Macopinion

Apple versus Microsoft: Part 2

by Marc Zeedar macopinion@designwrite.com

This series of articles is about exploring the core philosophical differences between Microsoft and Apple. Last time I wrote about how Microsoft has made the Windows Vista licensing agreement forbid use of the cheaper versions of Vista on virtual systems such as Parallels, forcing Mac users who need to run Windows to buy a more expensive Vista. (Or just stick with XP.)

My contention is that this decision by Microsoft reveals their fear of Apple. This is an attack on Apple. Though not a direct one or a particularly effective one, it is still an attack. Microsoft obviously does not just see Apple as another hardware maker like Dell or HP, but as a competitor. Since Apple's primarily a hardware manufacturer and doesn't compete directly with Microsoft but with Microsoft partners like Dell and HP, this tells you something important about Microsoft's philosophies:

Microsoft is not worried about losing or gaining a few sales to Apple but terrified of losing market control.

Microsoft is all about money, of course. All successful companies are. But Microsoft doesn't want to earn money via hard work and good products: it merely wants to receive money for doing the equivalent of nothing. It can do that by dominating the industry and using its monopoly power to guarantee sales regardless of product quality or consumer interest.

This attitude makes sense when you look at the history of the company. Microsoft is the luckiest company ever: that IBM happened to ask them for an operating system and forgot to make it exclusive turned out to be the lotto jackpot of all time. IBM's standard became the world's standard, and Microsoft became incredibly powerful (and rich) selling that standard. The chutzpah of Gates to claim he had an OS when IBM came knocking even though he didn't is about the only clever thing Microsoft has ever done. Since then, Microsoft has pretty much been sitting on its laurels, using its monopoly power to force people to give it more money.

Who wouldn't want such easy success? It must be addicting, and the power corrupting. Such easy sales must seem like a dream, and no doubt that's where Gates gets his fear that like an ethereal dream, the magical sales formula could just one day vanish into nothing. Such worries make you paranoid and delusional, qualities Gates has been projecting lately.

When you study the products Microsoft has created, the one common thread is a quest to repeat the magical formula again: to create a product that is so dominant people have no choice but to buy Microsoft. He is trying it with the proprietary Xbox, the proprietary Zune, Windows CE for PDAs and smartphones, Origami, etc. Is it any wonder that Gates is the world's biggest advocate of subscription-based sales for software, music, and other content? He wants to just sit back and let the money roll in without having to do anything. That's the Microsoft Way.

Of course, except for Windows, and to a less extent Office, all Microsoft's other ventures have failed miserably. Lightning will not strike again for Gates. His luck's run out.

Thus Gates is paranoid. He seeks to dominate every industry. He has no other business plan. It's the only one he knows, the only one he's been successful with. Apple befuddles him by continually innovating. All Gates can do is make cheap copies.

This frustrates and worries him. If his company is not the dominate force in the industry, what is it? A nothing, that's what. He knows that. His empire is a house of cards. Everything is built on the foundation of the Windows operating system. Windows succeeds because it's the standard. If it wasn't the standard, Microsoft would be an also-ran. A nothing.

So what does Gates do? He trivializes Apple's success. He denies reality, and spins his company's failures as successes (i.e. the Zune will sell a million units by next summer). He makes wild promises he knows he won't keep. He makes shoddy attacks like lying about Mac OS X and Vista in interviews. He encourages countries like Norway to shut down the iTunes Music Store because it's a monopoly (ironic). And he changes Vista's license agreement to force Mac virtualization users to buy the most expensive versions of Vista.

This is hilarious because it's the giant attacking the gnat as though his life depended on it. Apple is no threat to Microsoft. Even if half the world dumped Windows for Mac OS X next year (extremely unlikely) Microsoft would still have a huge chunk of the market and massive income and profits. Apple's a much bigger threat to Dell and HP and other PC makers who can only sell identically crappy Windows boxes and who can't fix the flaws in Windows.

But Gates isn't worried about immediate income. Remember, a lot of switchers would use virtualization to run Windows software and most of them would buy Office for the Mac to be "compatible" with their old files and colleagues, so Microsoft could conceivably rake in the dough from either platform. But Gates is thinking long-term, and he's terrified that if he loses control of the industry he'll lose his magical sales formula. If he doesn't own 90+ percent of the industry the marketshare losses will accelerate and eventually Microsoft would have to compete on merits instead of monopoly sales, a prospect which fills Gates with dread since he knows he can't compete on a level playing field. He never has and wouldn't even know how to try.

This character of Gates is revealing. We see it throughout Microsoft. They created PlaysForSure, their DRM technology, as a licensing system with the idea of making their DRM the global standard so that Microsoft could control the digital content industry. The fact that Apple's FairPlay is the much more widely used standard -- to such an extent that Microsoft stabbed its partners in the back and abandoned PlaysForSure on the Zune -- drives Gates insane. It wasn't supposed to be that way.

For another example, look at Xbox. As Daniel Eran on Roughly Drafted accurately assessed, Microsoft's primary goal in creating the Xbox was fear of losing Windows gaming to consoles:

So Microsoft has to invest in defending video games on Windows. They have to own or control enough of the gaming market to ensure game developers don't start a wholesale shift to consoles, or to Linux, or cross platform. Microsoft has gone on the offensive by developing DirectX, a set of proprietary technologies that tie video games to Windows...

With Xbox, developing games for PCs is strengthened; without Xbox, Sony and others gain power and technologies like OpenGL become the standard instead of Microsoft's DirectX.

This attitude of desperate domination is what makes Microsoft so dangerous. They aren't interested in being in markets where they can't dominate, unless such a move is strategic to their long-term domination goals (such as the MSNBC cable network venture providing Microsoft with media content).

Microsoft makes decisions based on fear, and while fear's a good motivator, it's not ideal for rational decisions. Fear leads to panic and desperation, and those open the door to unethical and unscrupulous choices. Microsoft will do anything to maintain its monopoly, and that makes the company dangerous. As Apple suceeds and Microsoft struggles, we're going to see Microsoft's fear rise, and who knows what it will do in response. The next few years should be interesting.

Next Time: We've just looked at why Microsoft fails, so we'll explore Apple's secrets to success.

macopinion@designwrite.com