Passing judgement on Microsoft's media juggernaut

Summary:In response to my last post on Microsoft's rapidly growing global footprint in the digital media universe, one ZDNet reader complained that, while I was reporting on that colonization, I wasn't taking a stand or expressing a viewpoint.  Another ZDNet reader, Godot,  took such sides, accusing Microsoft of unfairly wielding its operating system monopoly in an effort to dominate yet another market.

In response to my last post on Microsoft's rapidly growing global footprint in the digital media universe, one ZDNet reader complained that, while I was reporting on that colonization, I wasn't taking a stand or expressing a viewpoint.  Another ZDNet reader, Godot,  took such sides, accusing Microsoft of unfairly wielding its operating system monopoly in an effort to dominate yet another market.

If you're looking for me to condone or condemn the juggernaut, the first of the aforementioned readers is correct.  I've done neither.  And in this world, if you don't condemn, then you must be condoning. (Not that I am, but I understand how the perception could apply in this case.)   To Godot's point that Microsoft is using their operating system monopoly to move into this space, there's no doubt that Microsoft's global presence as a result of that monopoly greatly influences every market it attempts to penetrate. That said, I'm not willing to take the same position that Godot has taken and here's why.

First, when it comes to the operating system situation, what's done is done.  It's water under the bridge.  Microsoft has the footprint it has and while precedent antitrust judgment requires an antitrust remedy to keep a convicted monopolist from illegally building a new monopoly, we at the same time can't expect Microsoft or any other business to roll over and decide not to pursue its goals as vigorously as possible within the confines of the laws or the remedies that have been ordered.

So far, until someone proves to me otherwise, Microsoft appears to be going about this build-out in all the right ways, and has been very smart about it.  One of Microsoft's first stakes in the ground for mobile media, for example, was its PocketPC PDA operating system.  Unlike with Palm's initial strategy and, for the most part, Apple's current strategy, Microsoft's only model for operating systems is to license them to hardware manufacturers and then to let those vendors duke it out in the market.  When PocketPC first arrived on the market, a lot of people laughed it off.  I didn't. 

"Trying  to be all things to all people," they said.  "Violates the KISS principle that  has made Palm such a success, " they said.  "The  product isn't that great," they said. (This, back in PocketPC's early days, was true.)  But I and a handful of other people saw a different future, one where then market leader Palm was going to have some serious problems.   Since then, Microsoft's PocketPC has clawed its way to PDA supremacy,  to the chagrin of the old Palm (now split into PalmSource and PalmOne).  Palm stuck by the notion of simplicity and even worse, as I've written many times before, stuck to an isolated base of development for the PalmOS rather than joining up with one of the two environments that now command the lion's share of the world's developers (.NET and Java).  

Had it not been for Handspring's Treos (eventually acquired by PalmOne)  -- about the only bright spot in the Palm universe -- the undertaker would probably be getting dressed right about now.   Not that he isn't already.   When Handspring first got going and managed some traction with the cellcos, I remember one of the founders Ed Colligan describing what a monumental challenge it is to get the cellcos to resell a new telephone and how, by having overcome that barrier, Handspring had some natural protection from Microsoft, which at the time had no cellco relationships.  Indeed, Microsoft had no such relationships -- or maybe it had one in Asia -- and everyone was laughing at them, saying "See? No one wants to do business with Microsoft."  And what cellco doesn't have Microsoft gear on its network today?  How quickly time wounds all heels.

Here again, Microsoft had some vision. Today, cellco operators are being squeezed every which but loose and are desperate for ways to increase their average revenue per unit (ARPU).  They've got the VoIP on WiFi/WiMax folks to the left, themselves as competitors straight ahead, and 3G build-outs eating away at their bottom lines on the right.   Along comes Microsoft and says, "Look.  Let us on your network and we'll put a device so powerful in the hands of your customers that they'll want to subscribe to other services from you which will make you more profitable."  Doh.

