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Microsoft: The existence of alternatives changes everything

What's happening to Microsoft? Business Week calls it a midlife crisis, but what if the world has simply moved on?

The announcement that US regulators want to prod Microsoft to share more information with its partners underlines how things have changed for the software giant.

I remember the siege mentality in Silicon Valley during the first Microsoft trial. The company's browser bundle and its battle with Netscape seemed to make competing against such a dominant, cash-rich rival almost impossible. Who was going to be next? It became a cliché to talk of Silicon Valley venture capitalists asking "the Microsoft question" - how will your new technology fit into the Microsoft ecosystem, given the impossibility of fighting City Hall and taking on Redmond directly?

People genuinely questioned whether it was going to be fun doing technology anymore, given Microsoft's ability to provide a solid me-too in any market it wished to enter. Why innovate if you were going to end up competing against a vanilla version from Microsoft with far more marketing muscle and a huge Windows installed base? The slap on the wrist that Microsoft received after the Department of Justice found against it seemed to confirm all this doom and gloom. Microsoft had won.

It doesn't feel like that now. The aftermath of Microsoft's second trial in Europe sees Microsoft not as triumphant monopolist but as beleaguered incumbent. The company didn't expect to lose this suit, but it did, and it now faces a long and distracting appeals process. It is throwing around millions of dollars to end patent disputes with its bitterest foes. It says it has changed. It wants to come in from the cold. It's fed up with being treated like a bully. I asked the incoming head of Microsoft UK if there was one thing that he'd regretted in his eight years with the company. He replied at once: "The Department of Justice trial. We learned a lot from that."

Business Week frames Microsoft's position as a rite of passage, with a cover story that asks whether Microsoft can get over its midlife crisis. But that doesn't feel right to me. This isn't a rite of passage. It's a different world, and one in which Microsoft's familiar moves look increasingly out of place. Several incidents during the last two weeks have left me with a nagging feeling that the game really has moved on.

Item One: We don't want to buy software
This week's launch in Europe of Salesforce.com's latest software upgrade provided one example of how Web technology can simply bypass Microsoft's monopoly. The company's logo is a red circle with a line through it over the word software -- as in, "no software here". Its marketing capitalises on the pent-up frustration and irritation with complex software by offering a piped CRM application through a Web browser as a service for a monthly fee -- with a 30-day free trial. You can pay over the phone with your credit card, and no salesman will call. If your salespeople have Web browsers, it's pretty much deployed.

Founder Marc Benioff is an ex-Oracle man, so it's not surprising that there is no love lost between Microsoft and Salesforce.com, but it seemed to me that the company's executives had in their eyes the gleam of people who know they're riding the next wave -- an anti-software wave. Salesforce.com is software for people who don't want to deal with a software company -- with licences, with IT departments, with training, with the whole mess. As one user told me, "I need the service. I don't need to own the software." The existence of alternatives changes everything.

Item Two: We know there's better software out there
The second incident was the announcement of Google's Gmail. On the last day of March, I was at my desk trying to find a document in one of the 600 messages in my Microsoft Outlook inbox. I watched the tragic sight of Microsoft's embarrassing puppy skipping away while the search engine wheezed its way through my files. The horrid little cartoon seemed a painful attempt to substitute style for substance. The search was slow and I couldn't find what I was looking for. Then I went to Google and found an excellent helper application, the Nelson Email Organizer, which allows me to do wickedly fast searches in Outlook. Can someone please explain to me how Google can search billions of pages on the Web more effectively than Microsoft can search my 600 e-mails? Eerily, the next day Google announced an email service that, among other things, promised me the ability to use Google to search my mail. The existence of alternatives changes everything.

Item three: We want to use it, not hug it
I had two separate meetings with Microsoft product managers. They were talking about very different products -- one on the desktop, one for business users -- but they shared a passionate love for the technology that they were helping to create. Both spoke with incredible focus and intelligence about the existing feature sets of their products and outlined complex roadmaps for the future development of those products, in once case mapping out the vision until 2013. Both spoke with remarkable fluency and concentration about the intricate details of small user interface choices, and the minor incremental benefits that they hoped to include in future versions of their applications. Both were extremely intelligent about what they did. To me, they were channelling the geeky computer-who-wore-tennis-shoes charm of the early Bill Gates; super super smart and super super passionate about doing really cool software.

As I listened to them riff enthusiastically about the details of the software that they described, I thought: it's true. They really do love software. That's the problem. Most users will not use a fraction of the features with which they're so entranced. They just want it to be simple, and to work, and do one thing well. Like Google. That's not Microsoft's strong point. The game has moved on.