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Money Can't Buy MS Love.

By Gerry Patterson

When this website started in 2002, I wrote an article called "The Future Looks Bright For Microsoft?", in which I postulated that Microsoft's rise to pre-eminence had so changed the relationship with their customers, it lulled them into a mood of self-satisfaction that bordered on hubris. The newly successful corporation squandered the reserves of "good will" accumulated during the struggle with "Big Brother" IBM. I proposed that, like IBM, their dominance had been so complete, that they might not be able to play a significant role in the "new" landscape.

Since then Microsoft have gone from strength to strength. Or have they? The Great Longhorn Mishap become the Great Vista Debacle, and Microsoft's vice-like grip on the desktop market may be loosening slightly.

And now a new mishap seems about to embroil Microsoft. This is the Great Bing Bungle. Although many analysts are lauding the foray into Search Engine Technology as a "Great Leap Forward" for Microsoft, there are ominous signs that this could be a rather shaky teetering step rather then a giant leap. It could even turn out to be the most risky venture Microsoft has embarked on. And if it fails it could lead to the unravelling of the Great Microsoft Empire.

Microsoft - Profits Decline.

I'll buy you a diamond ring my friend if it makes you feel alright
I'll get you anything my friend if it makes you feel alright
'Cause I don't care too much for money ...
Money can't buy me love.

The Beatles

There is no question that Microsoft dominates the desktop landscape. At the turn of this century Microsoft may have had a desktop market share close to 95%. Depending on who you talk to this phenomenal market share has remained steady or dropped slightly during the first decade of the 21st century. Their market share could still be close to 90% ... And even if it is slightly less, this is still an unbeatable lead on any competitor.

Or so it would seem ... On the other hand there are signs of cracks developing in the monolithic Microsoft facade. As the recession bites ever deeper, consumers seem to be turning to devices other then traditional desktop PCs. These include netbooks, smart phones, music players, e-books and game consoles. And there may be other internet devices in the pipeline. Some of these devices (especially netbooks) are low-priced and require nothing more than an efficient and inexpensive operating system.

And these days Microsoft does not seem proficient at creating or distributing such operating systems.

And also this year, came news that Microsoft's profits have declined -- For the first time ever! Nevertheless even though revenue had declined, the total profits were a hefty three billion dollars. So many companies in the world today would be oh so happy to experience such a decline!

But the news has been seen as a bad omen by some investors, who expected better. And some Microsoft sceptics declare that the downturn is mainly due to Vista and declining desktop sales.

A Tale Of Three Microsofts.

Initially, this article was intended to be a comparison of the cost of various Microsoft operating systems. Eventually, for the purposes of this comparison, I divided Windows into three separate streams:

  1. OT (Old Technology). This was windows 3.1, Windows 95, Windows 98, and Windows ME.
  2. NT (New Technology). This was all the NT series, Windows 2000 and Windows XP.
  3. VT (Vista Technology). This stream is comprised of Longhorn (never released), Vista and Windows Seven (yet to be released)

Yes, I realise that this is not the official "approved" naming convention for these streams. However in a Microsoftish manner, I have borrowed their own naming conventions and then "embraced and extended them" ... With a little imagination.

The primary means I used to differentiate between the three streams was binary compatibility. I have named them according to the differences in system architecture, with the exception of Windows 3.1, which I have included with the OT stream, because it was a springboard for 95.

The Relative Cost?

Having decided how to categorise the Microsoft streams the next difficulty I faced was that of comparing costs. Over the years technology costs have changed and Microsoft (the corporation) has considerably altered in size. If information concerning the costs of various development projects were available, such data might have been "vetted" for public consumption. Furthermore the data would have to be aggregated, and adjusted to the relative sizes of the corporation, the market, and the value of the dollar.

I decided to use the time taken to release the software as an indication of the cost. We have an approximate start date for each stream and if we ignore minor updates like Windows for Workgroups 3.11 or XP SP2c etc., the time taken to actually get the major release out the door makes a rough measure of the cost. Following the time-lines of each stream, we can more less assume that the time taken to ship the final release is a crude estimate of the cost.

