Monopoly and technology

by Henry Farrell on March 26, 2006

Something which I hadn’t ever thought of before jumped out when I read this “piece”:http://www.nytimes.com/2006/03/27/technology/27soft.html?ei=5094&en=482f269e6e35b1c3&hp=&ex=1143435600&partner=homepage&pagewanted=print/partner/rssnyt in the _New York Times_ on problems with the new version of Windows.

bq. Skeptics like Mr. Cusumano say that fixing the Windows problem will take a more radical approach, a willingness to walk away from its legacy. One instructive example, they say, is what happened at Apple. … The approach was somewhat ungainly, but it allowed Apple to move to a new technology, a more stable, elegantly designed operating system. The one sacrifice was that OS X would not be compatible with old Macintosh programs, a step Microsoft has always refused to take with Windows. “Microsoft feels it can’t get away with breaking compatibility,” said Mendel Rosenblum, a Stanford University computer scientist. “All of their applications must continue to run, and from an architectural point of view that’s a very painful thing.”

Presumably Microsoft doesn’t want to break compatibility because by so doing it might undermine its enduring monopoly – if the mutual lock-in between Microsoft’s operating system and office productivity software is weakened, people might quite possibly move away from both. Apple, not being a monopoly (but having high customer loyalty) was much better placed to make the jump. While in contrast, Microsoft customers can look forward to a piece of bloatware that will be extraordinarily obese even by its previous standards. I suspect I’ll be switching to Mac meself next time I have the chance.

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Outside The Beltway | OTB
03.27.06 at 6:53 am

{ 36 comments }

1

Patrick 03.26.06 at 9:43 pm

Microsoft has also promised backward compatibility, and for the millions of people who still use older versions of Windows and Office, and who do not need or want to spend their money on a new computer, that promise is a good thing.

2

kcure 03.26.06 at 9:56 pm

Patrick is right. How is showing respect for your old customers/developers by promising that they won’t have to buy new software with each new OS a bad thing?

I still use programs that need DOS support, among other things.

3

DigitalDjigit 03.26.06 at 10:22 pm

But as Henry points out this will probably cause more and more people who are buying a new computer to switch to Apple. This trend will continue until it’s no longer too painful for Microsoft to abandon the old technology.

In fact Microsoft already abandoned DOS with Windows XP. DOS programs are supported but none of the DOS code is in XP. No reason they can’t do the same with later stuff, just add an emulator to the bundled software.

4

trotstky 03.26.06 at 10:54 pm

At my office, we just started using a system that is based on Word 97 with Windows XP. (No kidding!) When it crashes (not infrequent), I am as usual asked to report the problem to Windows. Only, if one reports the problem, one is informed that Microsoft no longer supports Word 97.

So they do cut their old customers loose, is all I’m saying.

5

tom@whimsley 03.26.06 at 10:56 pm

As digitaldigit says, Microsoft did indeed abandon DOS, but after several years in which the successor and DOS had been running hand in hand. And they’ve done the same with the Windows 3.1 legacy, abandoning the pre-NT software several years after NT was introduced. In fact, of course, Windows XP and Vista are built on a foundation that is about 15 years old (NT) but that is not so old really.

I’m no big MS fan, but I think they’ve done this right. They’ve paid attention to compatibility while continuing to move forward. It’s been this balance between pragmatic support for existing applications and continuing to move forward that has probably been the biggest source of their success. And while OS X may be elegant, let’s face it, Apple had got to the stage where they had to do something, and where they didn’t have that many existing customers (in comparison) to annoy.

6

thebears 03.26.06 at 11:27 pm

Of course, Apple did not drop compatibility when it moved to Mac OS X. The Classic mode allows power PC and 680xx programs to run in an emulation mode. There is a speed penalty, but the programs run faster than the did on old hardware. It seems to me that Apple, even with a completely redesigned operating system has better backward compatibility than Windows (begin the flames)!

7

Jim 03.27.06 at 12:08 am

I’ve got another explanation for you. Backwards compatability isn’t about consumers – it’s about businesses.

