Comdex 97 : A new venue for an ongoing battle

I had an interesting response to last week’s article on Microsoft. From warnings about being run in by the Microsoft Mafia to a request for a radio interview, there certainly are a number of people interested in the fate of Bill Gate’s company. While not wishing to predict the downfall of the software giant, I did imply that some of the challenges it was currently facing may lead to major changes at the company we have all come to know and love.

Last week the battleground moved to Comdex 97 in Las Vegas which was inundated with 215 000 people who pay up to $895 to make their way through 2 100 exhibition stalls, keynote addresses and parallel events. Bill Gates kicked the event off on Sunday night with a rather light-hearted look at the 10 reasons why he loves his personal computer. Lighthearted in delivery maybe, but he used the opportunity to subtly let off some steam.

Making light of the department of justice investigation into Microsoft, Gates 5th reason why he loved his PC was because he could, in one week-end, “collaborate with attorneys all over the world, comment on a 48-page legal brief and send it all to the Department of Justice.” He went on to take a glancing blow at network computer (NC) proponents by remarking that he does his best work using his laptop while on an airplane – and he doesn’t have to store a server on the seat in front of him.

There were clearly two camps at Comdex. Microsoft coughed up for nearly 3500 square meters of space so as to offer it at a better rate to 280 or so software vendors who sell Microsoft products. CNN reported that amongst these exhibitors, there was barely a mention of outstanding lawsuits or trouble in the Microsoft camp. Grouping all their supporters in one camp certainly worked, an estimated 80 percent of all attendees made their way through the Microsoft pavilion.

The ‘everyone but Microsoft’ contingent made a few announcements of their own, including a car that integrates the best of all of their technology (including Sun’s much publicized Java, IBM’s voice recognition and Netscapes’ browser and collaboration tools) to provide a 21st century car. Although innovative, the ‘cyber car’ didn’t get much coverage other than on their own web sites.

It seemed it was business as usual by the end of the week though. In their ongoing battle due in court on December 5th, The department of justice fired back at Microsoft, addressing most of the companies earlier submissions. They also cited a number of documents from within Microsoft and an eMail between two senior Microsoft employees stressing the importance of leveraging their ‘Windows advantage’ in beating Netscape in the browser wars.

You can get a lot more information by following the links below. I’m going to close with a quote. See if you can guess the company to whom it applies.

“In the United States, public opinion and the political process would revolt against combination and monopoly, and what came to be seen as unacceptable arrogance and immoral business behavior. At the same time, new individuals and new companies – operating beyond Rockefeller’s reach in the United States and in faraway places like Baku, Sumatra, Burma, and later Persia – would rise up to prove themselves hardy and persistent competitors.” – Daniel Yergin in ‘The Prize’

Ok, Rockefeller was a dead giveaway but Standard Oil Company in the late 1900’s certainly sounded like someone I knew.

The beginning of the end for Microsoft?

Too big. Too powerful. Too much of a monopoly. Too much money. Too many clever people. Too much momentum. Too arrogant to see the writing on the wall? When I learnt rugby at school I was taught that the bigger they are the harder they fall. Could this be the case with Microsoft? And are the events of the last month starting to have an effect on the software giant.

Bill Gates certainly sounded under threat at a Microsoft shareholder meeting last Friday. In his first public response to an anti-Microsoft conference convened by American consumer activist Ralph Nader, Gates called the offensive on his company over the past month ‘a witch hunt’. “Microsoft has a great story to tell,” he said. “This is not a country where success and great products should be punished.”

The month in review:

First Sun Microsystems sued them for not complying with their Java specifications and including a few of their own Microsoft proprietary items in the code distributed to Microsoft clients. There’s hot debate on both sides of this argument and there is certainly a camp that believes the trial will be more of a marketing effort for Sun than a fight for the merits of the case.

Be this as it may, Microsoft have had to stand up in public and make a stand. Their argument was clear, why should they include the bits of Sun’s software which allow it be run on other platforms besides it’s own Windows operating system?

Fair enough but a week later Janet Reno and the United States Department of Justice (DOJ) filed papers against Microsoft for not complying with their agreement of two years previous. In the filing they mentioned that Compaq wanted to pre-install Netscape Navigator on computers they sold rather than Microsoft’s Internet Explorer. Microsoft told them to get lost and if they did install Netscape’s product instead of their own then they would lose their access to install Windows on any computer.

Microsoft’s strong position in the market obviously allows it to pick and choose which agreements to follow by the letter and which to fight in court. The DOJ asked for a million dollars a day. Petty cash to a company the size of Microsoft.

Neither the Sun nor the DOJ case is likely to make a dent in Microsoft’s business in the short term. It does however play havoc with Microsoft’s carefully nurtured public relations image. Despite the PR efforts though, people seem to treat Microsoft in the same way as they do the insurance industry. It is a necessary evil. You have to have it but if there were another choice we’d all rather take that.

While everyone is buying MS products this is not a problem. It does however make their position in the market quite precarious. The problem is if they get side-tracked while fighting off attackers on all sides (DOJ, Sun, The everyone but Microsoft lobby, other competitors and Ralph Nader) and competitors are able to position their products as a viable alternative then the transition could be very sudden. There aren’t many of us who stick with our insurance companies because of loyalty. If someone offered us better cover at a better price, we’d change tomorrow.

Microsoft is not likely to disappear in the near future. Nature does however work in cycles and if I were Bill Gates, I would be looking to understand how I’m going to ride the downhill cycle that may just be appearing on the horizon. With his tremendous skill and energy I’m sure he could use the downward trend as rejuvenation for the company that he has built so successfully.