32 replies to this topic

[bwelford]

This is a very insightful article - The Great Microsoft Blunder.

I think John Dvorak is very much right when he says Microsoft should never have tried to have a browser. What do you think?

Edited by bwelford, 01 May 2006 - 04:36 PM.

[EGOL]

I thought it was a very interesting article. Lots of info that I had not seen before and lots of perspectives. I don't know if he is right and I always read press about MS with caution because so many people do not like them for crazy reasons.

Some of is info shows the adverse impact... but it would be hard to have full data on direct and indirect impact. IMO MS's mistake is that they have not monetized the browser strongly or integrated it into their web properties.

Edited by EGOL, 25 April 2006 - 04:22 PM.

[Ruud]

I would be hard-pressed to call I.E. a mistake. The mistake was integrating it into the operating system. We know that now; maybe back then when the decisions were made this was not so obvious.

Then with the browser deeply integrated the real problem was that Windows shipped with security settings based on a Disney fairy tale expectation of what was "out there" on the Internet.

That costs money.

But is it money lost? I don't think so. Every web service, every web application needs a browser. For years and years IE formed the overwhelming majority: it was the browser. Only after sooo much misery and finally government agencies advising to shift away from it did a "handful" of people shift away. Some sites see 60 to 68% of IE, others still do way over 80-90%.

Why, we asked. Because it is already installed, we said.

With Windows Vista coming up shipping with the more robust IE7 that situation will most likely come back again.

Then when I start my new computer I have an MSN Messenger (then Windows Live Messenger), already with well over 170 million daily users one of the most popular IM's. I can easily share folders with my friends. The program informs me that I can write about myself and share that with friends as well. One click takes me to MSN Spaces. MSN Spaces is Microsoft's blogging service; free, easy to use, with over 5 million blogs one of the largest blogging services and given its 180 million page views a month certainly not completely unknown.

I go to MSN Spaces with my Microsoft Internet Explorer. Cool, I can even upload photos! I click through to one of the spaces from my friends and see she went to a James Blunt concert. Who the hell is James Blunt? I type it into the MSN Search bar (don't worry, it's not an anti-trust violation because you can configure it to use any search engine) and the first result is information from MSN Music. Next to it is a download link (from MSN Music). Maybe I'll watch the video on MSN Video though. Or download it where it can automatically be played with the already associated Microsoft Windows Media Player (which has handy jumps to related MSN Internet services…). I'll store the information in Onfolio, now a part of MSN Desktop Search.

But hang on a moment – I need to write an email! Quick! What once was Hotmail now is Windows Live Mail. Nice interface, some ads in the non-premium version.

To find that file I want to attach to the email I'll use MSN Desktop Search. It's integrated anyway, isn't it?

So why couldn't all this be done with Firefox or Opera? Well, for one, some of those services simply don't work with non-IE browsers Second, you have to "own" the browser in order to "own" the customer ..erm… user. It's much easier to achieve that when you ship the product, pre-installed, pre-configured, ready to use, than it is to get people to download a toolbar, have them install it, make sure they see the toolbar, etc.

So, today you have a large user base who already and still use IE. By the end of the year new users will be added via Windows Vista. Between then and now even more users will be added of their own free will because IE7 is new and there are always people who switch, you try, because it is new.

Why not do the whole thing than with Opera, as the article points out, or with Firefox?

Because the problem of IE being part of the OS is removed in Windows Vista. Because the security is aimed at real-world scenario's. And especially because every code contains bugs and can and will be exploited. At least Microsoft already knows this code base because it owns it, it wrote it. Giving 80-90% of the Internet users Firefox doesn't make the web more secure… it simply shifts the problem to Firefox.

No, given Microsoft's MSN strategy and its long-time, early established web-vision I am[ i]really[/i] hard-pressed to see IE as a mistake.

[TheManBehindTheCurtain]

I've been reading Dvorak since he was a columnist for one of the Mac magazines back in the 80s. I still gravitate toward his writing because I know he'll always have something interesting to say. But he also reminds me at times of those political commentators on the TV who have a firm grasp of the simpler half of a very complex issue. He knows all too well that his paycheck depends on being predictably and consistently funny and controversial regardless of what he's writing about. And you can't blame him, because it's precisely because I know he'll be funny and savage that I continue to read him. Yet I usually find myself thinking, "Oh, there he goes again."

