Microsoft has had a relatively rough ride of late. Windows XP has gone down like the proverbial lead balloon as users are objecting to paying out for yet another load of Office trivia, the Passport security service is under attack and the vulnerability of the operating systems and network have become a hackers dream.
It is fairly certain now that the heyday of the PC is over and while there will still be a lot of business, the obscene profits and growth of the last ten years cannot be maintained. One company that seems to agree with this conclusion is Microsoft themselves and Bill Gates in particular. They therefore need to define and dominate the next big market and that has be Internet biassed. Never known for hanging back, Microsoft are going for broke, they are aiming to take over the Internet and to control it in the same way that they dominated the PC software.
Taking over control of the Internet and the Web is no trivial task. For a start the competition, particularly AOL, has got a head start on them and arch rivals Sun and IBM are not in favour! Before the last US presidential election, Microsoft were under serious pressure from Government legislators to bring down the monopoly that they abuse, but the contribution to the Bush government must have been appreciated because they no longer fear anti trust legislation. As a result they feel that they can redirect the company into Web dominance. Make no mistake, this is not just another software product development, they aim for another monopoly.
The thought of a Microsoft controlled Web is frightening. It is the monopoly that has left the PC world with such pathetic products and the same would happen to the Web. Innovation would be stifled. One would assume that the user base has had enough of Microsoft by now and any attempt to take over the Web would be impossible. But even though there is a lot of vocal opposition, there is a chance that the so-called .NET strategy will succeed, simply because Microsoft are as skilful at marketing as they are incompetent at software development. The fact of life is that there are lots of people who make a living out of using Microsoft software to the exclusion of anything else who quite naturally will follow any Microsoft approach, but even more important, Microsoft are reputed to be able to call on over $20 billion to buy their way into control. Further the fact that Microsoft is currently well behind in the Web services market is not very significant, they are usually behind in the beginning, make a mess of their early efforts but eventually steamroller themselves to the top. Think of Windows (developed by Xerox), Excel (versus 1-2-3), Word (WordPerfect), Power point (Harvard Graphics), etc.
There is however still a lot of hope that Microsoft can be stopped. Not only will there be strong opposition from the Internet community and the normal IT companies, Sun and IBM in particular and probably HP/Compaq to some extent, but also Media companies, AOL in particular. Another big media player, Yahoo, is struggling and a Microsoft take-over is always on the cards. However the biggest hurdle that can bring Microsoft to heel is closer to home. To succeed in a Web take-over, the company has to change very significantly.
The key changes that Microsoft are betting their future on are a change from a one-off- payment to a fee based financial model and a shift in emphasis from a software vendor to a services provider. True Microsoft will not necessarily operate every .NET server themselves, but any licensed operator will certainly be in Microsoft’s pocket. This means a massive change, which will have serious consequences for the employees, now reportedly very discontented by the impact that the fall in share prices has had on the value of stock options. Already Microsoft are applying new pricing strategies, based on annual (or monthly) income, to new releases of conventional PC software. This has been met with antagonism from the corporate world, most of who think that they pay too much already. This is a big gamble by Microsoft since they are vulnerable to a long term shift away from Windows towards Linux and OSS, but it shows the determination to re-invent themselves in this new Web services company style.
