinvention that all businesses have to undertake to stay profitable in the long run.

To create this makeover, Microsoft needs cash, lots of cash, billions in cash and more billions in stock value to acquire the businesses needed to ensure its permanent status on the world business landscape. It doesn't have enough yet so where is it going to get it?

Cringely proposes that MS is cannibalizing its independent consulting partners and pushing everybody into an MS support contract, creating DRM to finally end piracy of all types (but especially its own software), and generally ensuring that everybody has to be part of the great MS revenue stream or they simply can't get anything done.

The problem with Cringely's thesis is the idea that we'll all go along with it. Cringely notes "We live in the age of branding and the Microsoft, Windows, and Office brands are among the best-known in any industry, yet how many people actually buy software from Microsoft BECAUSE it's from Microsoft?" He misstates the situation. For something on the order of 40% (and growing) Microsoft products get purchased despite being from Microsoft.

Microsoft has become an anti-brand for these people for two reasons. First there are the well known technical problems that arise with Microsoft products. But increasingly more important, Microsoft business practices, especially Microsoft legal and licensing are viewed with suspicion by an increasing number of people. For the happy few, Apple's Macintosh or Linux provide a welcome escape but for many, they just don't see how to escape the clutches of MS in their business software.

People don't like feeling trapped in an abusive situation and you can be sure that the Microsoft label will be the kiss of death as it expands out to areas where they do not already have significant market penetration. Microsoft used to be the insurgent against hated IBM but have proven themselves to be even worse than the IBM of old. Microsoft will never again be able to play the scrappy underdog.

The real question is how and when will people move from being trapped in an MS world to liberating themselves from the clutches of MS legal and the fear that their OS vendor is perfectly capable and willing to sabotage their software if they get in Microsoft's way (a la DR-DOS and Lotus 1-2-3).

Posted by TMLutas at November 26, 2003 06:22 PM