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Author: jbfooljb Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 156992  
Subject: MICROSOFT - AMERICA WAKE UP! Date: 4/28/2000 8:04 AM
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Ok, since everybody else in the world these days has an opinion on Microsoft, I thought I would add my two-cents.

AMERICA WAKE UP! Many of us are old enough to remember all the talk in the late eighties about how the American economy was going nowhere and the economic miracle of the world was Asia. It seemed like we were great at inventing things only to see the strong, and successful, business tactics of Japan, and other industrious Asian nations, profit from our inventions. After all we were (and still are) buying all our television sets, most of our telephones, all of our video recorders, an increasing proportion of our cars, an ever increasing percentage of household appliances, and much of our entertainment dollars (including movie tickets) from Asian industries. Now don't get me wrong I have absolutely nothing against these countries or hard-driving, often government subsidized, Asian businesses. I just want to point out that America really was in real trouble economically. So what has changed? What miracle has occurred to shine such a bright light on the American economy? In a nut shell the answer is computer-technology. Before going into details, I would like to state three assertions: 1) Microsoft was a fundamental catalyst for the American technology-lead economic boom we have all enjoyed over the past decade, 2) Nothing is cast in stone; in other words, our computer chips and software dominance could easily go they way of the TV set, and we could all find ourselves exporting these dollars and jobs overseas, and finally; 3) Microsoft as a strong company is one of the nations best defense against the U.S. losing its dominance in this very important industry.

With that off my chest I would like to walk through some of the fundamental questions that Americans have been asking themselves lately with respect to Microsoft.

HAS MICROSOFT HELPED OR HURT CONSUMERS?

I am a software engineer who has been working with Information Technology for over fifteen years. I have worked in aerospace, custom business software, telephony, and the financial industry. I do not, nor have I ever, worked for Microsoft. I remember, not too long ago, database software for small servers selling for over $40,000, desktop publishing software for over $5,000 per user, and outrageous prices even for PC-based software that we take for granted today. All of that has changed dramatically over the last decade, and in my opinion, this change can largely be attributed to Microsoft. As a small-business, or an individual user, you can now get all of these capabilities simply by purchasing one of Microsoft's operating systems and Microsoft's Office product. You can buy all of this, including the computer, for a few thousand dollars or less. Large companies can get even bigger savings through bulk purchases. Microsoft decided long ago that its business plan was to sell its software at low prices in the hope of growing the market. As time has proven, this approach was well founded. While other companies thought they could maximize their bottom line by soaking each customer for as much money as possible, Microsoft saw the wisdom in expanding the market through a low price structure. This strategy has not only helped Microsoft grow into the powerhouse it is today, it is one of the fundamental reasons the United States economy has been booming over the last decade. By offering powerful computer programs to the masses, Microsoft has helped grow the high-tech industry, and all businesses and end-users have benefited.

One group that did not fair so well however, are those software companies that wanted to maintain high prices for their product. Microsoft drove them to reduce their prices or go out of business (which many did). Also the combination of low hardware and low software prices (i.e. Microsoft software and standard PC hardware), did not thrill makers of more expensive hardware. At first some of these computer manufactures thought the PC platform was joke. For example Ken Olsen, former CEO of Digital Equipment Corporation, famous quote that PCs are toys, only to see his computer company killed by competition, much of it from the PC industry, and the company itself eventually getting bought out by the PC company Compaq. Others hoped the low-cost phenomena would only inflict the consumer desktop market. However, with more powerful and economical PC software and hardware these companies now all see the writing on the wall, LOW PRICES ARE COMING FAST TO THE ENTERPRISE, staring Microsoft and Intel.

Does all this help consumers? You bet it does. You would be paying more for software today without Microsoft. Your software would not be as integrated (i.e. applications would not work with each other as well as they do today.) For example, copying your spreadsheet into your Word document and attaching the document to your email. On a more indirect note, but maybe even more importantly, the technology industry would not be as vibrant. Think, really think what this would mean.

WOULD MORE COMPETITION BE BETTER FOR CONSUMERS?

