Microsoft, Sun, Sony and Linux

Posted 19 Feb 2002 at 15:35 UTC by osullivj Share This

In his book Charles Ferguson tells the story of his start up Vermeer, how they saw the opportunity for FrontPage, and then sold the company to Microsoft. He gives a compelling account of the Web industry in 94, 95, 96 and 97: how Netscape had a historic opportunity to displace the Microsoft monopoly, and how MS themselves had failed to see the huge opportunity the Internet presented and were asleep at the wheel. MS eventually woke up, partly thanks to the braying of Netscape's hopelessly naive management team, and marshalled all their considerable resources to deal with the threat from Netscape. Ferguson predicts Sun will be out of business by 2006. At first I was flabbergasted by this conclusion, but the more I thought about it, the more it made sense.

Take a look at MS's track record. Companies rise, challenge Microsoft, lose, and retreat to their niche. IBM, Novell, Borland, Netscape... Sun are next. Just as MS took the desktop OS market away from IBM, the file and print server market from Novell, the dev tools market from Borland, and the web server and browser market from Netscape, so they will take the application server space occupied by Solaris & Java away from Sun. Why ? Because they are the world's leading software company, and their business is predicated on owning and leveraging de facto industry standard products. As such they can't afford to lose the battle for application server standards. Sun are a hardware company - they simply won't 'bet the farm' on their software offering.

In Ferguson's book a Microsoft executive muses on Netscape's attempt to replace the Windows PC with Navigator as the universal application client. His observation: "they threatened the platform, they're history". Microsoft has the smartest people, a huge cash pile, and two entrenched monopolies, Windows and Office, which they are determined to leverage into whatever market space attracts their attention. Sun's Java/Solaris franchise has 'threatened the platform'. With the DOJ settlement MS is now free to deal with Sun. They've been working on .NET since 97, and they've already spent $2bn on it. And when Microsoft decides they want to own a market space, they never give up. They keep trying, and will come back a second and third time if the initial offering doesn't cut it: think back to early versions of Windows, Excel and IE.

So far so good... Now let's look beyond the .NET vs. J2EE battle to other trends. Consider the following...

  • The PC market is saturated. 70% of US households and 35% of UK households have a PC. The MS vision of 'a PC on every desktop and in every home' has been accomplished. Everybody who is going to get a PC has gone and got one.
  • MS is moving away from the traditional "license fees for shrink- wrapped software" revenue model, towards software rental and charging for web services. MS is aggressively pushing Passport and "my .net services".
  • In the UK, Microsoft owns approx. 25% of Telewest, half of the UK's Telewest/NTL cable TV duopoly. It is likely that NTL and Telewest will merge, monopoly commissions permitting, to deal with their huge debts.
  • Microsoft is launching Xbox. Superficially Xbox is a games console. Actually it's a fully featured PC, with a hard disk, DVD ROM and Ethernet card.

For me these trends point inescapably to one conclusion: Microsoft's next phase of growth will be driven by Xbox users authenticated via Passport consuming .net hosted services delivered over cable or ADSL to their homes and being billed for those services by the cable or telco company. Only the cable and telco companies have the billing infrastructure and customer relationship to collect micro payments for .net hosted services. Only by disguising the client PC as a games console can MS get into the homes that aren't interested in computers or the Internet per se. By encouraging as many developers as possible onto the .net server platform it will ensure that compelling content and services will be created, and that MS can collect revenues for the delivery of those services. Passport will be used to match the users to the cable company's customer records.

Sun are already history. Microsoft's real competitor is Sony. The games console market was owned by Sega and Nintendo. Then Sony decided to enter the market; Sega are now just a software house, having quit the console hardware business. And Nintendo are an ever more distant second to Sony's PS/2.

The Japanese generally, and Sony in particular, have the determination, talent, and deep pockets to take on MS. They will not retreat to a cosy niche at the first sign of serious opposition like Microsoft's other challengers. MS vs. Sony is going to be a battle royal. The scale of this contest will be similar to the Japanese assault on the American and European auto industries.

Like the Xbox, the PS/2 is a PC in disguise. Like Xbox it is ready for connection to broadband Internet in the home via cable or ADSL. Like Xbox, it aims to be the home computing platform for the mass market who aren't interested in PCs, or can't/won't pay $1000 for a computer, but can pay $200 for a games console. However, Sony are approaching the 'computing platform for the masses' market from a different angle than MS. Sony's vector is through high quality market leading consumer technology hardware: TVs, DVD players, memory sticks, AIBO, Walkmans, Discmans etc. As wireless networking with 802.11b or Bluetooth or whatever gets built in to these devices they will become clients for the PS/2 or Xbox domestic server platform.

