Recording of a recent wide-ranging hour-long conversation that David Runciman and I had with Dan Schiller, who was a visitor to our Technology and Democracy project.
Audio version here
This morning’s Observer column:
One of my favourite cartoons shows a team of scientists in a Nasa control room clustered around a big screen. Their spacecraft has just landed on a very distant planet and has begun transmitting data back to base. A guy in overalls is saying to his assembled colleagues: “Now all we have to do is figure out how to install Windows 95.”
Ah yes, Windows 95… I remember it well. It signified the moment when Microsoft finally managed to implement the user interface invented by Xerox in the early 70s. It was launched with the biggest hype-storm that the computer industry – or indeed any other industry – had ever seen. Microsoft paid the Rolling Stones an unconscionable amount of money (we never found out how much) to use Start Me Up as the musical backdrop for the launch. The first internet boom, triggered by the web and the Netscape browser, was just beginning to roll and Windows 95 was the first Microsoft operating system to have a TCP/IP stack (needed to connect to the internet) baked in.
Back then, the PC was the sun in the computing universe around which everything else revolved. And Microsoft controlled well over 90% of the PC software market. So Windows 95 really was a big deal.
Last week, 20 years on, Microsoft launched Windows 10 with the kind of faded hoopla that accompanies 60s discos…
And then, of course, there is the fact that Microsoft is one of the very few large corporations that is still doing serious, high-quality, long-term research.
This morning’s Observer column:
Let’s spool back a bit – to 1993. By then, the internet was roughly 10 years old, but for its first decade had been largely unknown to anyone other than geeks and computer science researchers. Two years earlier, Tim Berners-Lee had created and released the world wide web onto the internet, but initially no one noticed. Then in the spring of 1993, Marc Andreessen and Eric Bina released Mosaic – the first graphical browser – and suddenly the “real world” realised what the internet was for, and clamoured to get aboard.
But here’s the strange thing: Microsoft – by then the overwhelmingly dominant force in the computing world – failed to notice the internet. One of Bill Gates’s biographers, James Wallace, claimed that Microsoft didn’t even have an internet server until early in 1993, and that the only reason the company set one up was because Steve Ballmer, Gates’s second-in-command, had discovered on a sales trip that most of his big corporate customers were complaining that Windows didn’t have a “TCP/IP stack” – ie, a way of connecting to the internet. Ballmer had never heard of TCP/IP. “I don’t know what it is,” he shouted at subordinates on his return to Seattle. “I don’t want to know what it is. But my customers are screaming about it. Make the pain go away.”
But even when Microsoft engineers built a TCP/IP stack into Windows, the pain continued…
This morning’s Observer column:
Some years ago, I had a conversation with a senior minister in which he revealed that he thought the web was the internet. While I was still reeling from the shock of finding a powerful figure labouring under such a staggering misconception, I ran into Sir Tim Berners-Lee at a Royal Society symposium. Over coffee, I told him about my conversation with the minister. “It’s actually much worse than that,” he said, ruefully. “Hundreds of millions of people now think that Facebook is the internet.”
He’s right – except that now the tally of the clueless is now probably closer to a billion. (Facebook has more than 1.3 billion users, some of whom presumably know the difference between an app and the network.)
Does this matter? Answer: yes, profoundly, and here’s why…
For all these years, we scrupulously followed McKinsey’s “Not A Single Crack In The Wall” advice, we’ve managed to successfully Embrace and Extend each and every possible threat to the Windows + Office combo.
While we initially underestimated these new tablets, their threat soon became obvious and we started thinking of ways to protect our franchise.
That’s when I took the company in the wrong direction.
To prevent these tablets from penetrating the Office market, I followed our Embrace and Extend strategy and endorsed the creation of hybrid software and hardware: The dual-mode (Desktop and Touch UI) Windows 8 and Surface tablets.
The results are in. Windows 8 hasn’t taken the market by storm. The Windows 8 tablets manufactured by our hardware partners are sitting in warehouses. We just took a $900M write-off on our RT tablets, now on fire-sale.
