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February 20, 2008 3:23 PM

Microsoft's IBM Moment



News Commentary: Microsoft can only lose if it enters into a proxy fight against Yahoo.

Supposedly, Microsoft is ready to make a hardball maneuver to replace Yahoo's board of directors. A proxy fight would be a highly aggressive move from a company that for years sought to remake its tarnished public image. Antitrust cases on two continents portrayed Microsoft as a bully, which is a label a Yahoo hostile takeover may just revive.

Microsoft's hostile takeover means that:

  • Google and the Web 2.0 platform are successfully shifting computing and informational relevance from the desktop to the server cloud—or that Microsoft executives are concerned about the possibility.
  • Microsoft's so-called services platform isn't ready—or won't be—fast enough to hold back the shift to cloud computing.
  • Windows is an aging platform that's relevance diminishes by the day—no thanks in part to Vista.
  • Top Microsoft managers aren't confident that the company can do what is necessary fast enough to slow down the rapid shift in computing and informational relevance.

So, Microsoft is embarking on a risky acquisition strategy that stinks of desperation. The proxy fight would be a stupid action—for, if nothing else, the damage it would cause to Microsoft's public image.

But matters will be much worse if Microsoft gets Yahoo, methinks. My prediction remains: Yahoo integration will disastrously bog down Microsoft. Yahoo will be Microsoft's IBM moment, and somehow fittingly.

IBM launched its personal computer in 1981 without much competitive concern for its mainframe business. The PC wasn't viewed as a real competitive threat. PCs and mainframes were different platforms. Different though they might be, the PC made information available to more people in more places for less money. The PC shifted computational and information relevance from the mainframe to the PC.

A similar transition is underway with the PC and the Web 2.0 platform, particularly for Google as a principle platform provider. The Windows PC and Google search/advertising platform don't seem much like competitors. But the Web 2.0 platform is making more information available to more people for less money than the PC. There is the aforementioned computational and informational shift underway from the desktop to the server cloud.

IBM's well documented mistake with its first PC was licensing the operating system from another company—Microsoft. The clone PCs that followed opened wide the computing desktop platform that would eventually undermine the mainframe's informational reign. Microsoft is on the verge of making its own crucial mistake at another critical computational juncture.

Microsoft's business is built on mistakes made by dominant competitors, such as IBM, Lotus, Netscape, Novell and WordPerfect. Microsoft trampled each of these companies—and many others—when they made tactical errors. Lotus miscalculated and bet 123's future on DOS, only to never recover. WordPerfect sold out to Novell, which blundered the move to productivity suites on Windows. Particularly from the late 1980s to the late 1990s, Microsoft capitalized on competitor mistakes to build shares in markets where others dominated.

Now it's Microsoft's time to fumble—and a Yahoo acquisition would be it. I will say it again: A Yahoo acquisition will hopelessly bog down Microsoft and open up a way for Google to leap ahead. Microsoft will never recover if the integration goes as I expect. Like IBM, Microsoft won't go away. Like the mainframe, the Windows monopoly will continue.

But Windows relevance will recede before the Web 2.0 platform. Computing and informational relevance will shift to the server cloud, allowing information access anytime, anywhere and on anything. Like IBM, Microsoft will tactically blunder if it forces a Yahoo acquisition. What's the saying about history repeating itself?

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Comments (25)

Bob :

Um, Joe, their relevance has been decreasing for some time. Let's put aside the fact that you ignored the one positive scenario - they see the opportunity for Online Advertising and think it's big enough to want to go after, and just focus on your overblown and overstated negative ones. If you're correct, how is trying something bold worse than doing nothing?

Joe :

Bob wrote: "You ignored the one positive scenario--they see the opportunity for Online Advertising."