There are a ton of businesses, small and large, out there that are run on custom applications that run on Windows. Think databases, customer management, document management, patient records (for HMOs and hospitals), and so on. I’m sure (although I don’t have any data on this) that many billions of dollars were spent on developing these applications. If Microsoft abandons backward compatability, these companies will just not upgrade. MS doesn’t make money on the new operating system and the companies don’t get the advantage of the new OS. Sounds like a lose-lose situation to me. Apple didn’t have to worry about it because companies weren’t running mission-critical applications on Mac at the time. (i.e. some things that are OK when you have 5% of the market aren’t so great when you have 90%)

Anyway, the “start over with a more elegant design” philosophy of programming is debatable. Not everyone thinks it’s a good idea (see, e.g. Joel on Software).

8

aaron 03.27.06 at 12:32 am

I’m pretty sure that I will be getting a Mac this fall. I’m just tired of microsoft, have been for years.

They seem to make changes to their software for no useful reason.

9

Brandon Berg 03.27.06 at 12:41 am

So they do cut their old customers loose, is all I’m saying.

They cut customers loose in the sense of no longer providing technical support and upgrades for very old products. That’s very different from changing their operating system in a way that would break all old applications.

10

abb1 03.27.06 at 1:36 am

No one cares if you are buying Mac, or 10,000 of people like you are buying Mac.

They only care if 10,000 companies switch to Mac, and this is quite a different game: if I am a CEO and I switch to Mac – is my ass covered? Until the answer is “yes, without a doubt”, Microsoft is safe. That’s what this is all about.

11

Luis Villa 03.27.06 at 1:50 am

How is showing respect for your old customers/developers by promising that they won’t have to buy new software with each new OS a bad thing?
Because it means inferior software in the long run- more complex, more buggy, slower, more insecure, etc. If they weren’t afraid of losing their monopoly, they could probably cut millions of lines of code from their OS and introduce something lighter, faster, more stable, and more secure. And nothing would stop them from continuing to support those old customers just fine on the operating system those customers already have.
That said, the fact that they keep compatibility, even at such demonstrably high cost, is actually a sign that there is at least some competition in the marketplace. If MS were a true/pure monopoly, they could perform this short-term customer abuse with no worries- the customers would have nothing to defect to. As it is, they are afraid customers will defect to Apple or Linux*, so they must keep compatibility.

* a much bigger threat in abb’s corporate space because of the lower hardware costs and increased competition amongst suppliers

12

Andy 03.27.06 at 3:21 am

In the corporate frame Linux is a much bigger threat than Apple. Another blogger going to a Mac is no big deal but more businesses emulating Novell or (part of) IBM and cancelling their Windows and Office licenses will make waves.

13

joel turnipseed 03.27.06 at 3:30 am

Yes, to all who said this is a business customer issue: exactly.

I’ve calculated the costs of switching to Mac, and it would cost me two or three thousand over-and-above the hardware costs: a fair amount, but amortized over a couple of years for the switch, it’s not bad. As a long-time Mac user (’85-’97) who only switched because Mac sucked so bad compared to a PC/Windows NT Workstation, I’m certainly hankering to switch.

But the business ecosystem has not billions, but tens of billions (or even: hundreds–it’s possible, given the twenty years or so of MS dominance in the marketplace, and there are certainly apps that old that are still in use), invested in proprietary apps built on MS (this is, of course, the true genius of MS vs. Mac: getting tools like VB/Access into hands of amateur/low-level programmers in business environment & supporting them like crazy–MS are the masters of the PRTM gospel & reaped the just rewards). So, there’s not really a choice for Microsoft.

Still, there’s a cost–and it’s increasingly shitty OS’s & the inability to create rapid churn for key apps like OS/Office (which account for massive percentage of MS net profits). I finally left Win2K Pro this spring when I built a new PC for the first time in 5 years and can definitely say: XP Pro is garbage by comparison (much less stable).

14

anon 03.27.06 at 3:43 am

Perhaps the best backward-compatibility play for Windows legacy applications may soon be a Mac. With its new Intel based hardware, it could easily make (eg) VMWare available on its systems, and people with legacy issues could run their apps safely on a virtual machine within OS/X.

15

agm 03.27.06 at 4:09 am

@anon at 14:
Not necessarily true. It’s called driver hell for a reason, especially if the driver does weird things when talking to the OS or the hardware (as is won’t to happen when you code for just getting something done, cause hey, who’s gonne be using this in 20 years…)

16

Branedy 03.27.06 at 4:11 am

One your fellow Bloggers has made the switch:

http://feeds.feedburner.com/Robhyndmancom?m=439

Go find out how he likes it.