The release dates for the most important component of the three streams are as follows.
1992-04-01 Windows 3.1. The Windows 3 series may have been intended to bridge the gap between MS-DOS and a complete re-write of the kernel. 3.1 was arguably, the first time an attempt was made by Microsoft to create a graphic user interface for the Internet that could be taken seriously. This release had many of the features that would help Microsoft gain a good grip on the client side workstations that would access the Internet. It was also the OS that contained Microsoft's infamous DR-DOS dirty trick. For the corporate environment, Microsoft offered Windows For Workgroups, featuring Server Message Block (SMB) technology which they had borrowed from IBM.
1993-07-27 Windows NT 3.1. The first of the NT (New Technology) line. This was the Windows operating system that tried to break free from its MS DOS shackles. The kernel was recompiled using technology borrowed from IBM's OS/2.
1995-05-30 Windows NT 3.51. Arguably the first "working" Windows NT. The main features were TCP/IP and an experiment with the Power-PC plus continued support for the DEC Alpha. There was also a half-hearted attempt at integrating the divergent streams of NT and OT by offering client server support.
1996-08-24 Windows 95. One of the more "hyped" OS releases in the history of software. It was little more than a shambolic patchwork of "new features" and frills, added to DOS 3.1. The main selling point was the Graphical User Interface (GUI) which was promoted effectively. Also the large reserve of "good will", left over from the earlier "Big Brother War" (with IBM) had not been entirely depleted. Microsoft also offered applications which up till 95 had been offered by third party developers. Many of these applications performed poorly when compared to the third party equivalents. Nevertheless Microsoft applications had the advantage of tight integration with the operating system and a bundled price. It was a competitive edge that was difficult to beat. Windows 95 and the associated Microsoft programs became the most popular Operating System / Application bundles ever released. It was a magnificent triumph of marketing and bullshit.
1996-08-24 Windows NT 4.0. The last of the official NT line. However later versions (notably XP) would build on the NT model. NT 4.0 was unremarkable from a sales and marketing perspective. Nevertheless it was, at the time, the most stable and reliable NT product to date.
1998-06-25 Windows 98. This consisted mostly of bug fixes for its predecessor. And there were lot of bugs! Windows 95 had redefined the expression "bad software". Now, there was a new low standard in quality to measure down to. Remarkably, as far as the general populace was concerned, the shine still hadn't worn off the Microsoft brand and so the gnomes of Redmond were able to pull of a publicity sleight of hand. In any case just about any load of old rope would look good when compared to its truly awful predecessor (or so we thought -- but we didn't know then what would come -- later in next century).
2000-02-17 Windows 2000. Of all the attempts to consolidate the NT stream and bring it into the consumer mainstream, this was the first that was taken seriously. Up until Windows 2000, Microsoft had been happy to market the NT stream to the corporate sector and off-load the second rate OT stream to the public. By the time Windows 2000 was released preliminary work had commenced on "Longhorn". Even though there would be one more release of the OT stream, it was pretty obvious that 98 was a dead man walking and Microsoft was firmly committed to go down the NT/VT path. Windows 2000 featured several significant improvements to batch commands and command line processing. Pipes and redirection worked better. New features were added to the command line and existing commands were improved and extended.
2000-09-14 Windows ME. Windows Millennium Edition. The last of the OT (Old Technology). Generally it was not well received. The OT stream (95, 98 and ME) had proven buggy and prone to frequent crashes and attack by malware. By the time ME was released even the general public was beginning to wake up to this. The Microsoft brand had lost its lustre.
2001-10-25 Windows XP. The "first cut" of the "new" NT stream, which it was hoped would become the cornerstone of an on-line subscription service that would replace Microsoft's "shrink-wrapped" business model. However XP was buggy and had many security flaws. For a discerning user, it was difficult to detect the real differences between 2000 and XP (except the menus -- which always seem to change when a major version is released).
2002-09-09 Windows XP SP1. Service Pack 1 fixed many of the bugs which had caused XP to crash unexpectedly. However most of the glaringly obvious security flaws remained. SP1 is generally credited as the Service Pack that "fixed" the Windows NT stream. On the back of SP1, XP went on to become the most successful operating system ever, easily surpassing the past glories of Windows 95/98.
2004-08-06 Windows XP SP2. At long last Microsoft patched many of the obvious security flaws in Windows. Service Pack 2 included a firewall which was enabled by default. Many of the gratuitous frills and holes (mostly service ports) that had been open by default in previous brain-dead versions of Windows were now closed. Also many of the buffer overflow attacks were patched. It was probably the first 21st century version of Windows that offered a minimal but acceptable level of protection when connected to the Internet. It had taken almost a decade and a half to produce a "working" operating system.
2007-01-30 Vista. The first and so far, only member of the VT stream (Vista Technology). Some cruel bloggers suggested it should be labelled shorthorn (since it was originally going to be called Longhorn). It is difficult to adequately and frankly describe this less then illustrious event in polite society ... Vista is generally reviled as the most appalling crapware ever released by the corporation. It set a new low in quality ... Even for Microsoft.
2008-02-04 Vista SP1. The eagerly awaited Service Pack 1 is said to have brought many much needed changes. However it did little to alleviate the suffering of the unfortunate Vista users.
2008-04-21 Windows XP SP3. Service Pack 3 for XP consisted of more security upgrades. But the really important security patches were in SP2. And in any case, if you are really REALLY concerned about security, you wouldn't be using Microsoft! In truth, SP3 was probably released because Vista was so dreadful, it meant that the XP lifetime would have to be extended.