Hi, Bob,

I've covered the topic many times; please see the "Related Posts" links above. But if advertising is the ONE positive scenario, is it enough? For the acquisition, no. There's too much other baggage. Microsoft should push a multi-channel ad strategy. But Yahoo integration logistics will slow down Microsoft at a time when Google's multi-channel ad strategy is rapidly coming together. Microsoft needed to buy Yahoo a year ago.

Joe

Mark Ashton :

Joe - I think you're looking at this in an over simplistic way. Microsoft has a lot of options in terms of how, when or even if to fully integrate Yahoo into their operations.

They certainly will need to rationalize their ad services businesses but in the greater scheme of things that's not too difficult. Beyond that they have a lot of options. They could continue to operate the Yahoo portal as-is along side MSN etc. for a long time if they choose. They get the eye-balls advertiserse want. As long as they provide one ad platform the platform can server any number of sites. There are lots of half-way options for integrating other parts of the business. For example, a lot of Yahoo or Hotmail customers will NOT want to change their email addresses. That's fine. But Microsoft can (without huge amounts of R&D)integrate Windows Live ID (aka Passport) to for authentication across sites both email systems and, for that matter, both IM systems. Then they start to get all kinds of valuable data about their users. From a brand standpoint Yahoo is still very valauble. I think they're #2 in total visits with #1 being Google which isn't really a destination site...just search. That brand is super valuable to Microsoft.

Microsoft also gets a lot from injecting fresh ideas into the company. While they're seeing some executive turnover these days there are undoubtedly still too many people with the baggage of the old client/server world. Yahoo would bring more "native" Web people to shake things up.

I don't mean to suggest that integrating two companies like this will be super easy. There will be culture clashes. There will be complexity. But my point is that Micrsosft can minimize that by taking a more measured approach to how and when they integrate.

mgo :

"Windows is an aging platform that's relevance diminishes by the day—no thanks in part to Vista."

Using your above point, isn't it also part of the history repeating itself tone of your article, that IBM's horribly botched OS/2 efforts helped to ddiminish that firm's relevance and credibility as well?

Pedro Panza :

Mark;

So here's the weakness in your argument: "As long as they provide one ad platform the platform can server any number of sites."

Therein lies the rub with a corncob. There is no evidence Microsoft has managed to integrate adCenter and aQuantive into a single ad platform after working for a year.

Let's imagine now adding Panama to the adCenter and aQuantive kludge and you get a mess that will take years to integtate into a single platform.

The real shame is that Microsoft doesn't have the technology to build single platforms on the web. In fact, Microsoft has spent billions of dollars and many years and produced nothing of worth beyond some disjointed anemic "services" and no client side muscle beyond Vista and XP and neither one of them can do anything across the internet beyond IE.

So, the whole future of Microsoft depends on whether or not they can find a technology that will enable them to treat software code in a virtual and arbitrary way.

WHEN do you think they will find that kind of thing and WHERE do you think they will find this kind of thing?

38 :

"Microsoft needed to buy Yahoo a year ago."


why pay twice as much a year ago? Half price sale was worth waiting for.

Chips :

MS has been planning this Yahoo buyout for some time, over a year now. Also, the fact that Google sees this as bad for google, and bad for the internet, should tell us something.

But the other overlooked fact in all this, is the huge massive datacenters that MS is building, at least 2 in the states, (one in Texas) and possible one in Siberia. These datacenters are a massive investment by themselves.

What this datacenters actually do, not completely sure, but I would bet that mostly they serve ads online, and in this respect, the Yahoo buyout makes more sense.

Pedro Panza :

"planning"? You know, Microsoft's "planning" has done nothing for them but put them far behind where the rest of the technology world is... and Microsoft had a huge head start six years ago.

Being star-struck and gaga over wealthy and powerful personalities might be fun and games for the Hollywood crowd, but, when it infects people who are supposed to be educated in the ways of technology, it all seems a bit unseemly. Like being in love with the little battery powered gizmo in the nightstand when the smoke alarm battery needed changing years ago.