17

Cian 03.27.06 at 6:41 am

Jim in post #7 is right. Its about business. Banks, insurance, etc, etc. Moving to a new OS is a huge endeavour for any large company, and one key consideration is will the legacy software work on the new OS. If the legacy software didn’t work, then they wouldn’t move (or would delay).

MS’s biggest competitor is not UNIX, or MacOS – its its own legacy of old Operating systems already paid for and people’s computers all over the world.

And for #13 – Are you sure? My experience (as a pro), is that XP is more stable than Win2000. The problems are largely hardware, rather than S/W – and that’s a problem for any OS.

18

Rob Hyndman 03.27.06 at 7:34 am

Yup, I made the switch (to a MBP). I’m a die-hard Windows user, and have been for about 15 years now. I made the switch about a week ago. I’m ecstatic about the transition. The only issue I think I’ll have is lack of drivers for my printer. But I’m still working on that.

Obviously in an enterprise situation it would be different.

But I couldn’t be happier. From my cold, dead hands, etc.

19

Doormat 03.27.06 at 8:01 am

The problems are largely hardware, rather than S/W – and that’s a problem for any OS.

But much less of a problem for Apple, as they make all the hardware, and go to some lengths to standise it. That doesn’t explain every difference between Mac OS and Windows, but a lot of people seem to agree that WinXP is very stable on a good bit of hardware: no easy feat for microsoft to pull off, given the vast variety of hardware they have to support.

While in contrast, Microsoft customers can look forward to a piece of bloatware that will be extraordinarily obese even by its previous standards.

I really don’t think that this is very fair– does, for example, Windows require much faster and more expensive hardware to run than linux or Mac OSX? No. If you want a really fast OS, go and run BeOS: it’s not supported anymore, but it’s beautifully fast (mainly due to design decisions taken from the ground up).

20

EWI 03.27.06 at 9:09 am

Thebears is correct – OS X on PowerPC had an emulation mode for System 9 and earlier. OS X on Intel has now dropped Classic, but itself includes an emulator (Rosetta) for PowerPC-native apps.

Branedy – I see that both Josh Marshall and John Aravosis have made the switch. How long until arch-Mac detester Atrios gives in to the peer pressure? ;-)

21

nick s 03.27.06 at 9:37 am

Yes, it’s all about legacy business apps. Consumers are very easily converted to a new OS or software package, by comparison. But if you have an office or agency system that holds a decade’s worth of data, and whose workings are familiar to staff, then migration is a nightmare.

22

jonm 03.27.06 at 10:03 am

Here’s a question though. Is there a music program like Musicmatch Jukebox that is compatible with the Mac. I have thousands of WMA files and I don’t want to convert them to AAC because of the loss of fidelity that would come be being forced to use ITunes. That is my major stumbling block with making the switch.

Given the dominance of the IPod, I think that Apple is acting a bit like Microsoft used to act.

23

joel turnipseed 03.27.06 at 10:22 am

cian –

Well, I kept a Win2K server running for more than a year once, so: I guess it depends on your apps & configuration (as well as, as you say, hardware).

In the meantime, seems like there’s (CT surprise!) near unanimous consent: Macs are cool, but legacy business apps are going to hold people to their current platform.

Of course, MS still has all those AS400/RPG users to convert while waiting for Vista–over their customers’ dead bodies (as I learned when working with legacy customers at ERP shop in 90s).

24

Slocum 03.27.06 at 10:23 am

I suspect I’ll be switching to Mac meself next time I have the chance.

Hmm. I thought everyone on the left already used a Mac ;)

The situation is rather different than the article suggests. First of all, Microsoft went through the the transition that Apple did much sooner than Apple, first when it went from the 16-bit, Windows 3.x programming model to the 32-bit programming model of Windows 95 and NT and then when it killed the old Windows 95 kernel and went exclusively to the NT kernel in Windows XP. Apple, by contrast, kept the OS 9 architecture alive LONG past its expiration date. Given how primitive OS 9 was under the hood (in terms of memory management and threading to name two critical areas), it is amazing that Apple was able to keep cutting edge software running on top of it for as long as it did. (Recall, too, the failed efforts and many-year delays in getting a successor to OS9 out the door almost killed Apple).