The only difficult date to determine was a start date for the VT stream. We could be generous and assume that work commenced in earnest when the first version of XP was released, in which case the cost of Vista would be almost identical to the cost of Windows 95. On the other hand there is anecdotal evidence to suggest that work on Longhorn commenced just after Windows 2000 was released. In which case, using our rough rule of thumb for cost, Vista would be 50% more costly then Windows 95. A bar chart that summarises the relative costs is as follows:

OS Relative Cost
Relative Cost Of Microsoft OS

The Microsoft Law Of Inverse Cost Quality.

The bar-chart above is remarkable for the correlation between time spent and quality. It seems that the more time (and by inference money) that Microsoft spend on developing a product, the worse is the end result. The exception to this appears to be Vista SP1. Although it might be possible to argue that Vista was such a dog that it was almost impossible to create a quality Service Pack for it. It might even be realistic to argue that seen within the strict context of the Vista paradigm, SP1 was in fact a quality software release!

At first I thought of proposing a tongue-in-cheek law of inverse quality. And then on reflection I wondered whether it was all that tongue-in-cheek? With the possible exception of Vista SP1, the inverse relationship between "quality" and time-spent is so tight it is spooky! Had I discovered a real corollary? -- Can I call it Patterson's Law?

This raises some questions about Windows Seven, despite the pre-release hype.

Windows Seven seems to be little more than a Vista upgrade. In more bountiful times it would have been called Vista SP2. Despite the enthusiastic reviews from select sources it is clear that the only users who would benefit much from windows Seven are Vista users. XP users have little to gain.

Because Vista aka Longhorn is a new stream, the problems that plague it are similar to those that beset the NT stream in its early days. In fact it wasn't until XP SP1 that all the problems with NT were finally ironed out. Considering this, it might be a bit premature to herald Windows Seven as the magic bullet that it is promised to be. It should be remembered that it took Microsoft over ten years to get NT right!

At best Windows Seven will do no further harm to Microsoft's reputation. At worst, it could turn out to be to Vista as Windows ME was to Windows 98. The pre-release hype for the latest OS is nowhere near as over-blown as it was for Vista. This time Microsoft is trying to spread the word that for the past year they have been hard at work de-bloating and fixing their flagship OS. Although if there really is an inverse relationship between quality and development time, things may not bode well for the upcoming release of Windows Seven. Already the time taken for the new release has stretched out ... Into the danger zone.