Ballmer is not a good CEO. Ozzie is not a technologist. Gates is just a rich geek and he doesn't even do that well. If these guys had been "planning" all this time, they wouldn't have lost so much in such a short time with so much of their reputation and future in tatters.

Some of you people need to wake up and send these swooners packing or all your technology value will be like so many buggy whips cast into the trash.

Gerardo Tasistro :

Joe said "Top Microsoft managers aren't confident that the company can do what is necessary fast enough to slow down the rapid shift in computing and informational relevance."

I don't believe they've ever been. Even going back to DOS, history shows us that Microsoft has purchased its way out of problems. It purchased itself a word processor, spread sheet, database server, web browser, instant messenger, etc etc etc. No only that it has changed their names to represent generic terms like "Office", "SQL Server", "Internet Explorer", "Messenger" etc.

If it can't develop it, Microsoft will buy itself an online presence and change the name from Yahoo to Internet. Making us all believe that is the one and only true internet.

Josh :

I know it couldn't be IBM PC, Lotus, WordPerfect were all crapware. That couldn't be the case could it? :)

Anti-Microsoft Troll would be a good tag line for your blog. The lock down architecture of apple is better? When will Linux get out of academic adoption.

Pedro Panza :

Josh,
That's cute. You said "lock down". Do you have any idea what the concept of the Sharepoint architecture is?

If Joe were a Microsoft basher he could have easily torn into the aimless wandering Microsoft has done in the past years pouring money down a hole trying to build something that will interoperate across the internet.

Apple is no better and while Microsoft and Apple devotees have thought the battle was between them, the war has raged on and both operating system vendors have lost the future.

The problem is Microsoft failed in their mission to be able to build web applications. Now they will have to buy a way to do that. Apple will have to do the same thing. And they will both have proven they can't build. They can only buy.

whatever :

I'm sorry but i'm lost - Microsoft and Apple impose a lockdown, but Web2.0 and OSS do not?

OK, lets start with OSS where you are shunned if you don't give up all your rights to Richard Stallman. They even have their own Microsoft-style drip fed punch lines and tag words like encumbered software, etc. As if GPL code is somehow unencumbered - hah! don't make me laugh - bitterly...
(no i'm not generally anti-OSS but this lockdown shizz really twists my knickers)

As for Web2.0, there are good citizens (gmail, google calendar, smugmug, etc) and bad citizens (facebook, hotmail, select yahoo services, etc). The vital difference between those two groups of course being the ownership and export / access restrictions imposed on your data.

I do find something interesting though - Apple's philosophy combines hardware/software. As they're more or less the only remaining vendor which does this and certainly so on the consumer-side of things; good luck with that... But where exactly is the lockdown with Apple?

.) Their OS strategy is a smart combination of OSS kernel and low-level architecture and proprietary UI and media / data frameworks on top.
.) Their web browser is the same approach, engine OSS (ACID2 compliant webkit) and app on top is proprietary.
.) Their web technology is WebObjects, written in 100% Java, standard J2EE compliant. (as far as i'm aware anyway...)
.) 3D Graphic subsystem is standard OpenGL. (to which Apple is a relatively major contributor i believe)
.) Directory services architecture is standard Kerberos, LDAP & SASL.
*** i know no one's reading that anymore, but let's have some fun***
.) Group Collaboration is standards compliant IMAP (messaging), CalDAV (calendaring), WebDAV. (web authoring)
.) Individual and Corporate Instant Messaging is standard JABBER/XMPP protocol.
.) Internet Streaming Media services are open source, available on OSX, Darwin and Linux and of course streaming ISO standard H.264 content.

Ok i'm not even reading this crap anymore so time to end it... :P

Gerardo Tasistro :

To whatever, whoever he may be.

