Microsoft blues

It’s been a week since the largest ever fine by the European Commission was issued to Microsoft for failure to comply fully with the eponymous competition case. I must admit that even I, not a fan of Microsoft, flinched at what seems to be unusually steep punishment for failure to comply with some minor interoperability issues in Microsoft Windows 2000 Server. Last week we also had an excellent lecture by Microsoft’s counsel Ian Forrester QC at the Playfair Library, which gave a very detailed account of the many problems with the decision.

The dust is starting to settle, so one has to wonder, what next for Microsoft? Everyone seems to agree that Vista is a dud, even those who initially thought it was a good system. The reasons for Vista’s problems are well documented, but it seems like hardware compatibility, and building the system as a DRM tool, are precisely the reason why it is so bloated and slow. As I have mentioned before, I tried it and gave up after Microsoft Live refused to open because of memory problems. And no game support. Urgh!

Steve Ballmer has now declared that their European troubles are over, and it seems like the company is trying to draw a line under the case and the £2.6 billion fines. One of the first steps taken in order to achieve closure has been to open the code to some products in order to ensure interoperability. Another part of the strategy is to slash prices for Vista Premium and Home Editions, and there is talk that Vista SP1 will greatly improve performance.

Will these measures work? If they do not, Microsoft may be facing a bleak future. Microsoft’s profits rely heavily on enterprises upgrading their software, particularly Windows and Office. Microsoft’s profits have been ensured by their virtual dominance of the software market. Every time they release a new version of Windows or Office, a bulk of their profits comes from enterprises all over the world upgrading to the new product. This also reinforces Microsoft’s dominance of the market, as people are more reluctant to migrate to other systems if their home computer relies on Microsoft’s products. This model has worked well in the past, but now that Vista and Office 2007 are under-performing, questions are being asked. Microsoft still dominates the software market, but the versions that are more likely to be installed in an enterprise machine are still Windows XP and Office 2003. Those are profits that last made their way to Microsoft five years ago (and counting). Enterprises are reluctant to migrate to Vista because of cost, productivity concerns, and the widespread belief that XP works better than Vista.

Meanwhile, geeks will continue to migrate to Linux or Apple, depriving them of another valuable source of income: the male compulsive-buyer.

Update: Glyn Moody has an interesting article in The Guardian related to this topic, highly recommended, despite the fact that he uses the term “GNU/Linux”.