Jo Best from Silicon.com, a sister CNET Networks property to ZDNet, reports that Microsoft still intends to ship Longhorn in 2006 and that the Redmond-based company doesn't think that the next version of its desktop operating system is going to suffer from any halo effect being introduced into the market by Apple's iPod. The halo effect to which Best refers has to do with the recently reported boost in sales and marketshare that Apple's desktop systems are apparently enjoying as they ride the coattails of iPod's success. The timing of renewed interest in Apple's systems, along with the fact that a new version of the OS X operating system (code-named Tiger) is on the way, may at first appear to be the sort of double-whammy that Microsoft needs least as questions about Longhorn's timing and upgrade-worthiness continue to get raised.
But, if you ask me, not only won't Microsoft feel the halo effect of Apple's iPod, it may only be a matter of time before Apple is feeling the halo effect of Windows Media. Much of attention and scrutiny being applied to Longhorn is misplaced because the industry is so used to operating systems being the center of attention when it comes to thriving ecosystems. Traditionally, an ecosystem is where developers for a particular operating system beget more software for that OS, and more software begets more users of that OS, and more users of that OS begets more developers who develop more software and so on. Spoils of untold riches go to the vendors of the most vibrant ecosystems. But, taking RSS as an example, today's most vibrant ecosystems are not necessarily based on software and operating systems, but rather on content and content management/distribution platforms.
Much to the benefit of the more popular blogging platforms provided by companies like Google (Blogger.com), Six Apart (Typepad), and Userland (Radio Userland), the sudden ramp-up of RSS-delivered text (blogs, newsfeeds, etc.) in the last year clearly dwarfs any growth spurt ever observed in software development circles and is reviving the old axiom that content is king. While there appears to be no end in sight for RSS-delivered text, RSS-delivered audio (aka: podcasts) is already out of the gates and it's only a matter of time before RSS-delivered video (no brand name yet. Update: Engadget calls this broadcatching for taking delivery of broadcast television shows via RSS but no word on what Google will call it when it's your video) busts into full stride. So, the big question now regarding halo effects has nothing to do with OS-based ecosystems, but rather content-based ecosystems.
Unfortunately for vendors like Apple and Microsoft (and fortunately for users), there's not much they can do to co-opt RSS-based distribution of text (well, there is, but that's a story for a different blog). RSS-based distribution of text is firmly rooted in standard technologies (like XML and the Web) over which no company has enough influence to disadvantage the others. Although Apple got lucky to have its brand associated with RSS-delivered audio (again, podcasting), even that form of content will be difficult for any vendor to "own" because of how the MP3 standard is the most widely distributed and used audio format. (MP3 files can be played by just about any device that can play digital audio.) But, with video, the entire game changes. Unlike the way MP3 got a major foothold before any of the vendor-specific audio formats could interfere with its traction, the reverse is true of video. While MPEG4 is arguably the closest thing we have to a vendor-neutral digital video distribution platform, the vendor-specific platforms from Microsoft, Real, and Apple are the ones with the headstart.
While Apple with its iPod appears to have the deepest penetration of its proprietary technology in the portable audio content space, the appetite for portable video content will be sufficient for technology buyers to seriously consider their options before taking the next handheld plunge. Forgetting phone functionality for a minute, they'll want (if they want to spend their money wisely) a single mobile device that can handle RSS-delivered text, audio, and video. Not only that, in true ecosystem fashion, the way users are drawn to operating systems for which a huge library of software exists, users will be drawn to content platforms for which a huge library of content exists. So, here are some questions to ask. First, what primary digital video formats are in use today? Answer: Windows Media, Real, and Quicktime. Second, if you wanted to buy a handheld device like an MP3 player that's capable of consuming digital video, which of those three formats is actually supported by such devices? As it turns out, all three. But of the three, do you think there's any demand for mobile videos based on Real or Quicktime? Sure, those technologies are available for a few devices, but if you're a content developer (and hopefully, you can see the ecosystem direction I'm taking here) what's the single largest meatball-of-a-target--the one that offers a fair degree of synchronization and media management across devices (albeit a bit painful)? If you guessed Windows Media, then you and I are are on the same wavelength.
The next big generation of developers are not software developers but rather, content developers. Therefore, the next generation of successful ecosystems are content ecosystems, not software ecosystems. And today, there's only one of those that looks even remotely promising as an ecosystem that reaches all kinds of stationary and mobile devices (desktops, PDAs, phones, etc.) and it's the reason that Microsoft doesn't really need to worry very much about how well Longhorn does. Windows Media, which transcends operating systems (making them sort of irrelevant... you don't even have to buy one now to play back Windows Media-formatted content) and telecommunications networks, will be Microsoft's next franchise. The only hope for an alternative might be Quicktime.
Finally, there will be the Apple faithful who say never count us out (sitting in front of a PowerBook here with an iPod permanently connected to my teenager's belt, I can understand this). But, for Apple to seriously challenge Windows Media and Microsoft, it will have to convert the iPod faithful into the Quicktime faithful, which in turn requires one of two tricks: (1) Activating some dormant Quicktime technology in all those iPods (I don't think this exists, but I have read about interesting hacks) is one approach that would take Microsoft by surprise, or (2) shipping video-enabled iPods sometime this year (seems more likely considering the rumors -- I hope they have bigger displays).
Even so, Apple will need to triple the iPod buzz it already has to fuel interest from the content developer side. One reason for this is that Microsoft, because of its work in the phone space, has much better relationships with the telecommunications and cell-phone mafias than does any other media platform company. In true ecosystem fashion, access to those users will affect the choices that content developers are making when figuring out which platform to target. Not surprisingly, some huge content providers like MTV, MSNBC.com, Food Network, Fox Sports, IFilm, CinemaNow, MTV, Napster and TiVo are already swinging in the direction of Windows Media, and I wouldn't be surprised if the platform's momentum draws in some other big content names as we head deeper into 2005. To compete on these fronts with Microsoft will require some interesting partnerships--not just with content providers, but with companies like PalmOne and RIM, two outfits that, because of their popular Treos and Blackberries (respectively speaking), already have some good relationships with the aforementioned mafias.
Bottom line: Halo effect? Guffaw. Not even with governments trying to undo Microsoft's dominance of the media client before it happens does the company have any halo effects to worry about.