Your post clearly indicates you have no knowledge of OSS and licenses. First and furthermost there is not "ONE" license, but a whole set of licenses. Of which the GPL is one of them. Secondly GPL forces you to publish the source code of derivative work and not of systems working on that code. A common example is Oracle. I have my Linux box which runs Oracle. Linux is OSS while Oracle is not. Oracle runs on top of Linux, but does not use its code in its own code. Thus Oracle need not be GPLed.

I can develop Java applications with open source frameworks and still not have to release my source code. As my code does not extend the frameworks it just calls in their functionality. Thus I can have Tomcat (open source) running on Windows (closed source) serving my application (closed source).

Last, but not least. I'd like you to come back and explain your post a bit. You question Microsoft's and Apple's lockdown. Then saying that Web 2.0 and OSS are lockdowns too, you rant a bit about how both lock you down. Going on to detail a long list of OSS systems that work inside an Apple. Ironically you finish off with "But where exactly is the lockdown with Apple?"

If I read you right your point is OSS and Web2.0 impose lockdowns. Yet you can't find the lockdown in Apple even after listing a large set of OSS elements in their OS. Which way is it?

whatever :

Hi Gerardo or whoever you may be as it's thankfully an unauthenticated commenting system here...

I do actually clearly understand the various open source licenses. I also understand that when Sun releases something like Java or ZFS using CDDL they get bastardised and ragged on by the "community" for *not* using the GPL. So yes, you're right, but also you're wrong.

And if you were to believe anyone in GNU/Linux land Oracle doesn't exist as mySQL is the only database you'll ever need and all the others are "encumbered" anyway.
I haven't claimed anything re OSS other than the peer-pressure associated with it - but using OSS in the Apple list i guess made that clear anyway, yes?

So my point is all 4 systems have proponents that push their agendas and impose "lockdowns" of sorts. I guess that's what "..i'm lost - Microsoft and Apple impose a lockdown, but Web2.0 and OSS do not?" meant in my head as opposed to MSFT&AAPL do not, but Web2&OSS do...

As for Apple, sure there's "lockdown" and as with the other 3 it's where at their centre - ie. their hardware for Apple, your data and usage patterns for Web2.0 ventures, etc...

"But where exactly is the lockdown with Apple?" - yeah my bad, sorry should have ended that sentence with "'s software stack?".

Lastly, of that list 5 out of the 8 points highlight standards rather than open source - ACID2 compliance, CalDAV, IMAP, H.264, JABBER/XMPP, WebDAV, Kerberos, LDAP, SASL, OpenGL.

Phew, ok that took way to long and now i'm late for work! Hope you're happy now that i've come back and explained my post a bit.

Hello whatever. A quick Google search brought up more results for "whatever" than "Gerardo Tasistro" (I'm adding a link to my blog just in case). Heaven forbid you become locked in by a Google Web 2.0 search app.

After reading your post I realize that the issue is with the community rather than the license itself. I find the peer pressure from the OSS community as amusing as that from the Microsoft or Apple community. We can listen to their arguments, but in the end it is our responsibility to call the shots.

Thus we have to distinguish between the manufactures (Microsoft and Apple for example), the license schema (open source, closed source, etc) and the standards (a term usually omitted from discussions like this).

In my way of seeing things. Lock in is defined by the lack of standards and ones commitment to one solution. A solution that uses a standard can be easily replaced by another solution that uses the same standard. We could even use the word "interface" here.

So for example I can use Sun's Java to compile a bit of code and run in on Sun's virtual machine or I can use Kaffe to run the same code. As Kaffe is a pure open source implementation of the Java Virtual Machine. Doesn't matter if Java is closed source, released under CDDL, BSD, GPL or Apache. It works. The standard here is the language.

The same applies for say TCP/IP. Different OSes have different TCP/IP stacks. You'll have Windows, Linux, BSD and the Unixes. Some stacks will be open source and some will not. Still the systems can communicate using a standard. Once again it has nothing to do with the license.

