Microsoft Buys Great Plains
OS/2 Finally Dead
The B2C (Business to Consumer) Dot.coms took their money, blew it all, and vanished. Now the B2B (Business to Business) Dot.coms are in the late stages of doing exactly the same thing. Linux IPOs came out way high, and Investors bid them up absurdly higher because it was "the next big thing", and they lost nearly all their money there too.
All these "opportunities" based their business plans of pure fantasy. It got so absurd one big consulting firm loudly claimed that ROI (Return on Investment) was no longer a valid measure. Well, it wasn't valid for any of these "investments", because none ever had the slightest possibility (or even intent, in some cases) of returning a profit.
ASPs (Application Service Providers) are the current darling for those still in the technology market. They'll go down with all the grace of an airliner with a bad jackscrew - twisting and turning the whole way. Microsoft's .NET is the biggest ASP play, and will do the most twisting and turning, but they'll keep it in the air somehow.
PC company stocks are headed for the tank in a big way, and will never recover their former glory. Disappointing sales from a saturated market are already a big factor. Delays in release of Whistler (next version of Windows) will cause sales to dry up almost completely, then slow sales for Whistler, as business realizes it's just Windows warmed over again and nothing really new. Then lower cost (read, "lower profit") network devices will start moving in.
Linux stocks will stay low, where they belong, for the simple reason nobody's going to make much money on a product that's almost free. Linux will generate vast amounts of money, but not for "pure play" Linux companies. Linux distributors like Red Hat intend to make money from "support", but they have little if any advantage over companies already in the support business - like IBM
Microsoft stock will stagnate as investors finally begin to realize the company peaked a couple of years ago and will never return to growth rates supporting absurdly high stock valuation. The "Greatest Fool" has already been elected at $119-13/16. This means big problems for Microsoft and it's employees, because they've been floating the whole business on stock options that are turning into so much wallpaper.
Smart Investors (not quite an oxymoron) will do quite well by
very selective bottom fishing. Business that really are sound are being
dragged down by the high profile failures. The cream will eventually rise.
The really important "technology investments" will be investments in
technology to enhance the operation of real businesses.
Why all this money when the fruits of this investment have to be "contributed back to the community"? Simple - because it will generate lots of revenue.
An example: IBM's new Web server for ISPs. It's an S/390 G6 mainframe running at least 1,500 instances of Linux, each running IBM's WebSphere e-commerce server (based on Apache, another "free" software product). This system also enables IBM to sell it's Shark disk storage product, starting from 11-Terabytes (11,000 Gigabytes). An entry level system brings in $3 million.
Notice something else about this beast? All the revenue goes to IBM, and not a dime to Microsoft. This also holds true for everyone else implementing their systems on Linux (See "Microsoft stock" above).
Couldn't IBM have used their own AIX Unix instead? Sure, but then they couldn't take advantage of all that Linux software development going on out there. Instead, IBM, Hewlett Packard, Caldera (SCO) and others are working to make Unix into "Big Linux".
Another factor is startup companies and the capital they need to get going. A few years ago, you couldn't get financing for development in any environment but Windows. Today, as Microsoft crushes the life out of the Windows market (see below), the situation has reversed. Startups (and the money guys) will favor Linux.
All in all, Linux allows integrators to offer solutions with a lot more service content (benefiting the customer and higher profit to the provider) and still come in at a lower price than a Microsoft based solution.
Linux won't dominate though. Most integrators still aggressively push Microsoft solutions. It's the "easy sell" and they can milk the sale indefinitely with expensive "fixes" and "upgrades" and "add-ons". Also, Microsoft has invested millions in key integrators to assure their loyalty.
Many customers will reject Linux because Windows is the path of least resistance. "Nobody ever got fired for buying Microsoft" (not actually true). I recently read an article where a corporate IS guy was asked "What would need to happen for you to install Linux?" The response was, "I guess Microsoft would have to sell it."
At the high end, neither Linux nor Windows is in the picture. Neither can
compete with high end Unix, AS/400s and mainframes.
Windows 2000 will be adopted, but the pace will continue to be sluggish, because it breaks just about everything it touches. Check out Putting on the Breaks in ent (a magazine devoted to Windows NT/2000). For a lot more see our article Adopting Windows 2000. In recognition of this pace, Microsoft has canceled plans to end Windows NT certification in January.
Linux enthusiasts say Linux will take over because it costs a lot less, is more stable, standards compliant, and offers a lot more choices. They are dead wrong. Choices is precisely what most people don't want, and they'll pay the monopolist any price he asks, and put up with instability, in order to avoid choices.
This deep seated desire to have "no choice" is the true power behind the
Windows monopoly, and why it's a monopoly in the first place, but it's not all
roses for Microsoft either. What people have now is "good enough", so they're
not buying a lot of new computers, and when they do they want it just like
what they already have, not "new and improved". This is not a good thing for
a company that depends on continual upgrades for its revenue growth.
It probably won't happen in 2001, but soon enough, when you bring home your new Windows computer it will be entirely non-functional except for the ability to make an Internet connection. Before you can use it for anything you will have to connect to Microsoft's registration page. License keys will be downloaded when your computer has passed inspection.
Don't have Internet access? Not a problem, you'll be offered the opportunity to sign up with MSN right then and there - just plug in your phone line. If you dig around you'll find buttons to sign up with other services (due to anti-trust meddlers, you know), but by then you'll already have MSN. Of course, to use your computer effectively, .NET will require you upgrade to a high speed Internet connection.
Your computer will maintain a continuing dialog with Microsoft (if you use Internet Explorer, it already does), and Microsoft will know what's on your computer and how you use it (and they will deny that they know). If Microsoft finds violations of licenses, they will simply disable your computer, and you have no recourse (see UCITA). If you don't allow Microsoft access to your computer, it simply won't do much, and then your licenses will expire and it won't do anything (except connect to Microsoft's registration page).