I find this a very interesting question. Most people would intuitively believe that more competition is always better. But before you reach your own personal conclusion, I urge you to read on. Again I go back to my own experience in the industry. I remember as an engineer we only worked on DEC VMS workstations then UNIX (Sun, Apollo/HP) workstations. For those not familiar with the computer industry, "workstation" is the term often used for powerful desktop computer typically used for engineering work. About ten years ago we would spend tens of thousands of dollars for each one of these workstations. Ok that is the hardware story and we all know hardware has gotten lots cheaper (again largely thanks to a company with a large volume business plan, INTEL). But it is the software story that you have to hear, or have to have lived through, to really understand the truth about competition in the software industry. From my perspective all of the UNIX box-maker companies did, and still do, everything they could to lock you into their proprietary technology and keep you on their machines. From my standpoint these hardware manufactures see software only as a means to lock you into their hardware. In other words, they make their money on hardware sales, and upgrades not really on software. Their business strategy is to offer goodies in software that only run on their boxes. This means they will support standards, when customers demand it or they see some other strategic advantage, but they will add proprietary "extensions" that they hope you would use and get used to thus making your software more dependent on their hardware. Now is this an immoral thing for them to do. No, this is plain and simple business. EVERY business that has competition must work to differentiate itself from its competition. The last thing in the world these box makers want is to make there product into a commodity and have customers pressure them into low prices since they can easily switch their software to another makers box.

In fact it is this lack of interoperability that killed the market for the VMS operating system, and will ultimately allow Windows to prevail in the enterprise over UNIX based solutions. The various UNIX vendors had many chances in the past to adopt a common standard OS, but although they made token efforts at complying to some industry standards, mostly for bragging rights and the ability to tick off customer purchase prerequisite checklists, they never really saw it in their interest to have true interoperability. Thus they continued to offer their own flavor of UNIX and everything else. In fear of the impact of Windows 2000, they are now rushing to support Linux. But I predict they will each subvert it to their own proprietary "enhancements" and thus will be unsuccessful in the end. Now you could imagine that if the operating system could not be the same on these various different UNIX platforms what hope did the applications have. Application developers have to port their software between these platforms, maintain these different versions, and try to establish standards for inter-operating with other applications. Even worse, applications that it might be nice to inter-operate with may be implemented by other companies, and may not run on all the same machines. As many of us are aware, the larger and more diverse a group you try to get an agreement between the more unlikely you are to reach one. Thus what you end up with is chaos.

I personally experienced this chaos in the UNIX industry and that is one of the reasons I love having one company bring it all together. With one company using one operating environment it takes away all of the market forces for differentiation mentioned above. I might feel bad if that one company was charging me an arm-and-a-leg for software, and/or selling junk. But this is not the case with Microsoft. Of course their software has bugs, all software does, it is complicated stuff. Even though Microsoft does not make hardware, do they add their own "enhancements" to standards to try and get you hooked on their technology? Of course they do, this is business and every company does this so that you come back to them!

WHAT IT ALL MEANS

People are a lot smarter then politicians take them for. If Microsoft's products did not provide value people would not buy them.

1. Microsoft was a fundamental catalyst for the American economic boom of the past decade.
2. A strong Microsoft is one of America's best hopes that our current market leadership in this critical field is not exported overseas (Sony has high hopes for your internet access time through the playstation, its likely a major reason Microsoft has decided to enter the game-station market).
3. Business strategy, not unfair competition, was the reason for most competitors falling to Microsoft. High prices and lack of inter-operability rack high among the mistakes made by many.
4. Microsoft now plans to take this same economies-of-scale to the enterprise level. With cheap powerful reliable servers running high speed and again cheap databases and enterprise software many competitors are worried. They should have to fight it out in the market place not the courts.
5. A court outcome that breaks up Microsoft is not in the best interest of consumers or companies. Even companies that think they may benefit will likely be hurt in the long run by a weakened American industry.
6. If you agree with this assessment let your political representatives know! See http://www.microsoft.com/freedomtoinnovate/fin_links.htm to find out how to contact your political representatives.
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