Sony's consumer electronics are a very strong franchise. However, they still stand in need of a software platform, and it can't be MS: Sony's palmtop computers have so far run PalmOS. Naturally, Sony's main OS platform will be Linux. Linux PS/2 is already on the market in Japan, and Sony recently announced it will be a global product. Linux being Open Source makes it much more adaptable for new classes of device: witness IBM's recent Linux wrist watch technology demo. Sony is building the alliances it needs for a software platform; at Comdex it announced partnerships with AOL and Nokia. Of course, Linux doesn't offer a friendly GUI like MS. But who better to engineer a consumer friendly UI than Sony ? While Sony builds its alliances for software and telecoms (a new area it has entered successfully with the Z range of phones), one should keep an eye on Microsoft's ehome division, and its alignments with organisations like Samsung.

The battle for the home digital network will drive developments in the application server space. With IBM and Sony backing Linux, Intel's 64 bit Itanium will achieve complete dominance, and Sun's Sparc/Solaris combination will be finally squeezed out.

Sun bankrupt by 2006?, posted 19 Feb 2002 at 16:48 UTC by chalst » (Master)

Well, conceivably, but to convince me it takes more than vague weather forcasts about the way the computer industry is going. I'd like to see concrete analysis of Sun's actual revenue stream and what is likely to make its existing customers change supplier.

Java doesn't seem perceptibly injured by MS's .NET initiative, it's fat defence contracts haven't vanished to Win2k. No wait, that was *last* years predictions of doom for Sun...

Web Server Market, posted 20 Feb 2002 at 09:10 UTC by neil » (Master)

Until they surpass Apache, Microsoft doesn't control the world of web servers.

Maybe people pay MS for a web server more than any other company, but if your view of the world of software is limited to propreitary commercial software, you're missing a lot.

Web Server Market, posted 20 Feb 2002 at 09:13 UTC by neil » (Master)

Until they surpass Apache, Microsoft doesn't control the world of web servers.

Maybe people pay MS for a web server more than any other company, but if your view of the world of software is limited to propreitary commercial software, you're missing a lot.

I think this tunnel vision affects your analysis of Sun. Sun is making alliances with free software communities - GNOME, OpenOffice, and now Linux. Sun took longer than most, but Sun's public moves make one think that Sun's strategists have figured out that you don't beat Microsoft at its own (propreitary) game. Microsoft's just too good, too successful at that game. One might even say that it's a game Bill Gates and MS invented.

And, as Sun's strategy changes, unlike the course taken by Borland, IBM/Lotus, Netscape, Sun will likely prove more resilient than the previous Microsoft challengers. The situation is different, so the outcome will likely be different. Just watch.

There're two fronts, posted 21 Feb 2002 at 11:32 UTC by TheCorruptor » (Master)

...indicated by this article, which MicroSoft is fighting on. As far as divergent devices such as PS2 and XBox are concerned, I'd put my money on Sony. They have content in the shape of games and multiple forms of consumer entertainment [in addition], and a far more diverse range of channels with which to bring these to mass consumer markets. The convergence of the associated devices is seemingly imminent and more thought out, not to mention eagarly anticipated by some of it's consumers (hey, I *want* my PS2 integrated with my Phone/LAN/TV/Stereo!). Microsoft are a good few years from being in a position to really threaten Sony in this sense, and I'm looking forward to watching how far they manage to squeeze into this territory with XBox and their mobile device partnerships. Me? Well, I'd rather give my money to Sony...

As for Sun, I don't do enough industry watching in this sector to offer sensible comment, but I'd be surprised if Microsoft manages to capture enough mindshare for it's server offerings to squeeze Sun out in the space of four years. That's an entirely different battle, and one that's been going on for a couple of years already..?

um, maybe, but not likely, posted 22 Feb 2002 at 04:30 UTC by rjp » (Journeyer)

well, the app server market isn't really occupied by solaris + java. it's more like, (bea+(linux|solaris)) | (ibm+(aix|linux|solaris|intel)) | (jboss+linux) | (oracle+(sheesh, who knows what?)) | (iplanet+(solaris|linux)) | (tomcat+linux)

yep, sun's a hardware company, and they're getting squeezed pretty hard. but for the next [oh, i don't know, 5 - 8 years or so?] i don't see them buckling under. but who knows. on the software side, i agree, sun clearly isn't betting the farm. here's some heresy: sun should spin off javasoft completely, and focus laser-tight on offering solaris *and* linux (maybe on cobalt?), and continuing to be master of the mid-range enterprise. a *truly* separate javasoft could be formidable.

but in any event, ibm, oracle, bea, and a host of others (like, a promising embedded market including mobile phones) have a vested interest in microsoft not owning the app server space - and .net et al is still so brand-spanking new . . . okay, the major fsck-up that .net could only be is really another issue.

