During the Microsoft antitrust battle of the 1990's, I recall Microsoft making the point that the computer industry was volatile and that monopolies are always at risk of naturally collapsing. Their best example was IBM, which was itself involved in a long, prolonged antitrust battle in the 1980's. Except for the resources wasted in the courtroom, nothing came out of those antitrust proceedings, but nothing needed to: IBM's monopoly had naturally collapsed, largely thanks to Microsoft.
Microsoft at the time of its own antitrust trial was fond of portraying its relationship with IBM as one of a young, relatively small upstart negotiating its way through a world dominated by a large, mature, and well-established corporation. And although the relationship between the two in the early 90's were terrible, the two never really directly competed. IBM did release OS/2, but OS/2's prominence was very limited and, for the most part, the two never directly battled. Direct competition came not from Microsoft, but from companies like Compaq, who were making IBM clones. After all, IBM was primarily a hardware company, and Microsoft was primarily a software company. But if they did not directly compete, why do people credit Microsoft with IBM's demise, and why did Microsoft view itself as a sort of rival to IBM?
Although the end of IBM's reign came directly from the rise of the ironically-termed "IBM-compatible PC", what had really happened was a platform shift. The hardware was no longer the platform of primary importance; this role had shifted to the operating system. In other words, it was no longer important to buy a computer bearing the IBM brand. Any computer with any brand would do, as long as it ran DOS or Windows, because it's on DOS and Windows that everyone's applications ran on. Contrast that with Apple computers, from the Apple II to today's Macs, where the hardware and operating system are vertically integrated and thus getting the operating system that ran the software that you wanted necessarily also meant getting hardware of a certain brand. The divorce of that hardware from the operating system destroyed IBM's monopoly power, which made possible competition in the hardware market, thus destroying IBM's monopoly and paving the way for the rapid-paced evolution of hardware and uptake of the PC in the 1990's (this, by the way, is the primary reason why I am so thankful that Apple ended up being marginalized; tight-fisted vertical integration of hardware and software has long been Apple's MO, and had they been at the helm, all the fast-paced innovation of the 90's would have been largely muted, and even today, Apple's "innovations" are largely aesthetic while all the real work of more powerful hardware development falls upon the legions of generally little-known hardware manufacturers made possible by the lack of hardware-software vertical integration).
Microsoft is quite cognizant of the way by which IBM fell from its pedestal, and this was why they were so fearful of Netscape and why they launched an all-out effort to destroy it. In hindsight, Microsoft never needed a heavy-handed tactic to destroy Netscape, since, despite all the hoopla over the antitrust violations, 90% of Netscape's demise could be attributed to the fact that Navigator 4 was by far the worst, most unstable, most buggy, and most atrocious browser to have ever been widely released. Microsoft's illegal actions only hastened the death that Netscape brought upon itself. But had Netscape actually produced a decent product, and had the conditions in the 90's been right (keep in mind that broadband was rare and many people were still not connected at all), Netscape could have posed a threat to Microsoft because if applications started to move online, then it would be Netscape's browser that would be the most important platform, and the choice of operating system would be marginalized, much like how the choice of computer brand was marginalized. Microsoft knew this, and it knew that it could not repeat IBM's mistake, so they tried to protect themselves through vertical integration, so when the day comes when online applications supplant offline applications, they would be running atop Microsoft's platform, not Netscape's.
Fast-forward a decade, and we are now only beginning to see the first glimmer of the world of truly functional web applications, in a very immature state in the form of AJAX and Flash. Although online applications are still far from supplanting offline applications, for a large segment of the population, especially among newcomers and casual users, the applications that matter most are e-mail, chat, web browsing, word processing, and maybe some multimedia playback,and all of which are applications that are independent of the operating system (some, like web-based e-mail, has been OS-independent for a long time, and some, like word processing, only broke free from the confines of the OS fairly recently with the launch of Google Docs). Through the standardization of web browsers, the browser has become less important, marginalizing the safety net that Microsoft had hoped to win with Internet Explorer, and with the prevalence of broadband and a growing number of people comfortable with the online world, this is the beginning of the end for Microsoft's monopoly. The recent uptick in Apple sales is in part due to the iPod halo effect and Apple's effective cult indoctrination brainwashing marketing department, but it is also greatly helped by the fact that as more and more of the applications that people care about are located online (either because of applications moving online or a shift in the things that people care about), the importance of the operating system is reduced, thus naturally destroying Microsoft's monopoly power (note that monopolies are not necessarily bad; it's monopoly power that is bad).
By now, it should be apparent why Microsoft's CEO, Steve Ballmer, made a private remark a couple of years ago (that was later leaked to the public) about wanting to "fucking kill" Google. A young, relatively small upstart is threatening to destroy a large, mature, and well-established corporation's world by pulling the rug from underneath them by shifting the platform away. Of course, the analogy isn't perfect. Although Google is the primary gateway to the Internet (just as Windows is the primary "gateway" to desktop applications), Google is not a monopoly in part because there are far fewer networking effects conducive to the formation of a natural monopoly. In layman's terms, Google is a quasi-monopoly of choice since people use Google because they choose to and they can easily switch to another search engine to find the same sites while Microsoft is a monopoly of necessity since certain programs only runs on Windows. And if Google were to become a monopoly, it would be one with very limited monopoly powers.
Finally, what about the browser? The thing that Microsoft had so long feared? W3C standardization has helped reduce the browser to just a commodity product whose choice is becoming less and less important. Gecko, which was built from scratch from the ruins of Netscape, still clings onto the notion of the browser as a platform, and as such, it is the most powerful and robust browser engine, making Gecko almost like an OS (after all, the Firefox browser, Thunderbird e-mail client, and Seamonkey communications suite are all rendered, independently of OS, by the Gecko engine--as in the UI and controls are all handled by Gecko, much like how Windows apps are rendered by the WinAPI). Although there is the chance that the model of the browser as a quasi-OS may bear fruit in the future, I have my doubts about whether this model will take off.
This entry was edited on 2007/07/03 at 15:29:23 GMT -0400.
