Fat, Lame, and Tasty

For the first time in many years, it looks like Microsoft is feeling the hot breath of real competition on the back of its corporate neck.

In the wake of a stock drop, CEO Steve Ballmer tried desperately to inflate a life raft and buoy the share prices. His chosen instrument was an internal memo, in which he tried to reassure his employees (and, thereby, Wall Street), that they're on top of things, and that all that capital outlay isn't really the nasty bleeding it appears to be.

His choice of illustrations, however, was unfortunate at best:

Ballmer said the investments are needed, even though they will take time. He also pointed to the fact that Microsoft is just starting to reap rewards from its decade-long investments in software for TV set-top boxes. "Our bold bet on television is about to begin to pay off," he said.

Is that a joke? And here I thought Ballmer was a humorless sort.

Worse, Bill Gates stands up a couple days later and says that Microsoft will "keep Google honest." I believe Mr. Gates is confused; it's the other way around. There is increasingly a shift toward online versus local resources, and Google is the very clear leader in this area. The fact that Mr. Gates chooses to focus his attention on Google's search engine alone, when the reality is that they already offer much more in the way of online services and tools, only serves to highlight how quickly Microsoft is losing the pulse of the market.

For years, Microsoft has milked every dime out of their proprietary dominance of the operating system and productivity markets, ruthlessly forcing "upgrades" upon businesses and consumers, refusing association in favor of direct attack at every turn. Thus, other companies learned that a frontal assault was suicide, and began the sapping process. Now that process has started to pay dividends, as companies like Google attack Microsoft at their weakest point: cross-platform compatibility.

Expect to see word processors, spreadsheet programs, and other productivity tools begin to pop up in the increasingly deep ranks of Google's services over the next few years. The big advantages--other than having variable levels of usage and functionality, which range in cost from free to cheaper-than-Microsoft--are the increased ease of use, instant integration and migration of data, and widespread availability. Microsoft, meanwhile, is trying to prop up the dinosaur, swearing all the while that it's not really dead, it's just sleeping.

It's looking increasingly like Vista may be the beginning of the end for Microsoft. Even a very small amount of competition can quickly stick a lance in the side of those who have become complacent in their perceived monopoly. Microsoft is beginning to limp--ever so slightly, to be sure--but a limp nonetheless. And the lions haven't eaten in a very long while.

Welcome back to the real world of capitalism, Bill.