>From http://comment.zdnet.co.uk/story/0,,t479-s2126268,00.html
By Rupert Goodwins "Microsoft knows just one way to make money, and the cost of dependency may be fatal in the end. It is one of the great pleasures in life that a man such as I, whose fiscal incompetence verges on the criminal, can look at the books of the world's most successful software company and tell it where it's going wrong. Fortunately, Microsoft makes it easy. Last week, I wrote about the strange business of Sendo ditching the Microsoft Smartphone platform. Readers wrote in, pointing out that it wasn't so much the inherent qualities of the phone that were the problem but that Symbian is an enormously better bet for operators, phone makers and third-party software writers to make money. Symbian is much more open, collaborative and flexible. In trying to repeat the Pocket PC model, Microsoft had comprehensively misread the market -- nobody wants to be tied to a control freak company that wants everything to run to its own plans. It's like the statism of Soviet Russia versus the capitalist anarchy of the US. The trouble for Microsoft is, it looks as if it doesn't know any other way. That was made painfully clear in last week's disclosure that while the company is still raking in the dough, it's purely from the Windows operating system and Office. These star performers show 85 percent profit margins on multi-billion dollar sales, the sort of return on investment that defies any integration with normal economics. Eventually, Microsoft will have to return to the real world, and its attempts to establish base camp back on the ground have been miserable. Windows CE and its Smartphone offshoot lost $33m overall on revenues of $17m -- after six years on the market. MSN lost around $100m on $500m revenues after seven years. Home Entertainment -- that's Xbox -- lost nearly $180m on another $500m revenues. Would you invest in any of the above? Microsoft has, because it can't think of anything else to do. Is that a good reason? The company has more cash than can be believed, some $45bn in the bank last time anyone looked, but is absolutely unable to spend it to good effect. In trying constantly to invent a new monopoly to replace Windows when it dies, it's comprehensively failed to build anything that can even survive on its own two feet, let alone take over the world. Even stuff that's building directly on the Windows base, such as the Microsoft Business Framework, is confused by this desire to own it all: the company is trying to keep all the old ideas going while generating new ones and embracing third parties. Do people trust Microsoft to produce stuff that's relevant, that works and doesn't lock them into expensive dependency? Then there's the brand new stuff, shown off by Bill Gates at Comdex Fall 2002 this week. The Tablet PC: �1500 for a laptop computer without a keyboard. The Smart Display: �1000 for a laptop computer without a keyboard -- or a computer. A magic application that lets you print from your desktop to a copy shop somewhere on the Internet. And lots of money spent on the Trusted Computing Initiative that many people -- myself included -- think should be renamed the Untrustworthy User Initiative, as it seeks to return control on what us naughty individuals do, watch and hear on our computers to big corporations who know what's best. Can you see any of these returning 85 percent profit margins on tens of billions of dollars of sales a year? Can you see Microsoft surviving if they don't? If the money Microsoft is investing in itself is returning so little, how about acquisitions? There used to be a running joke that all of Microsoft's innovations were bought in from outside, and to this day it's hard to point to any aspect -- OK, positive aspect -- of your daily computing experience that originated in the fertile minds of the Redmond brains trust. It's perfectly valid to buy in what you need, until you go shopping for good ideas and find that because the market's been so one-sided for so long all the independents have given up and gone to do something else. Even when the company does find good things to buy, they silently vanish away. One presumes the internal politics of Microsoft are worthy of Byzantium and the chances of newbies surviving if their sponsors fall out of favour correspondingly small. What Microsoft's figures show is that given the choice, people go elsewhere even if -- as Sendo demonstrated so graphically -- they have to gnaw their own leg off to do it. When there are no alternatives, then Microsoft takes the option to charge around three times as much as the market would normally support: mortgaging the future to build up treasure now. But why? What on earth is the point in converting respect you can't buy into money you can't spend? Microsoft's days in the Paradise of Windows are numbered. What it needs to survive outside can't be bought, only earnt." -- William T Goodall [EMAIL PROTECTED] http://www.wtgab.demon.co.uk/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