Now I have to say up front that I find IE bashing plain tiresome. It is what it is -- the browser that the vast majority of the Internet population uses. How it got that way -- on the back of Windows' popularity or through its own merits, or some indefinable combination of both -- may make interesting theoretical discussion, but it puts me to sleep. And I'm as frustrated as anyone else about the security flaws, but somehow the world has not yet come to an end and people still use it to surf the 'net. And yes, other browsers are chipping away. This is just the way of the world; fortunes come and go. I'm not saying there aren't important business issues; I've just heard them all too many times. Just show me the browser stats so I know what to design to.

To strike off on a topic Ruud introduced: IE just *is.* It's part of the operating system. That history panel -- same tree component used in Explorer. The area where the web content appears -- all drawn by another component used by many other programs. Help topics written in HTML are displayed using that component. Programs like the old Microsoft Encarta used it last I heard. You can also embed the browser component using VBScript and other languages in your own programs. Back in the day I used Director to embed a browser window within a kiosk program. Today you can embed browser windows in Flash; I'm playing with that right now for an autorun program. Now, all this wasn't a mistake. Re-usable components are an old idea and a new idea -- think web services. And none of this is going away.

Of course, the security flaws are maddening. I won't try to excuse them. (Though I do wish more of the venom were directed at the criminals and antisocial twerps who exploit them.) And regardless of circumstances, Dvorak and others are just being silly to suggest that Microsoft do anything other than keep closing the holes and slogging along on the same course. And if Firefox or Opera becomes the browser of choice, I rather suspect the criminals and antisocial twerps won't shrug and say, "Oh heck, those are nice folks. We'll just retire and go do something productive with our lives." The components will still be there.

So, having said the whole subject bores me, I've managed to write more than a few sentences about it.

[Juliette]

Frank & Ruud, I accept what you are saying about IE being the most dominant browser at this point in time, but the fact that people choose to use other browsers even though their os comes bundled with IE is never a good sign. Why go to the extra effort when something's right there? MAybe because the convenience of having the browser there does not make up for its flaws. There are so many factors that work for both sides of the arguments, but when will MS consider it the proper time to discontinue the shipping of ie with windows? When other browsers have a 100% market share?

The market shares of browsers other than IE are growing for many different reasons, not least of which are the security problems. As the market makes use of other browsers more and more often then surely the web developers will develop far more for those browsers and this would surely increase use of those browsers and so on in a cycle that is self perpetuating. If the shipping of IE7 with vista changes this cycle greatly i will be very surprised since none of the previously released versions seem to have made a significant difference to this trend. Or maybe i am overlooking something?

Personally i agree with Dvorak, but i'm not just joining in to play "bash Microsoft" i just honestly believe that convenience cannot make up for other faults all the time if there are more effective alternatives available.

Edited by Juliette, 26 April 2006 - 02:48 AM.

[bwelford]

You know what drives Dvorak better than I do, Frank. I think clearly you and Ruud have described the everyday realities of the market place and IE. However you didn't comment at the level that Mr. Dvorak was handling this. He was saying that looking at the whole company the IE related business activities have been a sinkhole rather than a profit generator.

Certainly in terms of what all these skilled Microsoft people and resources might have been doing with their time, it's not clear that IE related activities have been incredible winners. It's given them a packet of major headaches and it's still not clear they're handling the Internet in the best way for their own good.

I think it comes down to goals and what drives the owner of a company. Merely being bigger is not a particularly praise-worthy goal. With enough cash, you can easily get bigger. Seeing the size and the presumed stability, others will readily lend you money. The Enron's of this world show the folly of that.

A much more praise-worthy goal is to be better in some sense. Ideally if you deliver the best value to your customers while delivering long-term shareholder value and being good corporate citizens, then that's something to be honored. I believe that requires some focusing of efforts. Microsoft has never done that. Google has roughly done that and will likely be the ultimate winner in the Internet world.

[Eddie]

Microsoft has never done that. Google has roughly done

I can't agree with that at all Barry.

What ever you think of Microsoft, the fact remains that without Microsoft and Windows, most people posting here would never have bought a pc at all, and as for Google, I can't think of a more arrogant, self centred company.

[bwelford]

I agree entirely with your sentiments, Eddie. I was only commenting on how well the two companies focus.