Next, Microsoft’s Internet security problems aren’t really due to weaknesses of the kernel or the underlying programming model, but rather poor decisions and poor security discipline in developing Internet-enabled applications. Internet Explorer has been so exploitable because Microsoft intentionally designed it to emphasize openness and extensibility rather than security–an enormous mistake, as it turns out. Maintaining backward compatibility with older Windows applications has nothing to do with this.

Lastly, compatibility with the vast universe of Windows software and Windows hardware is absolutely fundamental to the Windows (and MS) ‘eco-system’. A new OS from MS that gave up all that would be DOA (except in special-purpose devices–the XBOX 360 for example).

25

Dan K 03.27.06 at 10:32 am

The really, really frightening thing for Microsoft is the trend where the business sector go for commoditized solutions and slow upgrade paths (a twofer with low margins and stagnation), and the consumer sector goes toward high differentiation/ tight integration. Today, growth is in the consumer space. As pointed out in # 22, consumers more easily converts. Microsoft’s only genuine consumer space presence is the x-box. Methinks the iPod/iTunes/OS X combo is a stronger proposal than x-box/vista. Although the business sector lock-in has served Microsoft well in the consumer space til now, it is in the future better to have a media lock-in than a business sector lock-in. Microsoft is of course going to have a commanding market share for the foreseeable future. However, that is true for GM as well.

26

abb1 03.27.06 at 11:27 am

Joel, but Win2K server is a server OS while XP is a client, PC OS. You can’t compare them as two server OS, normally an XP machine is rebooted daily.

27

joel turnipseed 03.27.06 at 11:48 am

abb1 —

Well, in this instance, it was Win2K Pro (which I was using as a VSS server). In any case–I’m certainly willing to say that my experience w/XP Pro may be uniquely bad… I certainly don’t have anything at stake in the matter.

Dan K–

It’s not clear to me what this means: “…the iPod/iTunes/OS X combo is a stronger proposal than x-box/vista.” Is this from a top-line corporate perspective or a consumer choice perspective? In the Apple instance, it’s all they have (damned good, at that); but for MS, there’s no stopping a Windows user from buying an iPod (I have three) and nothing prevents a Mac user from buying an Xbox (is there?)–and certainly the MS revenue stream is much more balanced than X-box/Windows?

For all that, just did a quick check of comparative revenues for last year & wow, is Apple catching up. Apple had $1.34B net on $13.9B rev, while MS had $12.25B on $39.8B–who’d have imagined Apple would ever approach even 1/3 MS revenue again? Of course, the MS margins are, as usual, nasty. Thirty-percent net margins… it’s enough to make you hate them just for that.

28

Antti Nannimus 03.27.06 at 11:54 am

Oh, no! Crooked Timber has taken a worm hole into Slashdot. Is there any way back? Are we doomed?

Have a nice day,
Antti

29

joel turnipseed 03.27.06 at 11:57 am

I’ll add–you’re spot on with this, Dan: “The really, really frightening thing for Microsoft is the trend where the business sector go for commoditized solutions and slow upgrade paths (a twofer with low margins and stagnation)…”

MS makes 90% of its profits from OS and Office. If sales of these two take a significant hit, they’re hosed (X-box still loses them hundreds of millions a year, they don’t make much on big server stuff, and Great Plains acquisition is all but a bust).

30

pdf23ds 03.27.06 at 12:10 pm

“this is, of course, the true genius of MS vs. Mac: getting tools like VB/Access into hands of amateur/low-level programmers in business environment & supporting them like crazy—MS are the masters of the PRTM gospel & reaped the just rewards”

Agreed. This is why it’s suprised me so much to see the incredibly exhorbitant pricing on the latest incarnation of MSDN and Visual Studio. Their basic development package for businesses is now stratified into three editions, the most basic of which is more expensive than their 2003 version of visual studio (which is the current standard). Their MSDN subscription has tripled in price. It’s almost as if they’re showing the finger to small business developers, hoping (maybe?) to get a bigger margin on medium and large business sales of development tools. This alienation is something uncharacteristic, and it seems like a bad move.

