Microsoft was the first company to realize the ramifications of the fact that software costs nothing to reproduce. No matter what it is, it costs $10 to make a copy (or even less now, with internet distribution). That means the entire cost is amortized development expense, and thus the more copies you sell, the less amortized cost there is per unit and the lower the price you can charge.

And with that realization, history was made.

Now Microsoft is finally up against a competitive wall, facing a competitor it is having a hard time dealing with: itself, five years ago. If software costs nothing to manufacture, the problem is that it also doesn't wear out.

Each new iteration of its products have been intended to be improvements over the previous version, enough so as to convince people to shell out for the upgrade. But that's a treacherous path because you eventually run out of obvious things to add or change, and you end up adding things that people see as being a "gimmick" instead of an obviously valuable change. And they don't shell out for the gimmick.

Microsoft is also facing a technological revolution. The self-contained PC is now being challenged by tablets with touch screens. (And also phones.) The PC with a built-in keyboard isn't going to die; there are a lot of uses for which it is simply better than a tablet. But its percentage of the market place will decline, and Microsoft is facing a crisis the like of which they haven't seen since OS/2. The problem is that Android is eating Microsoft's lunch in that arena. Partly that's because Google is giving it away and partly that's because Microsoft doesn't have any kind of competing product, or it didn't.

The goal of Windows 10 is to make it possible for Windows to run on a PC and also to run on a tablet. Windows uses the Desktop metaphor which has ruled the industry for 30 years, and Android uses the new Bookshelf metaphor, which an increasing number of users find to be very comfortable.

Microsoft is thus facing a bootstrapping problem: they need a lot of copies of Win 10 out there so developers will create apps for it, but before those apps appear there is no advantage to Win 10 for PC users, who would rather stay with Win 7. Without those apps, Win 10 simply isn't a compelling upgrade for Win 7.

They've been reduced to giving it away and using annoying nags to convince people to switch, and I have a suspicion they've taken to sabotaging Win 7. And they're rolling out the mother of all nags this month.

This is an act of desperation, and they're not fooling anyone. It's also a last ditch. They can never do anything like this again or customers will get angry. (They already are; this will make it worse.)

Some percentage of PC customers may switch to Linux or switch to OSX, but most PC customers are locked in with Microsoft. But that's not true for tablet users, and there's a lot of overlap between those two bodies of customers. If Microsoft blackens its own eye this way, a lot of PC users will say, Fuck Microsoft and buy tablets running Android.

Microsoft is already badly behind in this market segment and they may never be able to catch up at the rate they're going.

In the 1980's Microsoft gained a stranglehold on the PC OS market. Since then there have been three major attempts to break it: by IBM with OS/2, by Sun with Java, and by Netscape with Navigator. All the attempts were credible but ultimately Microsoft was able to fight back.

Now Google is making the fourth attempt, and I think they're going to succeed. It's hard to compete with "free" but "free" alone isn't enough to win, as Linux freaks have found.

Android is also free but it's also friendly like Linux isn't. And Google isn't going to start charging for it, either. Part of Google's business plan is to make internet access into a commodity, because the more time people spend online the more money Google makes. That necessarily means they need to badly harm Microsoft, but they aren't doing it out of any kind of animosity. It's just that Microsoft is in the way and needs to be moved.

I think Microsoft is making a huge mistake in all this; they're sacrificing 30 years of customer good will. On the other hand, I'm not really sure what else they could do, except to find some other business to be in. And they've been trying to do that for 30 years and their only successes were the XBox and the Microsoft Mouse.

Posted by: Steven Den Beste in Computers at 07:14 PM | Comments (7) | Add Comment
Post contains 796 words, total size 5 kb.

1 Oh, look, someone haven't heard of Microsoft Azure, the only credible alternative to Amazon AWS in the area where even the mighty Google peed it down their leg.

Posted by: Pete Zaitcev at July 05, 2016 09:01 PM (XOPVE)

2 Also explains why they bought Mojang (developers of Minecraft) and LinkedIn.

Oh, and their Surface line is doing pretty well.  They have competition now, but the competition is other high-end Windows tablets and convertibles, which is exactly what they want.

Posted by: Pixy Misa at July 05, 2016 09:22 PM (PiXy!)

3 The Windows Update thing looks like sabotage, but it's mostly just old code that Microsoft has never bothered to redesign. XP had the never-ending Update process for a long time, and the core issue was the same: the sheer number of released patches broke their algorithm for determining which ones you needed.