[Eddie]

You've got me there Barry :rofl:

[Ruud]

He was saying that looking at the whole company the IE related business activities have been a sinkhole rather than a profit generator.

Ah, but I did

If you look only at IE, yes there can't be much profit there.

But if you look at what IE has enabled Microsoft to achieve ... then I would say it's a sweet, cheap investment.

Certainly in terms of what all these skilled Microsoft people and resources might have been doing with their time, it's not clear that IE related activities have been incredible winners.

Much of their work benefits Windows at large as it often touches upon components used or accessed by the browser.

For example, the security issue concerning WMF and PNG images was a problem with the WMF graphics rendering engine and the PNG image rendering library. Because of that the same issue existed for older Firefox browsers and Opera at that time. Using buffer overflows the browser gave a nice access point to this bug but wasn't the bug itself.

A much more praise-worthy goal is to be better in some sense. Ideally if you deliver the best value to your customers while delivering long-term shareholder value and being good corporate citizens, then that's something to be honored. I believe that requires some focusing of efforts. Microsoft has never done that. Google has roughly done that and will likely be the ultimate winner in the Internet world.

Well, let me play devil's advocate...

I think the corporate structure of MS has made work their a bit difficult at times but certainly since MSN/Windows Live has started to pull the company and push the methods used things are changing.

Gmail is 2 years old and nowhere near #1 Yahoo Mail and #2 Hotmail/Windows Live Mail.

8 months after its launch of Google Talk they're not even beginning to be close to think about inching closer to the popularity of MSN Messenger, Yahoo Messenger, Skype or even Jabber.

Google Maps is really cool, of course, but they're not #1. And seeing how Yahoo and MSN receive a majority of their traffic from their portal users and push them forward to their own products it is not too likely they'll capture this audience "just like that".

In fact, with all these products and services out there their big hits are search and news, the number 1 news destination nowadays.

And what do I see there over the horizon? Ah, it is Windows Vista with search integration. Hmm...

Microsoft delivers the most widely used operating system in history. Despite roughly 15 years of working hard at it Linux is a speck of dust compared to Windows' user base. And most people know Apple computers only from seeing them on the TV or movie screen.

Nowadays Windows come "ready out of the box". You can play games, browse, email, fax, chat, watch videos, listen to music etc. without going back to the store.

"Tomorrow", by the end of 2006, Windows comes with many online services (MSN) integrated, Windows Defender against spyware, a true two-way firewall instead of the current one-way setup, and Windows OneCare (premium) to stay secure. It features speech recognition, a calendar app, graphic applications (slideshow and editing), a DVD creator, the new IE with RSS and anti-phishing, and then some.

I think that's making it better.

[bwelford]

However don't forget these possible threats for the future for Microsoft:

EU Antitrust actions and further governmental actions that may result from that.

Strategic questions re Internet Explorer:
Version 7 if if follows the Beta version will render XHTML Strict according to standards. Everything else will be handled by their Quirks mode. How long will they maintain this position? Will some of the legacy IE-designed websites break even in Version 7 or 8 or 9?

Are these concerns for the good ship, Microsoft? (not to be confused with the Titanic. )

[TheManBehindTheCurtain]

I'm tempted to say "hey, what Ruud said!" and leave it at that. I have lots of respect for Dvorak, Microsoft, and Google and don't feel any need to defend or diss any of them. But having spouted off I suppose I should try to clarify.

At the end of the day, comparisons of "market share" per se are not helpful because there is no "market" for browsers. Those who actually *do* charge for a browser have 100% of the "real" marketshare for browsers. For Microsoft and Firefox, "adoption rates" are changing. But whatever keeps Steve Ballmer awake at night, it ain't IE revenue because there simply aren't any revenue streams for IE -- not licensing, not advertising, nada. Whether one person or one million are using it doesn't have any *direct* material effect on Microsoft in the way it would for Firefox or Opera. Yet this "market share" thing is bandied about as if it had some intrinsic value on its own.

Now, Dvorak correctly "gets" the first half of the issue, that the browser is the application platform of the future, but then he falls back on some sort of revenue equation that leads him to the conclusion that Microsoft give up browser development and invest in Opera. Huh?

