This post has its roots in a series of discussions with a Microsoft employee about the mounting challenges that the company is facing and the implications on the company’s future. Naturally, like any good employee obligated to defend his company, he made some pretty convincing arguments for Microsoft which made me wonder if my enthusiasm for the Open Source movement may have prevented me from appreciating the extent of Microsoft’s dominance of the industry and its ability to defend itself and rebound with new products and strategies. I began to ponder and reevalute my views of Microsoft.

In recent years Microsoft has faced an onslaught of challenges on multiple fronts, ranging from the Open Source Movement to anti-trust actions from both the US Government and the EU. Just how well has Microsoft weathered the storm? As Microsoft prepares to launch some very important products this year, is it finally ready to rebound and resume its world domination?

To answer these questions I have attempted to take a long hard look at Microsoft from both sides of the coin rationally. I will present first the bearish arguments on the company and will follow up with another post containing the bull’s view point.

*Part 1: Bearish on Microsoft*

*Glacial progress on the Client side. Growing complacent?*

Windows XP is the current incarnation of Microsoft’s Windows OS. It was first introduced in 2001, and after having served faithfully for the last five years, practically a lifetime in the fast paced software industry, it is beginning to show its age, and desperately in need of an overhaul. Throughout the last four years XP has hardly undergone any major revisions but instead has received multiple bug fixes and security patches via the Windows Update feature. There have been such a large number of fixes and patches that Microsoft has been compelled to issue two major service packs to integrate these fixes. There are “some who argue”:http://www.pbs.org/cringely/pulpit/pulpit20040408.html that such complacency, as only a monopolist can afford, is a sure sign that Microsoft is beginning to get sloppy, and underestimating its rivals.

*Windows Vista, Microsoft’s Next big thing only playing catch up?*

In the same year that Microsoft released Windows XP, Apple also released its Mac OS X. The new Mac OS at that time was significant in that it represented the successful porting of the Mac GUI (Graphical User Interface) to a Unix operating system. The rate of development in the Mac OS X has been relatively more active compared to Windows XP. The current version of Mac OS is version 10.4 which “introduces a number of revolutionary features”:http://maclive.net/sid/134 only promised by Microsoft in Windows Vista. Despite years of hype, it seems that Redmond is only playing catch up with its rival in a fair number of features.

The Open Source community released Linux Kernel 2.4 in 2001 and they have not been sitting still. A few months after the release of kernel 2.4, work began on the development kernel 2.5, which culminated in the release of kernel version 2.6 at the end of 2003. The 2.6 kernel introduced a number of key new features which include:
* NUMA for enhanced multiprocessing
* Support for additional hardware architectures such as X86-64 (AMD’s 64 bit architecture), PPC64, S390 etc.
* Support for hyperthreading
* Unified Device Model
* Additional file system support such as XFS, enhance NTFS (r/w), JFS etc.
* Advanced Linux Sound Architecture
* User Mode Linux (virtual linux sessions running on linux machines)
* IPV6, IPsec
* Network file systems such as NFSv4 and CIFS

The current kernel iteration 2.6.15 was released in January 2006.

*Apple on Intel, will users byte?*

A recent significant development in the Apple camp is the successful porting of “Mac OS X to Intel’s X86 architecture”:http://www.apple.com/macosx/ . Apple is now able to offer desktop machines with comparable price/performance ratios with Windows powered desktops. At last computer users will be able to compare the OS offerings from Redmond and Cupertino on an “apple to apple basis”. Given Mac OS’s more advanced features, “X factor” and great industrial design, will traditional PC users bite?

*The Google challenge*

Microsoft’s desktop dominance is being challenged by the growing popularity of online software services being offered by its rivals Google and Yahoo. These web services are platform independent and threaten to render the desktop platform irrelevant because the same services will work on any OS as long as there is a web standards compliant browser. Google’s continued dominance in the search arena, which allows it to command the lion’s share of on-line ad revenue, has been a constant thorn in Redmond’s side. Google’s prowess as the world’s most popular search engine has given it brand recognition and it is now utilizing this advantage in promoting a whole slew of online services such as Google News, Google Earth, Gmail, Gtalk amongst others. At the same time Google’s introduction of Google Desktop encroaches into MS domain in offering its own user experience on top of the Windows OS.

