Ghost Story: Fear of Microsoft Fades

As Halloween fast approaches, Apple is producing more good-natured fun, poking fun at Microsoft's decision to end the use of Vista as the name of its Windows operating system for PCs. It probably didn't cost much to produce the latest three commercials in its "Mac vs. PC" series. But their effect appears to be much greater, across the Web at least, than what Microsoft is able to generate in its $300 million campaign about Life Without Walls .

It's not surprising, really. Microsoft is not known, even yet, for pulling off memorable videos, no matter how much it spends. Jerry Seinfeld, the $10 million pitchman, was given two weeks, then retired.

In fact, it's exactly 10 years ago this week, that a live audience of Microsoft watchers was trying to crowd into Judge Thomas Penfield Jackson's court room in Washington, D.C., so grab a glimpse of Chairman Bill Gates' video deposition on whether Microsoft had used the monopoly power of its operating system to drive Netscape and its Navigator browser out of business. Here's an excerpt of that testimony, called non-responsive by the judge, and whose action came mainly from Gates' tendency to rock back-and-forth in his chair.

The intervening time has given way to a slow fade of Microsoft power and the fear of it. Gates' "Internet Tidal Wave" memo in fact came in 1995 and the company has basically worked its way toward a point of irrelevance on the Web. The company's browser still dominates, but the open alternative, Firefox, is gaining ground and Google, unknown a decade ago, is now trying to accomplish what Netscape failed to do, by making a commercial success of its alternative browser, Chrome. Microsoft has talked about "software as a service" for years, but has failed to come up with a way to provide versions of its Word, PowerPoint and Excel office products online, in an effective manner. In the meantime, effective alternatives are springing up, albeit gaining ground slowly.

Sure, Microsoft will be powerful and profitable for another decade, at least. It has a market worth of $210 billion, even after all the turmoil of this year. That's basically equivalent to the worth of Google and Apple, combined.

But there's the rub. Microsoft can't rely on fear or forced loyalty any longer.

Google just got founded 10 years ago. Now, through search and text ads, it's worth half as much as Microsoft. And there is not enough fear to stop it from launching its own online office suite or its own browser. In the intervening time, the most significant new Microsoft product, you could argue, came in hardware: the Xbox video game machine.

Apple was basically presumed to be either on its way to slow death or at best in limbo, 10 years ago. Now, it's worth almost $100 billion -- even after losing about that much in value in the stock swoon this year. Even with that, its stock -- pushed by the iPod, the iPhone and improved products across the board -- has gone from $10 to $110. Microsoft's has dropped from $30 to under $24.

Even its operating system supremacy doesn't seem so intimidating, any longer. For ease of use and overall quality, Apple's Leopard operating system gets the blessing of The Wall Street Journal's Walter Mossberg. And, he even gives a nod to Linux, the openly produced operating system, which is favored by the same kind of folks who liked the command line interface of the original PC approach, the Quick and Dirty Operating System, redubbed the Microsoft Disk Operating System.

Microsoft will still produce prodigious cash flow, for years to come. But all its money cannot bring back its ability to dictate how computing will evolve, by tying features in Vista or Windows 7 or Azure or whatever operating system(s) it develops next.

That's why you likely will see Microsoft trying, successfully or not, to put more of its money into marketing what it's already got. Whether it gets the same bang for its bucks as Apple. Or not.