Look ... Google is either developing its own browser or planning to buy one. To suggest Microsoft give up its browser and invest in another is just laughable. The smart people at Microsoft and Google drew those battlelines long ago and the rest of us are just now realizing what's going on. Microsoft give up IE? You might as well tell IBM to ditch AIX because DB2 will run on other UNIXs. Tell HP it has to spin off HP-UX from its application business. Convince Larry Ellison he doesn't need a Linux distro. You may be able to legislate a power company into divesting ownership of transmission lines, but it's rare they would volunteer to do so.

Software development is a tough and complex business. It's hard enough to develop a new application on a platform you own, let alone chase a platform overseen in part by a committee of your competitors. Microsoft just can't develop software that way, and neither will Google. I look at Google, and I see a smart and cagey company. And I see in their secrecy and their drive (the sweatshop atmosphere is the stuff of legends here in Silicon Valley) and innovation a company that is just as hard-edged and competitive as Microsoft. Don't fall into the trap of idolizing them. Google is as miniscule compared to Microsoft today as Microsoft was to IBM back in the 80s. If the tide turns and Google comes of age in another couple of decades, it won't be because they were nicer than Microsoft, any more than Microsoft was nicer than IBM. You'll all be chanting that classic Who line, "Meet the new boss. Same as the old boss."

Meanwhile, what you have to admire about Dvorak is that he is a great entertainer. He was funny and concise and managed to come up with something original that, on the face of it, has a kind of superficial appeal. But in reality he has to know there's a 99.9% probability it will never happen, which makes it "safe" in that he will never be second-guessed and which also ensures that he can continue to lambast Microsoft for never recognizing the wisdom of his advice.

[bwelford]

The problem in trying to take the big picture view is that you've got to stand far enough away. Then the countless details become fuzzy and you can see the broad shapes of what's happening. On the specific topic we're on at the moment, 'far enough away' probably means waiting 10 years and then looking back at all this. It then will be clearer what really is happening at the moment.

One aspect of the evolution of Microsoft where we can stand far enough away is Microsoft's exploitation of the Internet. In 1995 Bill Gates wrote his Internet Tidal Wave paper. Vint Cerf, now of Google, has also spoken of the same theme. For whatever reasons, I think Microsoft is scrambling to catch up with Google and not doing as well as might be expected.

[Ruud]

For whatever reasons, I think Microsoft is scrambling to catch up with Google and not doing as well as might be expected.

Funny, I see it the other way around.

The only product that Google has that beats Microsoft is search. Dot. That being true, MSN is still the #3 search destiny.

MSN, the world's 2nd most popular portal, delivers consumer products for the regular folks. It's a $2 billion deal for Microsoft.

Then we have the "techies". People who like to pick their own, customize, etc. Microsoft is doing Windows Live products for them. There are over 10 Windows Live services in the make, already out or in beta.

Most of the products Google has released Microsoft already has. MSN Messenger vs. Google Talk. Hotmail with built-in calendar vs. the just now released Google Calendar. Contacts storage vs. ... oh, that's right, Google isn't working on that yet. Microsoft is done though. The unified contact store works across the network. With over 8 billion contacts it's easily the world's largest social network.

Online storage? MSN already does it, has been doing it for years. If space is the issue that can be increased at will. They know full-well it isn't though. The 30MB they give at MSN Spaces, for example, is well received by people.

In 1998 Microsoft, when talking about .NET, made a clear statement that the PC will never go away, Windows won't go away. Microsoft delivers and the platform and the content. By owning the platform and its multiple tools to deliver content, they can own the content.

Google's flirting with a browser, it's graphic tool, it's video "player" - that is trying to catch up and trying to gain some sort of stronghold on the actual, physical platform. A platform owned by Microsoft -- with a new version scheduled to up the ante a bit more.

[bwelford]

Here's a headline earlier in the week, Ruud. Google Wins, MSN Loses In March. That's in search of course. But why can't they get it right. I think I saw another headline that said that Ask was moving up close to MSN. That really amazed me.

Who's to say who is right? We all stand around the elephant like those six blind men and think we perceive different things.

[bwelford]

Microsoft knows Windows and Office can't deliver growth

The announcement yesterday that sent Microsoft shares sliding by 11% is an indication that the company no longer has confidence in its current business model. ..

I rest my case.

[TheManBehindTheCurtain]

I rest my case.

