RE: Bill Gates mentions Linux

Dan Kohn (
Tue, 10 Mar 1998 19:44:07 -0800

>Even if you buy a Mac, the only general productivity
>software available is MS Office. If that's not a monopoly, I don't
>what is.

Back when I used Macs (and was in fact Apple Student Rep at Swarthmore),
WriteNow and Nisus were both competitive word processors. But they
didn't keep up (on feature and ease of use, respectively), and lost out
to Office. One of the key arguments against saying that Microsoft
applications dominate because they have "secret" access to the OS is
that Microsoft has had a dominant share of the Mac market for over a
decade, where Apple was clearly doing them no favors. If competitive
word processors no longer exist, that's just a sign that the Mac
applications market is so pathetic that no one is willing to write to it
unless they can get majority share.

>> In other words, Microsoft gets no
>> revenue except for innovation that goes so far beyond what they
>> have that it's worth the trouble to switch.

>Except of course for the effective tariff they get for every machine
>sold, but why bother counting that? It's only a few billion, and the

>OEMs aren't allowed to talk about it, so why should he?

>Maybe I'm being ungenerous, but I've always assumed Microsoft gets like

>a third of its revenue from bundling deals. Is that fair?

>> I should have asked why they didn't choose LINUX or OS/2 or Macintosh

>Um, couldn't have anything to do with an agreement that PC
>had to pay Microsoft even if they shipped another OS on their system,
>until the DOJ told you to stop, could it? Nahh.

Ernie, this argument is specious. If Microsoft's licensing agreement
(which they were since forced to drop) was the cause of Windows
domination and Microsoft's "unearned" OEM revenue, then both would have
fallen apart from the surge in demand for PCs OEMed with Linux, Solaris
x86, and yes, OS/2.

In reality, Microsoft's licensing deal (pay us whether you ship Windows
or not), was a silly and unnecessary deal that is totally unrelated to
their OS domination.

Why is it so hard to understand that because of network externalizes,
markets naturally want a standard? This product remains the standard,
until it fails to innovate sufficiently and something else replaces else
(e.g., Apple [], Lotus 123, Wordstar, WordPerfect, Novell Netware).

Microsoft dominates because they've innovated better than their
competitors. As long as their competitors have only marginal advantages
(e.g., Linux has a smaller memory footprint than NT but is much harder
to use), Microsoft will continue to dominate. But, as soon as someone
comes out with an order of magnitude improvement, and Microsoft doesn't
immediately keep up, Microsoft will be supplanted (and there are
hundreds of garages out there with potential Microsoft-killers). Why do
you think Bill is spending $1+ billion on R&D?

(BTW, I believe that if Bill had embraced the Internet today rather than
Pearl Harbor Day, 1995, Microsoft would be a goner by the millennium,
supplanted by the NOISE (Netscape, Oracle, IBM, Sun & Everyone else)
cabal. The Internet was simply that much of a threat to Microsoft, and
no big company has ever before turned on a dime the way Microsoft has to
counter that threat.)

Finally, let's look at their OEM deal. Why would they do a deal that
makes them look so bad when they don't even need to, since everyone
wants Windows anyway? The reason is that Microsoft still views itself
as a scrappy start-up rather then an industry-behemoth. They still try
to take every little advantage they can, without considering that it may
make look just awful.

My five-year prediction is that all this DOJ stuff will ultimately
fizzle out into a minor consent agreement like last time. But the
cumulative effect of all of the scrutiny is that Microsoft will start
acting much less like a startup (e.g., Netscape last year), and much
more like a dominant industry player (e.g., IBM ten years ago). They
will then be supplanted.

In the meantime, though, only idiots short Microsoft.

- dan