I'll Give You All I've Got To Give!

I'll give you all I got to give if you say you love me too
I may not have a lot to give but what I got I'll give to you
I don't care too much for money ...
Money can't buy me love!

Another challenge to Microsoft has come, not unsurprisingly, from Open Source software. To date software such as Linux has not gained much traction in the traditional desktop market. A few years ago, users contemplating a $2000 machine wouldn't mind shelling out an additional 5 to 10 percent extra for that warm comfortable feeling that they got when they saw the familiar Windows startup screen.

Netbooks however, have changed that. A customer contemplating a $300 netbook is going to think a bit longer about an operating system that almost doubles the cost of the netbook. In fact the most recent version of Windows (Vista), is so resource hungry, it won't even startup on a netbook. The only way that Microsoft could maintain a presence on netbook devices was to lower the price of XP to about $15 per copy. And that represents a price cut of about 90% (depending on the country and the vendor contracts).

But for Microsoft, it is vital to minimise the number of users who get hands-on experience with Linux. Most computer users have learnt how to use computer systems by clicking and typing the occasional phrase on a keyboard, rather than reading the manual and working out how the system has been put together. Direct experience with Linux could cause the Microsoft herd to stray right outside of the Microsoft paddocks never to return. Especially since Linux is free as in beer and as in speech. However, in order to compete on the lower priced netbook platform, Microsoft have taken a big hit on their bottom line. This has been a bitter pill for them. And if hardware prices come down further, the medicine will become even more unpleasant.

Now that Google is offering to lend their prestigious brand name to the Linux OS, more hardware manufacturers may consider the possibility of shipping Linux on netbooks. That means that the competition from free software is not going to go away any time soon.

The Bing Bungle.

Can't buy me love, everybody tells me so
Can't buy me love, no no no, no ...

There are signs that times may soon start getting tougher for Microsoft. However the biggest difficulty may be because of Microsoft itself! Or more accurately their attack-dog mentality towards potential competitors. Microsoft, rightly perceive Google as a threat, and have moved aggressively against the search engine titan. Google has reciprocated (with Google Chrome, Android, Office Apps, Chrome-OS etc.)

However some of this aggression may cause Microsoft more injury then it causes their opponents. Any one who has played chess or read a translation of Sun Tzu's "Art Of War" realises that one of the best forms of defence is offence. Nevertheless Microsoft's plan to beard the lion in his own den (i.e. take on Google in the area of search engine technology) is more foolhardy and counter-productive then bold and aggressive. The philosopher Sun Tzu would advise generals not to waste their best troops storming the opponent's most powerful and heavily defended fortress.

Or to use another metaphor, Microsoft, obese, bow-legged and wearing coke-bottle glasses is settling into the starting gates for what looks like a two-horse race. But the other protagonist is not a fat nerd, it is the lean athlete, Google! And it doesn't matter how many Hershey Bars and steroid pills Microsoft gobble down in the next few months, they will not even approach the same level of fitness as their stream-lined, muscular competitor.

Apart from spending a lot of money, Microsoft don't appear to have a cohesive strategy. The first idea seemed to be the wild-eyed and rather hair-brained scheme of buying Yahoo for a whopping, jaw-dropping, mind-boggling Forty-Five Billion Dollars! ... Most reckless of all, they were proposing to spend that astronomical amount on the brink of the Greatest Recession ever.

Microsoft were saved from this supreme folly by the intransigence of Jerry Yang, whose name shall forever be cursed by the unlucky Yahoo shareholders who probably missed out on the deal of their lifetime!

But even after this close shave with probable oblivion, Microsoft have pressed on with their audacious plan to spill their financial life blood in a vain attempt to compete with Google. The latest plan is to carry out all of Yahoo's search using their own Search Engine, Bing, and to funnel 88% of the revenue back to Yahoo. To top it off, Bing has recently been given a $100 Million advertising boost. Which, it must be admitted, is just small change compared to the 45 Billion they might have spent if they had bought Yahoo outright.

