Windows is dead. Microsoft is going out of business.So goes the common refrain in Silicon Valley.
And to be sure, the Windows business looks worse than it has in a long time, as many consumers put off PC purchases because of the economy, or opt for iPads instead.
Earlier this week, Gartner downgraded PC sales expectations for the third time this year. PC makers like HP and Acer are suffering or getting out of the business. Microsoft’s Windows revenue has been shrinking on an annualized basis for the last two quarters. The iPad now has 11% of the PC market.
Next week at its BUILD conference, Microsoft will unveil more details about Windows 8, the operating system that is supposed to beat back the iPad while still maintaining a lot of what made Windows so popular in the first place. sceptics doubt Microsoft will be able to pull it off.
Maybe. But Windows has been threatened many times before, and somehow it keeps surviving….
The Mac came out in 1984, giving Apple six years to win the consumer personal computer market before Microsoft had even a semi-decent answer in Windows 3.0.
RESOLUTION: IBM PCs were cheaper, more compatible with more devices, and ran more apps, which gave Microsoft time to catch up.
Microsoft made several smart moves to keep the Mac at bay. It licensed MS-DOS (the precursor to Windows) broadly and made sure it worked with a wide range of hardware, which created competition in the hardware market and kept prices low. It also had a strong developer evangelism group which made sure developers would build apps for DOS and Windows.
Meanwhile, Apple lost Steve Jobs after a boardroom coup in 1985 and the company began a long decline which didn't start to reverse itself until he came back more than a decade later.
Microsoft and IBM created an alternative operating system to DOS OS/2, together, and released the first version in 1987 exclusively through IBM channels. But Microsoft was working on Windows at the same time, and the companies gradually parted ways.
In 1992, IBM touted OS/2 as better and faster than Windows 3.0 -- it could run two apps at once and had a true 32-bit API.
Microsoft's head start with Windows 3.0 gave it a loyal base of developers, customers, and partners, and IBM was never able to crack it. Performance problems -- particularly when running emulated DOS apps -- also hit OS/2 hard. Then Windows 95 was a runaway hit and became the standard.
IBM eventually phased OS/2 development out, although it can still be found in pockets.
This company started as a special project within Apple and was spun out independently with investors like Motorola, Sony, and AT&T. The design was ahead of its time -- it used a lightweight operating system called Magic Cap and relied on the network for most of its functionality.
A bunch of MagicCap devices came out in 1994, and Bill Gates was worried enough to mention the company in his famous Internet Tidal Wave memo a year later.
RESOLUTION: Apple's Newton both killed General Magic and flopped itself, and Microsoft eventually got its intellectual property
Apple introduced the Newton around the same time (it also sued General Magic for stealing the idea), and although the Newton was a big flop, it had handwriting recognition. Magic Cap devices didn't, which meant they looked immediately outdated. Plus, mobile carriers were slow to roll out supporting technology, so there were no networked apps available at launch -- only weak local apps.
The company basically fell apart, and Microsoft invested in it and bought its intellectual property in 1998.
Sun originally developed Java as a lightweight platform for low-powered mobile devices, but in the early 1990s it looked like it might prove to be a way to develop apps that could run on any computer -- 'write once, run anywhere.' That would have made Windows less relevant.
Microsoft created a modified version of Java for Windows, which Sun argued split the Java community and erased the promise of 'write once, run anywhere.' (Although some developers would argue that promise was never really true -- there have always been slight differences in Java between platforms.) The companies had a big legal fight over the issue which ended with Microsoft paying Sun $1.6 billion and licensing Sun's patents.
Java is still around, but Sun isn't -- after its hardware business collapsed, Oracle picked it up a couple years ago for a fraction of its peak value. But Java is a big part of Android (so much so that Oracle is suing Google for copyright infringement.)
So in a sense, Java is still a threat to Windows -- but only as much as Android devices pose a threat to the desktop PC.
Microsoft completely missed the significance of the Internet and the World Wide Web early on, and allowed Netscape Navigator to become the default way for early users to get online. The risk was that developers would write for Web standards incorporated by Navigator instead of writing for Windows.
RESOLUTION: Microsoft embraced the Web and beat Netscape with Internet Explorer, but the move to Web standards is still going on.
Bill Gates caught this one in time and ordered Microsoft to embrace the Internet in all its products -- including by integrating a competing Web browser, Internet Explorer, into Windows. This was the spark for two antitrust cases against the company, one in the U.S. and one in Europe, but in the meantime Netscape disappeared into AOL and the browser went away. By 2001, Internet Explorer had more than 90% market share. This allowed Microsoft to redefine some 'de facto' Web standards -- developers had to build for IE.
But the Mozilla organisation took the remnants of Netscape and created Firefox, which quickly began cutting into IE's market share. Meanwhile, Web giants like Google took up the call for developing sophisticated Web apps, and Microsoft continued to face threats from Web-based apps like Gmail and Salesforce.com. In more recent years, the rise of mobile devices gave developers another reason to write Web apps that could work on all browsers.
Meanwhile, Andreessen went on to found and sell another company, Loudcloud (later Opsware) and is now a successful venture capitalist.
RESOLUTION: Consumers preferred Windows for its ease of use and broad app and hardware compatibility.
Linux desktops were too complicated and didn't run enough apps for most mainstream and business users, and neither Microsoft nor the Linux community is making a big deal out of desktop Linux these days.
That said, Linux is still very popular on servers and embedded devices, and formed the basis of Android. (Apple's OS X is also based on a slightly different spin-off of Unix called FreeBSD.)
Ken Kutaragi, the head of Sony's console business, was pretty explicit that Sony wanted to create an alternative to the consumer PC, with quotes like 'A new world will be created on the basis of PlayStation 2 in the coming years. The client right now is the PC... but the PlayStation 2 will be a completely different computing environment.'
The Xbox launched later than the PS2 and never caught up in sales, but in 2005 Microsoft launched the successor Xbox 360 -- a full year before the PS3 -- and has since kept Sony on the defensive with advances like Xbox Live and Kinect. The game console may still replace some PC sales, but at least Microsoft has a chance of making money from those replacements. (Although it took an investment of more than $9 billion to get there.)
Meanwhile, Sony's business has faced repeated stumbles in the 2000s, and Kutaragi left the company in 2007.
It's hard to believe now, but Gates and company saw AOL as enough of a threat that they spent billions on their own competing service, MSN. The idea was that consumers would simply buy Windows to get AOL, and once they logged on, they would do all their computing in AOL -- including sending email and instant messages and (eventually) using productivity apps.
Eventually, AOL's fee-based walled garden approach lost out to free ad-supported Web services from Yahoo, Google, and countless other companies. Microsoft followed quickly, turning MSN into an umbrella brand for whatever the latest Internet flavour of the week was.
Meanwhile, AOL bought Time-Warner and began a gradual process of self-destruction that continues to this day.
Microsoft is making a big bet on Windows 8 to meet the iPad threat while still retaining a lot of what has made Windows so popular. Can it pull off this two-in-one strategy? We'll start hearing more next week, and the battle will play out over the next three or four years.
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