Windows will be the only way consumer entertainment and gaming sites can be accessed. This is already nearly the case. Macintosh users will have access to some sites (if they use Internet Explorer) but not to many others. Linux and OS/2 users will have to settle for "alternative media" sites.
Doesn't this all mean a great loss of freedom? Won't there be rebellion?
Yes. No. Freedom is of interest only to a few intellectuals and nutcases.
The vast majority couldn't care less so long as they have entertainment.
Communism didn't fall for lack of freedom, it fell because it didn't provide
New wireless protocols and services will make mobile devices a lot more practical. They can stay connected to the office network, allowing them to leverage the power of stationary applications servers and data storage. On the other hand, they will remain much slower and clumsier to use than desktop machines.
Palm, Linux, Symbian and others will do well in the mobile marketplace. Microsoft will not do so well because Windows just requires too much power. Battery life is a major concern, and significant improvements in battery technology have been few and far between. Also, there's Microsoft's high royalty demands and forced upgrades. Linux is free, and other proprietary systems are far less costly, a major concern in consumer market devices.
"Windows compatibility" will not be such a big issue with mobile devices,
since just about everything will be browser and Java based. Microsoft's
"Pocket PC" (formerly Windows CE) isn't that Windows compatible either.
So many services and so much information will be moved to the Internet every business will find it necessary to have Internet access for nearly every worker who has a PC or other computing device.
So many clients, customers and business partners will simply expect your business to offer information and services on the Internet you will just have to. If you don't, It'll be like telling them you don't have a fax machine.
How good your Web site is will be the competitive factor, not whether or not you have one. Right now, most Web sites are very poorly implemented, and it'll be years before a good site is the norm. Now is the time to take advantage of the situation - a good site doesn't have to be flashy, costly or "cool" - it has to be usable.
Microsoft will have complete control over gaming and entertainment sites, because unless they host on Windows 2000 servers with IIS (Internet Information Server) they won't be able to implement Microsoft proprietary features Windows users expect.
Microsoft will fail to take over the entire Internet, because they won't be able to control most of the servers. Sites that must have Microsoft proprietary features (entertainment, gaming) will host on IIS, but the majority will host on Unix, Linux, BSD, and mainframes running Linux.
Why can't Microsoft control the serves? Compare a warehouse full of quad Pentiums running Microsoft IIS (Internet Information Server) to a single IBM G6 box with a single 20-Terabyte storage array running 4,000 instances of Linux / WebSphere. Compare the reliability of a mainframe system to the reliability of a warehouse full of PCs. Compare administering a warehouse full of PCs to administering a single box from a single console. Are you getting the picture? It's pure economics.
Not everyone can afford a mainframe? For smaller sites there's Sun Unix
boxes, and for smaller still there's Linux (or BSD) / Apache on Alphas and
quad Pentiums, and Linux / Apache is free. None of these can run Microsoft
software, or would want to.
The reason for this shift to Web technologies is to free applications from both platform and location restraints.
Other approaches place company owned applications on company owned servers running over the company's network and store the data on company owned hard disks. Availability is now, but this is still mostly custom development.
"When I think about having a molding machine connected to the Internet, I
realize we open up to a lot of things" - Delphi Automotive's Gary Robertson.
nonetheless, Robertson is fully committed to .NET because Microsoft has
promised him "molding machine to boardroom integration" in just 3 to 5 years.
Windows and Office include a wide selection of marvelous virus writing tools built right in. There's no security to prevent them from going about their business, and they have full use of the most effective virus spreading mechanism ever imagined, Microsoft Outlook.
The people who wrote the "ILOVEYOU" virus had only a few weeks training. They certainly weren't "expert hackers", yet they cost business hundreds of millions of dollars within a few hours. What expert hackers could do is truly frightening.
So if Windows insecurity costs business hundreds of millions of dollars in 2001, won't people start avoiding Microsoft products? No. People truly want to believe they have no choice. If getting your network shut down and your data corrupted periodically is a cost of using Windows, most people and businesses will simply accept that cost.
Microsoft will repeat over and over, "If any other environment were as
popular it would be just as vulnerable". This is simply not true - see
Microsoft's Security Model for the
reasons why - but it will be accepted because it's what people want to hear.
Microsoft has intensified the activities that got them hauled into court, and will continue to do so. They want to grab as much market and kill as many companies as they can before they are placed under restrictions.
Their "integration" of streaming media into Windows Me is precisely the tactic they were found guilty of using against Netscape, and is intended to destroy Real Media and other multimedia companies. Their purchase of Great Plains will be used against business management software publishers and ASPs.
This brings the probability of two additional major anti-trust suits, private or by the DOJ (Department of Justice). Expect at least one of them to get rolling in 2001 (complaints have already been filed with the DOJ in the Great Plains case).
Considering the weakness of Microsoft's appeals filing, the Court of
Appeals may let substantial parts of judge Jackson's verdicts stand. This
will probably force Microsoft to settle in other cases, but the damage
is already too great for the Windows market to recover.
My prediction (Sep-1999) that Microsoft would purchase Great Plains Software was dead on. I expect my prediction that this purchase will be used to crush the life out of the accounting and business software industry will be just as dead on. This is not a good time to be a developer of Windows based software.
[ Update: My companion prediction to the Great Plains
buy was that Great Plains would come out with a low end accounting package
to cover the space between Microsoft Money and Great Plains. In August
2001 this prediction came true with the announcement of Small Business
Manager. Microsoft's revenue plan for Great Plains can only be met by
pushing out practically every other accounting software vendor in existance,
so we can presume that's the plan. ]
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