Sunday, April 23, 2006

Microsoft's Choice

Google and Apple have shifted the competitive landscape leaving Microsoft fighting a defensive battle on a battlefield not of its choosing.  Microsoft faces the dilemena of continuing to compete on their competitors terms or disrupt the competitive landscape.

The first choice will lead to the slow but inexorable decline in revenue and profitability of Microsoft.  The second choice is very risky because the outcome is unknown and will involve the internal disruption of Microsoft.   Two stark choices but only one can halt the decline of Microsoft.

So what can Microsoft do if it chooses to go with the second option?  Microsoft needs to swap the Win32 kernal for the Linux or BSD and focus on the UI and productivity aspects of the OS.  Similar to Apple's strategy with OS X.

By using a Linux or BSD kernal Microsoft benefits in several ways.  Fundamental architectural decisions made a  long time ago are placing constraints on how secure the WinOS can be made.   Security is becoming increasingly important and is now effecting choices on OS.  A Linux/BSD kernal provides the fundamental security necessary to build a safe OS.  Using a Linux/BSD kernal will allow Microsoft to concentrate on the UI and productivity aspects of the OS which fits very neatly into the creation of a seamless computing experience that Microsoft is pursuing.  It reduces OS maintence and development costs.  Microsoft essentially outsources the bug fixing and OS maintence to the Linux or BSD community.   Microsoft would still need to participate but would not need to devote so much resources on housekeeping but can focus on innovation.

Using a Linux or BSD kernal will allow Microsoft to increase margin on the OS product while reducing the cost to the consumer.  A benefit that Microsoft's hardware partners will appreciate.

Those are the direct internal effects of this move.  But there will also be disruptive market effects of a kernal switch, which can be argued to be far more important to Microsoft.

  • The sea anchor of being an OS company that is stopping Microsoft competing effectively in the new market. 
  • It will in on fell swoop take the wind out of most of the anti-trust suits that Microsoft currently faces.
  • The OS versus OS argument looses bight as it becomes an argument about Unix flavours.
  • Security and productivity reasons for swapping OSes (ie from Win to OSX or Linux) will be mutted if not completely sunk.
But most importantly, the strategy of switching kernal will allow Microsoft to blur the boundaries between the centre and edge of the network.  Which directly effects the competiviness and value of competitors like Apple and Google.

The question remains of what kernal would Microsoft use.  Technically there isn't much difference between Linux or BSD kernals.  I expect that Microsoft will go with the Linux kernal for the following reasons:
  1. Linux already has a greater amount of public mindshare and it would allow Microsoft to reclaim those organisations that have already move to Linux Desktops,
  2. Linux developer community is larger (and more vocal) than the BSD community, and
  3. Steve Jobs choose BSD.
Microsoft using the Linux kernal has significant benefits for the company ranging from costs to more focused development.  Perhaps more importantly it will represent a major disruption of the status quo.  Innovative disruption not only comes from new technology but also from adopting new strategies.

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