Google announced its intentions to take the fight to Microsoft by offering “Google Pack”:http://pack.google.com/ , “a free collection of essential software from Google and other companies”, in the words of Google itself. Apart from a collection of free tools from Google itself and other publishers including Open Source’s Firefox, the pack also includes Google updater which seems to be the most significant piece of the bundle because it allows Google to provide a full fledged software distribution service including delivery of software updates.

In a recent development, some of Yahoo’s key execs have been “reported”:http://news.com.com/2061-10811_3-6030502.html as having conceded defeat to Google in the search arena. This must come at an inopportune time for Microsoft whose own search engine offering is a distant third in the race between these two giants.

Google may just be heralding the beginning of a trend towards user preference for the independence offered by the plug-in simplicity of web based applications as compared to the stodgy clumsiness found in platform dependent technologies. This new trend is being ushered in by some exciting new technology, collectively known as AJAX, or Asynchronous JavaScript And XML. Arguably the most visible AJAX application will have to be “Google Earth”:http://earth.google.com/ which never fails to amaze with its responsive and smooth user experience.

*The Open Source Challenge*

*Open Source Operating System: GNU/Linux*

On another front Microsoft has always been challenged by the Open Source movement which has always been very competitive on the server side. In recent years the proponents of Open Source has decided to take “Linux challenge to the desktop”:http://www.desktoplinuxconsortium.org/?page=members . While history’s lessons have taught the industry that Unix is notoriously user unfriendly, Apple’s success in grafting its much touted GUI and user experience onto a Unix code base has silenced even the staunchest critics of Unix’s potential on the desktop. At present Linux desktop users have a number of choices when it comes to GUI, the most popular being “KDE”:http://kde.org/ and “GNOME”:http://www.gnome.org/ .

The movement has been gaining strength, with “Mark Shuttleworth”:http://mscom.rabbithole.co.za/biography/ throwing his weight behind the latest Linux distribution, “Ubuntu Linux”:http://www.ubuntu.com/. “Ubuntu builds on top”:http://www.ubuntu.com/ubuntu/relationship of the “Debian distribution”:http://www.debian.org/ (Debian has over 13,000 software packages available), with regular half yearly releases, and each release is supported for a period of no less than 18 months. The commitment by the Ubuntu Development Community provides a level of assurance previously unseen in the Open Source Movement. Commercial grade support is available from multiple companies for users who require the additional comfort level and corporate accountability.

Out of the box, Ubuntu is packaged with a comprehensive range of desktop applications including full featured business productivity suites, graphic manipulation tools, web browser, email clients, messaging clients, internet connectivity tools, graphical user interface etc. The default package is well suited for business desktop application. There is a separate server package available bundled with server side software including database server, web server, email server, file and print server etc.

For sceptics who are still reluctant to take the GNU/Linux movement seriously, a visit to “OSDL member roster”:http://groups.osdl.org/osdl_members/osdl_roster will at the very least be an eye opener. OSDL is the acronym for Open Source Development Lab, a non profit research lab dedicated to the promotion of GNU/Linux in the enterprise and telecommunication market. To date it has lined up an impressive list of industry big names as its members, as can be seen in the above link. OSDL’s site provides a glimpse of the organisation’s ambitions to further promote and bolster GNU/Linux usage in a number of key areas, including:

* Carrier grade Linux - targeting communications and data service networks
* Data Center Linux - targeting data center applications
* Mobile Linux - promoting Linux based mobile platforms
* Desktop Linux - promoting Linux based desktop systems

*LAMP shines the way for Open Source*

The combination of Linux, Apache, MySQL and PHP (a.k.a. LAMP) provides a very attractive development platform for application servers. The growing popularity of LAMP especially for web application development threatens Microsoft on four fronts. Linux displaces Windows Server as the server OS. Apache remains as the undisputed web server of choice at the expense of Microsoft’s IIS. MySQL is used as the database server in lieu of SQL Server and PHP becomes the language of choice instead of .NET. So every time a user selected LAMP alternative, Microsoft suffers from lost business opportunities in the server OS, web server, database server and development tools business.

