I haven’t said anything about Microsoft Executive Craig Mundie’s speech yet. Everyone’s heard of it, of course, and the typical response has been something along the lines of “Now we know Microsoft’s stance on Open Source.”
No, we’ve always known Microsoft’s stance on that. They’re scared of it. Remember the stereotype of open-source programmers: college students and college dropouts writing software in their basements that a lot of people are using, with the goal of toppling an industry giant. Seem far-fetched? Friends, that’s the story of Microsoft itself. Microsoft became an underground sensation in the late 1970s with Microsoft Basic, a programming language for the Altair and other kit computers and later for CP/M. And while we’ll probably never know the entire story of how and why this happened, when IBM decided to outsource the operating system for the IBM PC, they went to Microsoft and got both an OS and the must-have Microsoft Basic. Ten years later, IBM was just another hardware maker–really big, but getting squeezed. Today, 20 years later, IBM’s still a huge force in the computing industry, but in the PC industry, aside from selling ThinkPads, IBM’s a nobody. There may be hardware enthusiasts out there who’d be surprised to hear IBM makes and sells more than just hard drives.
Ironically, Microsoft’s response to this new threat is to act more and more like the giant it toppled. Shared Source isn’t a new idea. IBM was doing that in the 1960s. If you were big enough, you could see the source code. DEC did it too. At work, we have the source code to most of the big VMS applications we depend on day-to-day. Most big operations insist on having that kind of access, so their programmers can add features and fix bugs quickly. If Windows 2000 is ever going to get beyond the small server space, they really have no choice. But they do it with strings attached and without going far enough. An operation the size of the one I work for can’t get the source and fix bugs or optimize the code for a particular application. You’re only permitted to use the source code to help you develop drivers or applications. Meet the new Microsoft: same as the old Microsoft.
Some people have read this speech and concluded that Microsoft believes open-source software killed the dot-com boom. That’s ludicrous, and I don’t see that in the text. OSS was very good for the dot-com boom. OSS lowered the cost of entry: Operating systems such as FreeBSD and Linux ran on cheap PCs, rather than proprietary hardware. The OSs themselves were free, and there was lots of great free software available, such as the Apache Web server, and scripting languages like Python and Perl. You could do all this cool stuff, the same cool stuff you could do with a Sun or SGI server, for the price of a PC. And not only was it cheaper than everybody else, it was also really reliable.
The way I read it, Microsoft didn’t blame OSS for the dot-com bust. Microsoft blamed the advertising model, valuing market share over revenue, and giving stuff away now and then trying to get people to pay later.
I agree. The dot-com boom died because companies couldn’t find ways to make money. But I’m not convinced the dot-com boom was a big mistake. It put the Internet on the map. Before 1995, when the first banner ad ran, there wasn’t much to the Internet. I remember those early days. As a college student in 1993, the Internet was a bonanza to me, even though I wasn’t using it to the extent a lot of my peers were. For me, the Internet was FTP and Gopher and e-mail. I mostly ignored Usenet and IRC. That was pretty much the extent of the Internet. You had to be really determined or really bored or really geeky to get much of anything out of it. The World Wide Web existed, but that was a great mystery to most of us. The SGI workstations on campus had Web browsers. We knew that Mosaic had been ported to Windows, but no one in the crowd I ran in knew how to get it working. When we finally got it running on some of our PCs in 1994, what we found was mostly personal homepages. “Hi, my name is Darren and this is my homepage. Here are some pictures of my cat. Here’s a listing of all the CDs I own. Here are links to all my friends who have homepages.” The running joke then was that there were only 12 pages on the Web, and the main attraction of the 12 was links to the other 11.
By 1995, we had the first signs of business. Banner ads appeared, and graduating students (or dropouts) started trying to build companies around their ideas. The big attraction of the Web was that there was all this information out there, and it was mostly free. Online newspapers and magazines sprung up. Then vendors sprung up, offering huge selections and low prices. You could go to Amazon.com and find any book in print, and you’d pay less for it than you would at Barnes & Noble. CDNow.com did the same thing for music. And their ads supported places that were giving information away. So people started buying computers so they could be part of the show. People flocked from closed services like CompuServe and Prodigy to plain-old Internet, which offered so much more and was cheaper.