But this brave new plan overlooks some important factors in Google's rise and triumph. The key to the Google success story was cheap open source software. Google didn't get to be number one in search by spending oodles of cash. They got there partly by the opposite strategy of not spending money! While other would-be search engines bought expensive equipment, Google purchased the bargain basement hardware ... And then linked it all together into powerful clusters. They didn't spend vast sums on the operating system ... They used Linux.

On the other hand Google spent a lot of money on research and development. Now that they have developed powerful search software, their taste in hardware has become more up-market

The end result is the Google mean machine. Her clusters are as lean and efficient as Windows bloatware is fat and clumsy.

Microsoft's extravagant spending spree on Bing is putting money in all the wrong places. None of it is going to make Windows into a better backbone for a search engine. True it's possible to buy a bundle of hardware. But Microsoft will have to buy a lot more hardware to even get close to Google in terms of performance. And the inherit inefficiency of their Windows operating system means that each additional node is more likely to add to the maintenance overburden rather than propel them toward optimum performance. And yes, it's possible to purchase an imponderable swag of advertising ... But advertisements also, won't improve the performance of Windows.

And let's be frank! This is last century's war! Back in those days (last century) it was a serious competition between AltaVista, AskJeeves, Excite, Google, InfoSeek, Looksmart, Lycos, WebWombat, Yahoo ... etc. And some of them tried frills, gimmicks and fancy home pages ... But Google prevailed ... By offering the best service ... No frills ... Just results! In the end it didn't matter how much blather, tricks, advertising and eye-candy were offered by their rivals ... Google demonstrated that when it comes to search, a service that is offered for free, the only thing that really matters is relevant results and performance!

But it seems that in Redmond central today, the Microsoft luminaries, marketing advisors and spin-doctors are urging their followers to ignore the lessons of history. They are drawing up the battle plans to fight last century's war all over again, on the premise that the hustlers and spin-doctors last century didn't spend enough money on frills and eye-candy! According to these strategists, Microsoft corporation is going to prove once and for all that with a big enough advertising budget, form really can triumph over content ... Or at least it can, when it comes to search ... But will this grand master strategy go the distance? The plan currently on the drawing board seems to be a ten-year plan. And that's a lot of time to stick to a losing strategy!

Well, that remains to be seen.

I Don't Care Too Much For Money

Say you don't need no diamond ring and I'll be satisfied.
Tell me that you want the kind of thing that money just can't buy.
I don't care too much for money ...
Money can't buy me love!

But there is even worse news to come for Microsoft. The Microsoft brand may be badly tarnished. And their competitors may gain an edge just by not being Microsoft!.

A recent study showed that web-users preferred Google and Yahoo to Microsoft even when presented with identical results! And Google is not the only one who smells blood in the water. The Apple marketing division launched their I'm A Mac campaign earlier this year, which inferred that Apple Macs were cool and hip, and that furthermore Wintel machines where dumb, square and decidedly uncool.

Of course there are many sob-stories about the fickle nature of fads and fashion. Just ask IBM. Last century Microsoft vanquished IBM with inferior software (Windows 95), and hardware (cheap 486 clones). Microsoft won because their product was cheaper and consumers had a more favourable perception of the Microsoft brand then they had of the IBM brand. Even though IBM had an extraordinary lead over rival computer manufacturers, they weren't able to adapt to the micro-computer market and the comoditisation of computer systems.

It must have been particular galling for IBM to watch the upstart, Microsoft, walk away from the contest with a huge share of the PC market when IBM had put effort into developing a new kernel and Microsoft were using a load of rubbish like Windows 95. Ironically Apple had contributed to the poor perception of IBM with their brilliant Big Brother advertising campaign (which with the benefit of hindsight Apple would surely have aimed at Microsoft rather then IBM). Later, as IBM's fortune faded, Microsoft had the effrontery to re-cycle the very technology they borrowed from IBM (the NT stream). And eventually that NT stream came to dominate the PC market.

