The Second Clone War

By Gerry Patterson

Microsoft has always endorsed the doctrine of Attack being the best form of Defence. In the Battle for the Desktop, last century Microsoft chose the battle field and fought from a position of strength. It ended in a rout. The First Clone War was also fought and won in a similar manner. In the opening skirmishes Microsoft fought by proxy, providing others with munitions, at first surreptiously and then openly. When the time came to show their hand, Microsoft once again chose the field and fought from a position of strength, defeating its' older technology rival decisively.

Now it appears the Second Clone War is about to begin. Significantly these are not firmware clones as in the previous conflict, but software clones and the battlefield is a dominion that Microsoft had supposedly secured last century. The PC Desktop. It is curious therefore, that with the DOJ still not completely relinquishing its' bull-terrier-like grip on Microsoft's nether regions, and powerful old foes like IBM lining up with new opponents such as HP, Sun and Time Warner on the Open Source Side, that Microsoft should choose security as the theme of its' opening gambit. Security is probably the weakest link in the Microsoft chain. Does Microsoft know something that the rest of the world doesn't? Do they have a secret weapon?

Or have they just lost the plot?

Clone War I.

Microsoft is an organisation that has thrived on conflict. Since its' inception the corporation has built a reputation for tough negotiation and marketing, based on the old military stratagem of attack is the best form of defence. This was a lesson that they learned during the Battle for the Desktop, and the First Clone War of the eighties. Microsoft did not vanquish Lotus-123, WordPerfect, Borland Paradox, Borland Quattro, DR-DOS, IBM-DOS, IBM-OS/2, and many others by being caring and sensitive new age nerds. They achieved this with aggressive vertical integration of the desktop software environment, which enabled them to block other vendor's access to the desktop and attain phenomenal growth. It was only because the brash new company was a software only entity that they were able to pursue their aims in the way that they did. The American legal system was well aware of vertical integration as used by large corporations that sought to consolidate various individual components of the supply chain. There were ample precedents going all the way back to the landmark case against Standard Oil. Anti-trust litigation had been employed against organisations which attempted to lock customers into an integrated supply and distribution chain by locking competitors out. The corporations who come under scrutiny from the Department of Justice usually tried to control the many aspects of a complex network of manufacturing, distribution and sales of their product by integrating them into a single channel. Initially Microsoft was perceived as an innovative young company selling to a niche market. Specialising as they did in a particular type of software for a particular type of hardware, it was thought that this bright new upstart would rely on partnerships with hardware manufacturers and other software vendors, and was not worthy of consideration as a potential monopoly. The legal system had not caught up with with the idea of software monopolies. But this is no longer true. The courts have since ruled that Microsoft had in principal violated anti-trust, and are still engaged in lengthy negotiations to settle the case.

The Battle for the Desktop had been initiated and then won decisively by Microsoft, with other contenders being driven from the field. Initially Microsoft was not represented at the frontline in the First Clone War, preferring to confine their role to the secret provisioning of the OEMs who fought on their behalf. Later, when the split had become official with IBM they openly sided with the attacking clones and delivered a stinging defeat to their former ally. Both these campaigns had been waged on a field of their own choice from a position of strength and executed with ruthless precision. By the mid-nineties there were no other serious contenders in the desktop market. Rather than consolidate and win the peace, Microsoft looked for new wars of conquest. Here Microsoft made a strategic decision that they may come to regret. Despite having made numerous powerful enemies amongst the corporate sector, Microsoft enjoyed considerable good will from its' customer base, many of whom were of the opinion that IBM had no business in the PC market. These customers felt grateful for the leadership Microsoft had shown in driving IBM out of the fledgling PC market. And Microsoft was regarded as a leader in the provision of user friendly software for the desktop, which empowered users to break free of the suffocating restrictions of the corporate data centres and were then on the brink of becoming a major force in the IT landscape. Microsoft missed the opportunity to build on this good will. The world would have been a different place, had Microsoft consolidated its' hold on the desktop, embraced the new Open Standards of the Internet and made a genuine truce with many of their former enemies, with the exception of IBM, with whom they will probably never be able to make a truce.

Clone War II.

Instead instituting a new and enduring Pax Microsofti, the by then giant corporation perceived the Open Standards of the Internet as a threat. True to form in the face of a perceived threat, Microsoft went on the offensive against the leading commercial organisation on the World Wide Web. The strategies employed during the resulting Browser Wars were so agressive, they had the extraordinary effect of driving the price of a major commercial product down to zero. Which is possibly the only time in the history of modern American capitalism that this has happened. And consumers undoubtedly benefited from this remarkable conflict. Microsoft employed the now familiar tactic of vertical integration. By taking aim at the browser on the desktop and locking it in with their own operating system they hoped to link this with the Internet server market, which they also planned to dominate. However the outcome has not been the resounding success of previous campaigns. Microsoft appears to have won dominant market share in the browser market, and claims to have the majority share of the server market. However the opposition was not completely defeated and some of the claims of Microsoft server market share may be inflated. And despite the large number of Microsoft servers, there are probably more users interacting with Unix servers. Unix remains the preferred choice for organisations serious about getting the job done (e.g. Google).