Wasn't Apple supposed to have gone under a few years back?, posted 23 Feb 2002 at 15:34 UTC by Nelson » (Journeyer)

I mean, all the "journalists" were predicting it. Now it's Sun? Apple and Sun are very similar in that they are real deal technology companies that push the status quo more than they follow it. They have a tremendous amount of technology and the smarts to use it. Worst case, they are bought by somebody else, neither goes away any time soon. That's just the way that is, Sun provides too much to too many to just go away. They are a little bit more than a workstation maker, they have real value that goes beyond cash flow or slumps in workstations and servers.

Claims like that usually take away credibility in my book.

See more MS vs OS not MS vs Sony., posted 25 Feb 2002 at 21:30 UTC by anselm » (Journeyer)

I don't see the conflict so much as Microsoft versus Sony but rather Microsoft versus the so called Open Source Community (aka everybody else).

With regards to Micrsoft versus Sony:

The Sony PS2 is just a game machine and is a poor stick for Sony to use to beat Micrsoft into submission with. The PS2 architecture is complex, has misleading statistics, is difficult to develop for, and certainly not suitable for general purpose computing - it simply isn't a general purpose computer even if it can run Linux. The PS3 in turn will just reflect a continuing strategy by Sony to balkanize a hardware market and then sell into a specific niche only (memory sticks reflect a similar philosophy - costing 2 to 4 times that of a compact flash). Most importantly Sony doesn't have a comprehensive online strategy as well (as far as I know).

On the other hand the PC is built from commodity hardware with many different vendors competing to provide components. This continues to act as one of Microsofts greatest foundations. [ Not to suggest that the Microsoft XBOX strategy is better. The XBOX will quickly find itself obsoleted. ] Finally, Microsoft is putting in *amazing* infrastructure for handling online transactions.

Also note that The PS2 and the XBOX are solely aimed at young teenage boys. Games need to grow from one being million user propositions to one hundred million user propositions before we see a Battle Royale over the field. These new audiences are more likely to be stay at home moms, younger kids, older men and other differing demographics. Basically we need more Everquest and less fast twitch adrenaline.

What I see happening is that the Sony PS2 may be forced to interoperate with the Microsoft Gaming Network. Perhaps the nefarious minds at Microsoft have intended for the XBOX hardware to just seed the market such that the software services become a must have for other vendors such as Sony; after all there is a loss taken by Microsoft on the sale of each unit of XBOX hardware. Wouldn't Microsoft be just as happy if there was no XBOX but just a nice software gaming OS and infrastructure that they licensed to vendors?

I think Sony has Microsoft exactly where Microsoft wants them.

With regards to other battles:

Microsoft seems to derive its core value from licensing foundation computing platforms for applications. It's directly positioned over the geothermic well from which all good things emerge. The Microsoft business strategy may simply be to recognize shifts in computing platforms and attempt to dominate them.

If there's any area of weakness it is the fact that the Operating System as we know it is so poor. There is lots of room for improvement, and there is a lot of free software development spurred by irritations here. Knowledge should be seamlessly available from anywhere by any application or party (with reasonably strong security measures). There should be a variety of viewing metaphors for human users including voice. Persistent long term storage needs to be better integrated. Eventually OODB's or ReiserFS type filesystems have to become part of the status quo, and unified namespaces and suchlike also need to become standard. As well there needs to be reasonably safe high performance distributed languages so that snippets of code can do real work for remote clients.

The Open Source Community is ahead with regards to addressing multi user computing. The free OS'es of course (OpenBSD, Linux etc) are multiuser, and aggressively so. Apache dominates the market. Apache Tomcat rocks. And web applications overall be they in Perl etc seem to be motoring along quite well without Microsoft so far. Microsoft *still* does not have a good multi-user Operating System (and will not until Miguel ports .NET to Linux :-) ).

Overall I see Microsoft being more concerned about wildcard threats from the Open Source community. The .NET product is in fact excellent, delivering on a lot of features that Sun had trouble considering; being myopically fixated on the thin client heavy server model. Issues such as identity, client side persistence, sheer performance, and ease of development are dealt with far better in .NET than in J2EE and I expect .NET to flatten J2EE in an unbelievably short period of time.

If Microsoft does indeed have a star chamber where darkly hooded figures plot out world domination, then .NET wouldn't be a bad response. It almost migrates them off of Windows itself; and into a kind of meta-platform that can rest on top of Linux or Windows.

Ultimately something like Microsoft's .NET will have to become part of the infrastructure of our society; much in the way roads, electricity and water have become. Then we'll see .NET be wrested from their grasp and your .NET payments will be added to your municipal taxes.


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