Now the party’s ending as dot-coms close up shop, often with their content gone forever. To me, that’s a loss only slightly greater than the loss of the Great Library. There’s some comfort for me: Five years from now, most of that information would be obsolete anyway. But its historical value would remain. But setting sentiment aside, that bonanza of freebies was absolutely necessary. When I was selling computers in 1994, people frequently asked me what a computer was good for. In 1995, it was an easier sell. Some still asked that question, but a lot of people came in wanting “whatever I need to get to be able to get on the Internet.” Our best-selling software package, besides Myst, was Internet In A Box, which bundled dialup software, a Web browser, and access to some nationwide provider. I imagine sales were easier still in 1996 and beyond, but I was out of retail by then. Suddenly, you could buy this $2,000 computer and get all this stuff for free. A lot of companies made a lot of money off that business model. Microsoft made a killing. Dell and Gateway became behemoths. Compaq made enough to buy DEC. AOL made enough to buy Time Warner. Companies like Oracle and Cisco, who sold infrastructure, had licenses to print money. Now the party’s mostly over and these companies have massive hangovers, but what’s the answer to the Ronald Reagan question? Hangover or no hangover, yes, they’re a whole heck of a lot better off than they were four years ago.
I’m shocked that Microsoft thinks the dot-com phenomenon was a bad thing.
If, in 1995, the Web came into its own but every site had been subscription-based, this stuff wouldn’t have happened. It was hard enough to swallow $2,000 for a new PC, plus 20 bucks a month for Internet. Now I have to pay $9.95 a month to read a magazine? I could just subscribe to the paper edition and save $2,500!
The new Internet would have been the same as the old Internet, only you’d have to be more than just bored, determined, and geeky to make it happen. You’d also have to have a pretty big pile of cash.
The dot-com boom put the Internet on the map, made it the hot ticket. The dot-com bust hurt. Now that sites are dropping out of the sky or at least scaling operations way back, more than half of the Web sites I read regularly are Weblogs–today’s new and improved personal home page. People just like me. The biggest difference between 1994 and 2001? The personal home pages are better. Yeah, the pictures of the cat are still there sometimes, but at least there’s wit and wisdom and insight added. When I click on those links to the left, I usually learn something.
But there is another difference. Now we know why it would make sense to pay for a magazine on the Internet instead of paper. Information that takes a month to make it into print goes online in minutes. It’s much easier and faster to type a word into a search engine than to leaf through a magazine. We can hear any baseball game we want, whether a local radio station carries our favorite team or not. The world’s a lot smaller and faster now, and we’ve found we like it.
The pump is primed. Now we have to figure out how to make this profitable. The free ride is pretty much over. But now that we’ve seen what’s possible, we’re willing to start thinking about whipping out the credit cards again and signing up, provided the cost isn’t outrageous.
The only thing in Mundie’s speech that I can see that Linus Torvalds and Alan Cox and Dan Gillmor should take offense to is Microsoft’s suspicion of anyone giving something away for free. Sure, Microsoft gives lots of stuff away, but always with ulterior motives. Internet Explorer is free because Microsoft was afraid of Netscape. Outlook 98 was free for a while to hurt Lotus Notes. Microsoft Money was free for a while so Microsoft could get some share from Quicken. It stopped being free when Microsoft signed a deal with Intuit to bundle Internet Explorer with Quicken instead of Netscape. And there are other examples.
Microsoft knows that you can give stuff away with strings attached and make money off the residuals. What Microsoft hasn’t learned is that you can give stuff away without the strings attached and still make money off the residuals. The dot-com bust only proves that you can’t necessarily make as much as you may have thought, and that you’d better spend what you do make very wisely.
The Internet needs to be remade, yes, and it needs to find some sustainable business models (one size doesn’t fit all). But if Mundie thinks the world is chomping at the bit to have Microsoft remake the Internet their way, he’s in for a rude awakening.
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