Despite its' antipathy towards Open Standards, Microsoft did not openly attack the Open Source Movement. Although it has been around for almost two decades. Until recently Microsoft has pretended to ignore Open Source. This is not because they were unaware of the threat Open Source may pose, but more to do with the way that traditional software corporations do business. Much of Microsoft's marketing power depends on its perceived market dominance, or leadership, which is the term the corporation now prefers. If the the customer base, or more correctly consumers perceive that the desktop village is just a one-horse town, and that horse is stabled in Redmond, then of course, an individual consumer would be unwise to purchase anything but Microsoft products. This is an effect which could be termed the VHS principle, in deference to the Video Wars. And it all depends on perceived market share. If Microsoft shows the slightest concern about Open Source, however, the tiny cracks in the dam may widen rapidly. Subsequent loss of perceived market dominance or leadership could lead to rapidly falling sales, especially when the competitor's product is cheaper, or worst of all, free. This in turn leads to falling share prices. All of which could lead to catastrophic change when the IT industry is gripped by the worst recession in living memory. Eventually it could lead to reduced capital gains, or in the worst case, losses for senior Microsoft executives, whose packages often include share deals. And so the whole fabric of the Microsoft tapestry starts to unravel, held together as it is by the thread of perceived market dominance. Many analysts (including the author), believe that Microsoft is, in fact, deeply concerned about Open source and has been for many years. However, despite this concern, it is vital for the corporation not to show it.

The recent attacks on Open Source in regards to security are therefore intriguing. At first it might seem that this is the prelude to another Microsoft campaign. However, if this is the case, it differs considerably from previous campaigns in the following regard:

• In the past Microsoft has chosen the battlefield. This time however, they will be defending their home territory. The Open Source movement has produced clones of Microsoft software, and Microsoft may be forced to defend a dominion that they supposedly owned, the PC desktop. It remains to be seen whether the corporation's defensive facilities match its' unquestioned offensive capabilities
• Microsoft has always fought from a position of strength, which enabled them to bring overwhelming market force to bear on an opponent. This time however, there are some powerful organisations lining up on the opposing side, including their old foe IBM, who have risen dracula-like from the grave, and now form an unholy alliance with some of the most powerful media forces in the United States and the anarchic Open Source movement. Furthermore Microsoft has chosen security as their opening gambit. Security is Microsoft's weakest suit. This has already been mentioned briefly in an earlier article, How Bright is the Future? And it deserves further attention in the PGTS Journal.
• The DOJ has not completely let go of Microsoft's nether regions. Microsoft are in great peril of further punitive action from the DOJ if they should use their market power against a potential adversary. Nobody, not even Microsoft, wants to get into a mine-is-bigger-than-yours contest with the American Department of Justice.
• Investment in IT has slowed and may even, for the first time in its' history, be shrinking slightly. This could work in Microsoft's favour since they have enormous cash reserves. However, this is the first time that Microsoft has had to deal with a truly recessionary market. IT was remarkably exempt from recession in the late eighties.

There is one other point which is so weird that it has not been included in the above list. In fact it more rightly belongs in a Stephen King novel than a serious discussion paper about the Internet. However some mention should be made about the strange almost neural nature of the Internet. Ever since its' inception, the Internet, or more correctly, the World Wide Web, has exhibited a weird swarm-like intelligence. Some might say intelligence is entirely the wrong word. In any case the whole is somehow greater than the sum of the parts. It may, to some extent, be due to its' origins. The original DARPANET, was designed to be capable of withstanding a nuclear attack, although it is doubtful that it would have. Nevertheless, as the network went through various evolutionay phases and gave birth to the modern web, redundancy, platform independence and de-centralized administrative structures were some of the keystones of the resulting progeny. Which may explain why the network has absorbed the worst of the Microsoft onslaught in such an impassive blob-like manner.

Microsoft in its' own inimicable unfree enterprise manner, also resembles The Incredible Blob. And the looming Second Clone War could be a case of the irresistible force meeting the immovable object. All of which begs the question: What is Microsoft up to? Will there be another superbly executed Microsoft battle plan, leaving the Internet just another proprietary Microsoft protocol? Or has Microsoft completely lost the plot? Does Microsoft have a secret weapon that they will deploy soon against the Open Source movement? Or is this attack on Open Source security just the first stage of blind and irrational panic?

So many questions.

And the answers will soon be at hand.