Amongst the other threats posed by the Open Source movement include:

*Open Source Business Productivity Suite: Open Office*

This is a business productivity suite originally known as StarOffice. Sun Microsystems bought the product and unleashed it to the Open Source community to harness the collective effort of its legions of coders. The move has been very successful and “Open Office”:http://www.openoffice.org is already in its second version. It is very much a clone of Microsoft’s Office suite and offers similar interface and surprisingly good compatibility with MS Office document formats. Most Office documents can be imported into OpenOffice with little modification required.

OpenOffice uses the “Open Document Format”:http://en.wikipedia.org/wiki/Open_Office_XML , an XML based file format developed by various organizations to be an open standard for office productivity applications, available to be implemented by any party without restrictions. It is designed to be an open alternative to closed document formats, the most popular being the formats used by Microsoft Office, providing a solution to the problem of document lock-in, whereby customers find their data being tied to a particular software vendor with no alternative solution in the market. ODF promises to offer a file format for speadsheets, text processing, charts and graphical documents which is independent of vendor and applications. This feature is beginnning to attract the attention of many organisations including governments concerned with the problem of data lock-in. The ODF is increasingly seen as a “threat to Microsoft Office’s”:http://www.theregister.co.uk/2005/10/20/openoffice_versus_microsoftoffice/ dominance of the business productivity software suite market.

*Open Source Web Application Framework:*

Apart from having to compete with Java, Microsoft’s .Net faces increasing competition from Open Source alternatives such as “Ruby on Rails”:http://www.rubyonrails.org/ and “Zend PHP Framework”:http://www.zend.com/collaboration . Zend’s initiative aims to be an industry wide collaboration which has garnered the support of big names such as IBM, Oracle and Intel. Ruby has been gaining acceptance and is now being offered as a standard service by an increasing number of forward looking “web hosting companies”:http://wiki.rubyonrails.com/rails/pages/RailsWebHosts .

*Unfavourable Legal Landscape*

On the legal front Microsoft has been fighting multiple legal battles with antitrust actions brought against it by its rivals, US Government and EU. These battles will be time consuming, and costly. In all probability most of these cases will require legal settlements with “high price tags”:http://www.eweek.com/article2/0,1759,1561770,00.asp , not to mention the “legal fees”:http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2004/05/12/financial0332EDT0443.DTL . Such costs will, at best, siphon financial resources from research & development work, hampering the company’s ability to continuously introduce new products and enter new business segments.

I believe that the above lengthy discussion has put up a strong case against Microsoft’s continued dominance of the software industry. In a future post I shall play the devil’s advocate in support of Microsoft maintaining its monopoly and see if the bear’s viewpoint can stand up to scrutiny.

*Essential Links*

Watching Microsoft:

* “Microsoft Watch”:http://www.microsoft-watch.com/
* “Todd Bishop’s Microsoft blog”:http://blog.seattlepi.nwsource.com/microsoft/
* “Microsoft Monitor Weblog”:http://weblogs.jupiterresearch.com/msft/
* “Microsoft Report”:http://blogs.zdnet.com/Bott/
* “Technorati tag on Bill Gates”:http://technorati.com/tags/bill+gates
* “Microsoft”:http://www.microsoft.com/
* “MSDN blogs”:http://blogs.msdn.com/
* “Microsoft Community Blogs”:http://www.microsoft.com/communities/blogs/PortalHome.mspx

Sources on OpenSource:

* “Open Source Initiative”:http://www.opensource.org/
* “Halloween Documents: Microsoft’s strategy against Open Source”:http://www.catb.org/~esr/halloween/
* “The Cathedral and the bazaar”:http://www.catb.org/~esr/writings/cathedral-bazaar/cathedral-bazaar/
* “Linux Everywhere”:http://images.businessweek.com/ss/06/02/open_source/index_01.htm
* “Free Software Foundation”:http://www.fsf.org/
* “Linux Online”:http://www.linux.org/
* “Enterprise Linux”:http://www.linux.com/
* “Debian Linux”:http://www.debian.org/
* “Open Office”:http://www.openoffice.org/
* “OnLamp”:http://www.onlamp.com/
* “Open Source Development Lab”:http://osdl.org/
* “News Forge”:http://www.newsforge.com/
* “Technorati tag on Linux Torvalds”:http://technorati.com/tags/linus+torvalds