The point, in the case of Palm, is that Microsoft stayed the course that it knows so well.  It licensed the OS (as both Apple and Palm should have always been doing) and knew that by version 3.0 (as with Windows), they'd get it so right that the naysayers would be eating crow.  And so they are.  There's no doubt that Microsoft's desktop monopoly played a role in PocketPC's rise from obscurity.   But it was really just a classic business model combined with the mistakes of Microsoft's competitors that got PocketPC to where it is  today.

Another bet that paid off for Microsoft was Moore's Law.  The early PocketPCs were slow and clunky.  Memory technologies like Compact Flash and SD were just getting their footing at the time, so they couldn't do much to improve the situation.  Palm executives poo-pooed the idea that one day, a handheld device might be less of a PDA and more of computer and let Microsoft make a fool of itself in the market with a non-starter.   

Today, PockePCs are just that: handheld computers that perform just as well as 2002-class Intel computers and that can have gads of memory added to them.  Recognizing that PDAs and phones based on its mobile platforms were actually computers, the Redmond company was also smart in unifying all of its platforms, including PocketPC, under the .Net development environment.  If Microsoft leveraged its monopoly, perhaps this is really the closest one can come to pinning the tail on the donkey.   It created a world where all of the people developing for Windows desktops and servers -- at least the ones developing on .Net -- could also develop for the PocketPC.  But even here, to say the monopoly played a role, is a stretch.  A lot of Windows developers -- particularly the VB crowd -- are getting dragged into .Net kicking and screaming.  It's not exactly like Bill Gates threw some switch and said "Muh-haw-haw-ha-ha-ha-ha...  and now with the flip of this switch, we will use our army of developers to dominate PDAs as well."

So, whether it's a phone or a PDA, people are now running around with some pretty powerful gear on their belts and Microsoft has a choice now that mobile media has taken off thanks to the iPod.  Leave the power dormant on those mobile devices (let them be fancy contact managers, email devices, and phones) or go for broke and enable them for all forms of content: text, audio, and video.   And, surely, there are some of you out there saying "Shame on Microsoft" because when it enabled all those mobile devices for multimedia, it did so in a way that made it compatible with Microsoft's desktops and notebooks (thereby once again leveraging the monopoly).  So, let me get this straight: Microsoft should have invented some new format that was incompatible with everything else it makes just to avoid any perception of monopolistic impropriety?  Puh-leeeze.

Now that Microsoft has the deals in place to make sure the market is sufficiently seeded with the technology to play Windows Media-based content, all it has to do is get the content flowing.  That way, the cellcos get their ARPU up.  Oh, and the content providers know that when they create some content, that they only have to create it once and it will work on someone's media center at home just as well as it works on the phone in their hand.  Enter deals like the TiVo one I wrote about yesterday.  The content is flowing.   Enter the competition that Microsoft has created between online music stores like Napster-to-Go and Yahoo's Music Store, both of which require Microsoft Digital Rights Management technology in order for the music that's downloaded from them to work.   If music from Apples iTune's Music Store comes down in price from 99 cents, you'll have Microsoft and the battle for your business that it created between various online music stores to thank.

Did Microsoft do a bad thing?  Sure.  Not only that, I'm still not sure that the trust-busters came up with an effective remedy.  I've often said that Judge Penfield-Jackson had it right.  Not only should the company have been split up, it should have been split three ways (the third one being MSN).  But now that the punishment has been meted out,  to expect the company to roll over and play dead instead of doing whatever it can -- within the limits of the law -- to protect its future and its stockholders is absurd.  To credit Microsoft's monopoly for the way the company is so well-positioned to succeed in digital media is equally ridiculous.  If you really want to point a finger at someone, point it at Microsoft's competitors. 

Topics: Microsoft

About

David Berlind was fomerly the executive editor of ZDNet. David holds a BBA in Computer Information Systems. Prior to becoming a tech journalist in 1991, David was an IT manager.

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