The problem with lock in. Particularly with Microsoft is that there is no standard even among themselves. If there were we wouldn't be having such issues with the Vista migration path. The whole .NET platform is a huge lock in. It runs only on Microsoft platforms. Sure there is Mono, but really give me a break.

Choosing .NET commits you to an OS and an architecture. You become a member of the Wintel family. Microsoft has recently released part of its source code, but it has not broken the lock in. Since the released source code is not modifiable nor is it the whole .NET code, you can't make it run on another OS or architecture. So having both closed source and in a way open source (not modifiable, but visible) and still we get a lock in.

More so the lock in is probably version specific. As the Visual Basic 6 experience taught us. We can expect development tools to change in a way that makes previous code unusable and in need of changes. My experience as a software developer shows that the code I developed six or seven years ago on open source tools still works today. The code developed on Microsoft's tools does not build cleanly or does not work well on current OSes. In some cases the development tools no longer exist (as is the case with Microsoft's Java).

This translates directly to higher costs. Higher costs for me as a developer (in training, new tool acquisition and recoding) and higher costs for my clients (who pays the bills). We are seeing the pinch of this with driver developers. Vista marks the end of a golden era of Windows development.

Seven years of XP have developed a great inertia in terms of code. Code that might (and probably will) have to change over the next two years. If Vista is going the Windows ME way and becoming only a stepping stone to Windows 7 then even more changes lay ahead. How will that affect software development and currently developed code? We already know what is going on with the drivers.

Maybe most people won't believe me on this one. After living 7 years of XP, getting a nice little GUI tool to develop "drag-n-drop" software we might feel comfortable that we are using the "standard" platform called Windows. But when the platform suddenly starts to move ahead and it is no longer standard with itself and you own code that doesn't run on any other platform or architecture. You are locked in and you must go with it.

So as you see the key here is standards, not manufacturers or licenses. Microsoft by always promoting its own standards will continue to be incompatible with others. Making it one of the worst cases of lock in in the industry given its deep market penetration and lack of standards even with itself.

karl :

Hola Gerardo,

I think your comments regarding standards are on the mark. If you look at the rapid advances being made in consumer electronics compared to the slow advances being made in software engineering, I think you can attribute a lot of that productivity difference to the wide embrace of standards (IEEE, EIA, etc.) in the consumer electronics world. Building on standards allows us to "stand on the shoulders" of those who have gone before.

Consider the challenges in software engineering, perhaps even referring back to Fred Brooks' seminal paper, "No Silver Bullet." We need to increase developer productivity. As you point out, embracing standards, rather than developing in Microsoft's or some other vendor's vertical silo, enables us developers to be more productive.

Great post!

whatever :

Hi again,

I agree with you completely that the key here is standards, hence the calling out of standards previously. Primarily I'm interested in standards around data formats and data transport / exchange as that's really where any normal industry after 50 years would now have it's processes for creating and inducting new standards all worked out. It's ridiculous really...

I think that if it weren't for Microsoft there would be a lot more and a lot clearer sets of standards, particularly around those areas. Not that they're the only culprits by far...

I know my first post was a mix of unrelated opinions (by which i all stand individually btw) which makes it read like a mess. But let me for instance address your joke about fear of being locked into a search engine (ie. web2.0) - i do fear scenarios like my hotmail account which I've had since forever but can't get my data out of or access outside of the website - and Outlook Express *snort*. Thousands of emails locked into hotmail land forever. Contrast that with Gmail where i can access it through the ad-revenue generating web site, or POP3, or IMAP4, or through email forwarding to another address.

Lastly, i don't consider OSS to be a standard or when something is cross-platform to automatically be a standard. A standard is such because an independent committee has approved it and now steers it forward with input from the industry.

That attitude of *certain* OSS proponents thinking their software has a birthright to being the standard just because it's OSS irks me.
While i think Java is great, it's *not* a standard, no matter the license or number of implementations.