PRTM?

31

Cian 03.27.06 at 12:45 pm

joel – a lot of the WinXP drivers that were written for old hardware were pretty bad, so its quite likely that was the problem. Of course anybody running any serious server app on Windows is a fool…:) (run it on AS/400. Like a rock those things).

As for revenue. Well Apple is mostly a hardware company, so their costs per unit will be far higher that Microsofts. And the MS margins sort of reflect the fact that in software your main costs are fixed, no matter how many licenses you sell.

The future may be the consumer – but I doubt that’s windows, or MacOS. The trouble with computers is the things are too complex, and too prone to breaking.

32

joel turnipseed 03.27.06 at 1:01 pm

PRTM. Founding partner Michael McGrath’s Product Strategy for High Technology Companies is the best book ever written for high tech entrepreneurs. I don’t know if he developed his models before or after MS got their mojo working for juggernaut of Win 95/VB/Office (which is when they really took off as a company; McGrath’s first edition was 1994), but you’d be hard-pressed to find a better strategic guide to growing a software or technology company (Moore’s Crossing the Chasm is a close second, though–and better written).

And if what you’re saying is true about MSDN/VS–it’s too bad, and a bad whole product strategy. They don’t generate much revenue from that stuff anyway. Spending $2000 on VS Enterprise & MSDN (which is what it was when I last subscribed) for a developer in a small shop is peanuts & the apps that person writes will stick them to MS forever. It was a great deal for everyone.

OK… time to get out of slashdot wormhole/memory lane.

33

joel turnipseed 03.27.06 at 1:12 pm

“The trouble with computers is the things are too complex, and too prone to breaking.”

Yeah, when I saw the NYT piece’s details about 50M lines of code and the delay I immediately thought three things:

1) I hope the project team remembers reading Brooks.
2) Didn’t Bill Joy once say that you couldn’t write a program larger than 10K lines without bugs (much to the chagrin, no doubt, of Watts Humphrey)? Is it even possible to write a commercial product with 50M lines of code that isn’t a complete wreck? Isn’t this why fighter jets and space shuttles are so ridiculously expensive?
3) Douglas Hofstadter’s hilarious Hofstadter’s Law: “It always takes longer than you think, even accounting for Hofstadter’s Law.”

34

nick s 03.27.06 at 2:14 pm

One of the more problematic aspects of the transition to Vista may be that, with such a long time between major OS upgrades, the traditional path of hardware upgrades to cope with software upgrades has been delayed. You can get away with XP at the consumer level on a 2001-vintage box, as long as you have enough RAM and don’t ask much of the hardware. When Vista arrives, while hardware guidance is vaguer than in the past, its bells and whistles may be hidden from many consumers. (There’s an awful lot of old kit these days, and an expanding consumer base brings in people who simply don’t upgrade until something breaks.)

In contrast, thanks to its control on both hardware and software, Apple has the ability to ensure that its OS and machines keep the same pace. It’s also benefitted at the consumer end by providing modest but noticeable performance gains in its OS upgrades for people with relatively new kit.

It’s a different ballgame, but Apple ensure that its third-party developers could buy Intel machines at a relative discount to port their apps in advance of the commercial switch — and swap those development boxes for a shiny new iMac once they appeared. Again, that’s a luxury of controlling both sides: were Microsoft to make a similar transition, the OEMs would have a fit.

35

jw 03.27.06 at 2:24 pm

agm@#15:

That’s much of the point of using a virtual machine: to avoid driver, library, and other such compatibility errors. Software under VMWare uses a virtual VMWare graphics card, network card, etc. instead of accessing the physical hardware.

36

Dan K 03.28.06 at 5:31 am

Joel:
I meant in the consumer space. I’m sorry for the confusion. Actually, the xbox/vista integration is rather weak, while everytime Windows users use iTunes, they are testdriving OS X. Still, I don’t think that is enough to convince consumers. And never underestimate MS. But I think they are in a weird fix where old strengths have become weaknesses. And since the cost to switch will, in a year or so, be neglible (install Windows on your shiny Macbook/iMac/Mac mini if you don’t like the OS X experience) and the upside potentially great, I think Apple marketshare will explode, if only because Wintel is so uninspiring at the moment. You know, this happened to Apple 1995-1997.

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