The fix was to release a major Service Pack, which reset the baseline. Anyone running Service Pack N didn't have to calculate all the patches that came before that; they were guaranteed to be present. Windows 7 never had a second service pack, and of course they don't want to officially announce one now, so it's disguised as an optional "roll-up" patch that you have to be tipped off about. Explicitly superseding earlier patches means they can now be left out of future calculations.

-j

Posted by: J Greely at July 05, 2016 10:25 PM (ZlYZd)

4 The "Free" Windows 10 upgrade was an extremely good idea born from an understanding of where the market was going.  Good on Microsoft.

The *implementation* of everything around it is standard Microsoft.  Which is to say done with as little competence as necessary to get it out the door.  If Windows 10 didn't have all of the spy-ware baked into the OS, I'd have upgraded.  But I see no reason to, as it stands.

Even since Vista, people & businesses no longer upgrade rapidly.  Since the 1.6ghz generation of CPUs, there's been little reason to upgrade business computers.  (Office applications run just fine there. In fact, they don't run any faster on 10+ year newer hardware.  Go figure.)  Once computers hit a sufficient level of processing power, the upgrade cycle shifted by 3-5 years.  That's the market MSFT finds itself in, now.  So offering no-cost Win 10 upgrades was a really smart idea.  People will still pay when they buy new computers and businesses will generally upgrade there computers about every 5 years. 

There's also a very useful benefit of bringing everyone onto roughly the same platform.  That should hopefully, as Steven pointed out, make it so developers focus on the primary Windows OS.

Posted by: sqa at July 05, 2016 10:40 PM (Zcnzi)

5 I realize that as a mechanical engineer with a computer engineering background, who spends 8 hours a day sitting in front of a CAD workstation, I'm not the typical user. Very much not the typical user.

But, from my perspective, the sheer usability of Windows peaked with Windows XP. Subsequent versions may incorporate some technical improvements in some areas, and I understand the need to upgrade the underlying code to eliminate exploits as they are discovered.

But the user experience has been going downhill fast from my perspective. Trying to force an interface designed for the limited real estate of a phone screen on people using desktops was something of a last straw for me. My wife's new laptop ended up with Windows 8, and it was a nightmare. My wife is 35, it gave her fits. My son is 7, even he couldn't figure it out. So it can't just be that I'm 57. It's a genuinely bad OS.

I'm running Windows 7 pro, and even here so many things that were easy on XP have been made harder. Inexplicably harder. I'm running a faster computer than ever, and simply searching a directory takes forever, because it insists on "indexing" everything before it will do the search. Why could XP search a directory faster without indexing it, on a slower computer?

And I know that my opinion isn't eccentric, because our corporate headquarters has decided to stick with Windows 7 pro for the foreseeable future. Partly because it violates company policy to install spyware, and as far as IT is concerned, Windows 10 is spyware. If that doesn't change, we're never upgrading to another version of Windows. We might even go to Linux, if necessary.

Here's a crazy idea: Keep the old interfaces as options, and just change the guts. I don't care about the guts. As long as the performance is there, I care about the interface. There's no technical reason Windows 10 couldn't have a "looks like XP" mode. Or even a "looks like 8" mode, lunatics are a market, too.

Posted by: Brett Bellmore at July 06, 2016 02:43 AM (l55xw)

6 XP is still my favorite, followed by 7, then 98SE2 and 3.11.

And I *hate* spyware.  That's why I don't like Google very much, because their "free" model is built around spying on me and selling that data to anybody willing to pay.  That will lead to Bad Things(tm) someday, and I want no part of it.  I have an Android phone, but I use it sparingly, and social media not at all.

I understand that M$ is being forced to compete with "free", I just wish there was a (reasonable) premium market for those of us who still actually value our privacy.

Posted by: BigD at July 06, 2016 03:11 AM (VKO9N)

7 I use Win7, but again, last night, it annoyed me by making it harder to perform system maintenance tasks, and troubleshoot a problem with my computer that turned out to be an application software glitch.   XP was probably as close to perfect as the admin functions ever got, and makes me wish there was an equivalent to the Great Old Games site, only for O/S.  "Great Old Operating System Experiences" or GOOSE for short. 

Posted by: ubu at July 06, 2016 06:36 AM (SlLGE)

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