Given that this thread started as a discussion about IE, and the piece above is a commentator's analysis focusing on Office and Vista, I'm not sure I can see a clear line of reasoning from A to B.

Here's the way Forbes reported it:

Microsoft's Growth Comes At The Expense Of Profits

Despite the news, the analysts are still putting them in the Buy column. At the bottom, the article cites a few "overweight" stocks, including Yahoo and Google.

Tell ya what: On Monday, you buy 10 shares of Google, and I'll buy 10 shares of Microsoft. A year from today, whoever has made the most money as a percentage of their original investment buys dinner. (OK, we'll have to work out how that happens later.)

Deal?

[bwelford]

Nice try, Frank. After a week where Microsoft shares have dropped 11% or so and the Google share price has been recovering, I don't think it would be a very prudent bet. It may be that nevertheless I'll regret not taking your offer.

I don't think the thread has gone at all off-topic, Frank. What Mr. Dvorak was discussing was the total Microsoft strategic direction. That Forbes article hardly gets into that and is more helpful on whether I should take your dinner bet. There's only one sentence that has anything to do with the overall strategic decisions Microsoft is taking.

But Morgan Stanley analyst Mary Meeker downgraded the shares to "equal-weight" from "overweight."

"We are shaking our heads and asking the question, ‘if Microsoft can’t get operating leverage when it’s in its biggest product cycle ever (and customer interest is high), when can the company show leverage?'"

Whether Microsoft has strategic focus is not displayed on a twelve month time horizon but is measured on a 5 to 10 year time frame. We should revisit this thread 5 years out and see what it all looks like.

[Eddie]

Microsoft, the world's largest software maker, has reported a 16 per cent increase in third-quarter profits.

http://www.999today....story/3109.html

I don't think Bill is sweating yet Barry

[bwelford]

Frank's challenge on whether the Google shares or the Microsoft shares would appreciate more over the next 12 months got me thinking. I'm not sure I want to accept his challenge on dinner, since there is quite a travel charge tied up in that either way.

However I thought it would be fun to just see what develops. Accordingly I've added a poll to this thread. You can all play along. It will be open for 30 days. So we'll have a measure of the Cre8asite community's collective view on the matter, provided you all take part. You don't need to add the reasons for your view to the thread, unless you wish to. However the more who participate, the more valuable the results. Then on Monday April 30th 2007 at the opening of trading, we can all see how good or how bad our collective wisdom was.

Will Google's share value grow more or less on a relative basis over the next 12 months than Microsoft's share value grows. The values below must be corrected for stock splits, if there are any.

Basically the current values of the two shares are as follows at the opening of trading on Monday May 1st 2006 at 09:35 am EST. The Google share price (GOOG) is $417.94 per share and the Microsoft share price (MSFT) is $24.15 per share. Will the Google share price outpace the Microsoft share price over the next 12 months?

For background the high and low for the Google share price over the last 12 months are $475.11 and $216.74. The high and low for the Microsoft share price over the last 12 months are $28.38 and $24.00.

The possible answers in the poll are as follows:
Taking the Microsoft share value appreciation ratio over the next 12 months as 100%, the Google share value will appreciate:

• Very Much More ( > 200% )
• More ( between 133% and 200% )
• Somewhat More ( between 105% and 132% )
• About the same ( between 95% and 105% )
• Somewhat Less ( between 75% and 95% )
• Much Less ( between 50% and 75% )
• Very Much Less ( < 50% )

Since this is slightly complex, I will give an example of how the calculation might go (assuming there are no stock splits). Suppose at the opening on Monday April 30th 2007, the Google share price is $560 and the Microsoft share price is $ 35. The Google share price is then 134% of its current value. The Microsoft share price is 145% of its current value. So the Google share value appreciation versus the Microsoft share value appreciation is 134% / 145% . This calculates out to be 92%. In this case, anyone who had selected the Somewhat Less response would have got it right.

Bear in mind that this is being done just after a week where Microsoft went to its lowest value in 12 months. Google on the other hand is already at a relatively strong position. So if Microsoft merely recovers to historical levels, then Google will have done well to keep pace.

So what's your opinion? Who is going to be doing better, at least in this relatively short term share value race - Google or Microsoft?

Edited by bwelford, 01 May 2006 - 09:54 AM.