Comment Articles

Microsoft: The existence of alternatives changes everything

Published: 15 Apr 2004 14:20 BST

The announcement that US regulators want to prod Microsoft to share more information with its partners underlines how things have changed for the software giant.

I remember the siege mentality in Silicon Valley during the first Microsoft trial. The company's browser bundle and its battle with Netscape seemed to make competing against such a dominant, cash-rich rival almost impossible. Who was going to be next? It became a cliché to talk of Silicon Valley venture capitalists asking "the Microsoft question" - how will your new technology fit into the Microsoft ecosystem, given the impossibility of fighting City Hall and taking on Redmond directly?

People genuinely questioned whether it was going to be fun doing technology anymore, given Microsoft's ability to provide a solid me-too in any market it wished to enter. Why innovate if you were going to end up competing against a vanilla version from Microsoft with far more marketing muscle and a huge Windows installed base? The slap on the wrist that Microsoft received after the Department of Justice found against it seemed to confirm all this doom and gloom. Microsoft had won.

It doesn't feel like that now. The aftermath of Microsoft's second trial in Europe sees Microsoft not as triumphant monopolist but as beleaguered incumbent. The company didn't expect to lose this suit, but it did, and it now faces a long and distracting appeals process. It is throwing around millions of dollars to end patent disputes with its bitterest foes. It says it has changed. It wants to come in from the cold. It's fed up with being treated like a bully. I asked the incoming head of Microsoft UK if there was one thing that he'd regretted in his eight years with the company. He replied at once: "The Department of Justice trial. We learned a lot from that."

Business Week frames Microsoft's position as a rite of passage, with a cover story that asks whether Microsoft can get over its midlife crisis. But that doesn't feel right to me. This isn't a rite of passage. It's a different world, and one in which Microsoft's familiar moves look increasingly out of place. Several incidents during the last two weeks have left me with a nagging feeling that the game really has moved on.

Item One: We don't want to buy software
This week's launch in Europe of Salesforce.com's latest software upgrade provided one example of how Web technology can simply bypass Microsoft's monopoly. The company's logo is a red circle with a line through it over the word software -- as in, "no software here". Its marketing capitalises on the pent-up frustration and irritation with complex software by offering a piped CRM application through a Web browser as a service for a monthly fee -- with a 30-day free trial. You can pay over the phone with your credit card, and no salesman will call. If your salespeople have Web browsers, it's pretty much deployed.