But it seems the wheel has turned full circle. Microsoft now appear to have problems with the public perception of their brand. They are struggling to adept to the on-line paradigm. And their competitors are not only cheaper, but most worrying of all, they are better! At least IBM could claim, with some justification, that their products were of a reasonable quality, even if nobody was listening to them!

But now the shoe is on the other foot. And despite the new plan to provide search engine technology to Yahoo, there is a danger that it might back-fire. Not only because of the market dynamics of a service that is offered for free, but because of the public perception of the Microsoft brand.

It seems Yahoo would be well advised to make all the Microsoft logos, on their site, minuscule! Otherwise the deal could end up damaging Yahoo's brand (by association).

The big danger for Microsoft is that even though they can afford to lose a lot of money on this futile search engine venture, they may not be able to afford the damage to their reputation if they seem to be losing money!

Lastly is the news that prompted me to re-write this article. We already know that a lot of consumers won't use Microsoft Search ... even if they were paid to use it! ... One of the most audacious (and ludicrous) schemes in the economic history of the Internet, was announced by Microsoft earlier this year. It was called Live Search Cashback. The proposal was to actually pay users to use their search engine!.

Then with the re-packaging of their Search Engine, Microsoft have just announced that they will offer double cashback for certain products searched for and purchased with re-badged Bing. The creative ingenuity of this scheme will be rivalled only by the creativity of the accountants who must compose the ledgers for this loony enterprise.

How far are they prepared to go? Will they offer 100% cashback? Could they go above 100% (??!!)

And ... umm ... Wouldn't it be a lot less expensive for them to just release a Free Open Source version of Windows?

Over the next few months I expect a splodge of advertorials, puff-pieces, contrived news items and blogs about how fabulous Bing is and how Microsoft Search is really thriving! This will be because it is as important to win the propaganda war as it is to to win on the ground ... Or almost ...

The irony of Microsoft's fading fortune, particularly the problem's they currently have with branding, is bitter indeed for Microsoft, since it was Microsoft who pioneered the modern day branding of computer software. Thanks to their earlier successes in marketing, computer software has come to be considered as just another commodity for general consumption rather then a technical resource for specialists ...

The cost and poor performance of Bing will inflict serious harm on Microsoft. And now in sheer desperation, like a drowning man clutching at straws they are going to pay their customer to do business with them. But the sad truth is, like the song says, Money Can't Buy Me Love!.


Useful links etc ...

PSU News

Branding matters -- even when searching. University Park, Pa. -- Web searchers who evaluated identical search-engine results overwhelmingly favoured Google and Yahoo, providing evidence that branding matters as much on the Internet as off, according to a Penn State study.

NY Times

Google’s Strength May Be Part of Microsoft Defense Strategy. NY Times article by Kevin J. O’Brien, May 7, 2009. News of Microsoft's appearance (yet again) before the European Commission. Their argument was that Google's dominance of Search was bad for competition. They also tried to argue that their browser was inseparable from their operating system. NB: You will need a NY Times account to read the article.


History of Microsoft Windows. As with most topics technological, Wikipedia has gathered a fine collection of the essential details regarding Microsoft Windows. The release dates were used in this article.

Channel Web

Dell Refutes Microsoft's Linux Netbook Return Claims. Dell break ranks with Microsoft. As the recession bites, hardware manufacturers will have to explore different alternatives. Free alternatives are going to seem very attractive. This article is interesting because it mentions some of the "price-breaks" and system options that manufacturers offer and hints that Microsoft may have "influenced" some of these.

PageTraffic Blog

Microsoft Doubles Cashback For Bing. Buy now! It's Our Going Out Of Business Sale! Batteries Not Included! Microsoft are actually paying customers to use their search engine. This gives new meaning to the contemptuous declaration "I wouldn't use Microsoft Search Even if you paid me ..." How desperate are they?