I agree with your definition of a standard. According to the Webster Dictionary

"3: something established by authority, custom, or general consent as a model or example" (www. merriam-webster. com /dictionary /standard )

Yet Sun and I are certainly not in accordance with your position of Java not being a standard.

"The Java 2 Platform, Enterprise Edition (J2EE) is a set of coordinated specifications and practices that together enable solutions for developing, deploying, and managing multi-tier server-centric applications."

(java. sun. com /javaee /overview /faq /j2ee.jsp#j2ee)

That sounds awfully like a standard to me. More so if I use your definition.

To put it in cnet's words:

"J2EE isn't a product. It's a set of specifications used by commercial software makers to build products using Java in a standardized way. A software application written to the J2EE specification should run without change on any J2EE-compatible application server, for instance."

( www. news. com /2100-1013_3-5058048.html )

Regarding you comment on OSS being called a standard. Well I have seen and heard very few of those cases. Yet it is clear that a great deal of OSS tools are built on standards. I would not claim the tool itself is a standard. For example Open Office uses OASIS file format which is a standard (Any dispute of this fact should be discussed directly with ISO. You can ring them up here +41-22-749 01 11). Yet Open Office itself is not a standard, but relies on them to operate.

whatever :

Hi again Gerardo,

thanks for the links! :) I concur with regards to OOo vs. ODF.

With regards to Java - again - i *looove* Java, so this is not a criticism of it in any way, but i do think it's different from say ANSI C because an independent standards body is driving it forward.

To be honest though, i don't think languages are in drastic need of standardization. Not to the degree of this ridiculous file format, data exchange and "communications protocols" situation that we find ourselves in.

I appreciate Microsoft's position that innovation requires a more rapid moving structure than standardization allows, however it's 2000-and-freaking-8 and the 90+% market share OS cannot talk to file servers on anything but SMB, whose many iterations aren't publicly specified particularly the post-IBM ones. It also cannot gain authentication data from anything but the skewered standard AD. The list of course goes on indefinitely...

BTW, thanks for replying to my silly posts and giving me good food for thought... :)

Whatever, would you say CD and DVD formats are standards or not?

whatever :

I don't know anything about the CD format in terms of standards except for CDFS being ISO9660 (or thereabouts) standard.

I know that once DVD was settled on as the next-gen format it was handed to the DVD Consortium for um... safekeeping or whatever it is you do with a ridgid physical media standard. So, yes I'd say that's a vendor neutral standard...

So Java, particularly J2EE can very well be a standard even if it isn't developed by an independent organization. After all there is more than one JVM and more than one full J2EE compliant application server.

whatever :

Yes, but say Sun create Java 7, and some OSS coders fork into OpenJava 7 both of which have unique and incompatible features. Not unlike what happened with MS/Apple and Sun i suppose... Then the Sun version would be the standards simply because it's Sun.

If there's an independent steering committee or standards organisation looking after Java's progress, IBM, OSSers, Sun, Microsoft or anyone else can feed input and suggestions to that organisation for future progress.

My take is both would be standards, but only one could carry the Java logo. A standard need not be supported by a committee although in the interests of companies it does. So not one company has excessive control over the standard.

The "independent steering committee" you speak of can be seen in things like JSF (Java Server Faces, jcp.org/ en/jsr /detail?id=314 ). More can be found here jcp.org /en/jsr/all. As long as open and closed source implementations comply with the standards they will be mutually interchangeable.

I believe most of the gripe people have with Microsoft is that their standards are "standard" as long as you use Microsoft products of a certain said revision (intra-version incompatibilities). More so, some people may even claim that those "standards" work better if your a Microsoft developer working on a Microsoft product than an external developer working on a non Microsoft product (hidden APIs). Such "relativistic" phenomenons occurring depending on the observer prevent them from being true standards.

whatever :

Hi Gerardo, had a look at that JSF link. Thanks for that, i never knew that so many companies have official input into JSF...

Cheers!

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