It doesn’t matter who actually proposed or implemented the failed strategy, I endorsed it. What matters most — the only thing that matters — is what we’re going to do now.
And while we’re on this topic, Benedict Evans has a very perceptive post arguing that, with the benefit of hindsight, we can now see that Microsoft peaked in 1995. Excerpt:
Just as overnight success can take a lifetime, so overnight collapse can also take a long time. There are founders creating companies today who weren’t born when people were still actually scared of big bad Micro$oft. It stopped setting the agenda 18 years ago. Windows 95 was the moment of victory, but was also the peak: it came just at the moment that the Internet started taking off, and Microsoft was never a relevant force on the internet despite investing tens of billions of dollars.
But you needed a PC to use the internet, and for almost everyone that PC ran Windows, so Microsoft’s failure to create successful online services didn’t seem to matter. Microsoft survived and thrived in the PC internet era, despite appearing to be irrelevant, by milking its victory in the previous phase of the technology industry. PC sales were 59m units in 1995 and rose to over 350m in 2012. Of course, that’s now coming to an end.
Though it looks like we’ve passed the tipping point, this process isn’t going to be over quickly. PC sales aren’t going to zero this year. But the replacement cycle, already at 5 years, will lengthen further and further, more and more apps will move to mobile or the cloud, and for many people the PC will end up like the printer or fax – vestigial reminders of an older way of doing things. Microsoft may yet manage to turn Windows tablets and phones into products with meaningful market share, but it will never be dominant again.
LATER: Lovely piece in Slate which explains Microsoft’s decline in terms of the storylines of The Wire.
This morning’s Observer column.
Coincidentally, in that same year, Gates stepped down from his position as CEO and began the slow process of disengaging from the company. What he failed to notice was that the folks he left in charge, chief among them one Steve Ballmer, were prone to sleeping at the wheel.
How else can one explain the way they failed to notice the importance of (successively) internet search, online advertising, smartphones and tablets until the threat was upon them? Or were they just lulled into somnolence by the sound of the till ringing up continuing sales from the old staples of Windows and Office?
But suddenly, that soothing tinkle has become less comforting. PC sales are starting to decline sharply , which means that Microsoft’s comfort zone is likewise set to shrink. Last week, we had the first indication that Ballmer & Co have woken up. In a 2,700-word internal memo rich in management-speak drivel , Ballmer announced a “far-reaching realignment of the company that will enable us to innovate with greater speed, efficiency and capability in a fast-changing world”.
This morning’s Observer column.
Apple has to date authorised 500,000 [Apps] for its iPhone. The corresponding number for the Android platform is 600,000. These numbers provide ample justification for the late Steve Jobs’s great insight: phones were really powerful hand-held computers that could run useful applications. And so it proved. Jobs unleashed an explosion in creativity as programmers raced to create apps that people would buy in huge volumes. The result is a world in which smartphones are basically app-running devices that can also make voice calls. Ditto for tablets, except that they don’t bother with the calls.
So that’s all right, then? Not quite. Look closer at this explosion of creativity and you find that much of what it has created is either trivial or downright crap. You can, for example, get an app to put an image of bubblewrap on your iPhone screen. Then there’s the Halloween Sound Machine (“Sneak up on your mates with the sounds of a rusty chainsaw, go on, you know you want to!”). Or how about iBeer (“turns the iPhone’s screen into a showy pint of the foamy stuff”)? And gentlemen trying to decide between a walrus moustache, Victorian sidewhiskers or a goatee beard will doubtless find Beard Booth invaluable.
I could go on, but you get the point. A large proportion of smartphone apps are the contemporary equivalent of those plastic gee-gaws my kids bought all those years ago: impulse purchases that provide a moment’s entertainment – or even delight – and are then forgotten…
Those who are salivating about Apple’s new tools for creating iTextbooks ought to first of all have a read of this.
For nearly two years, Apple has wooed digital book publishers and authors with its unconditional support of an open, industry-leading standard. (The EPUB standard is managed by the International Digital Publishing Forum [IDPF], of which Apple Inc. is a member.)
With last week’s changes, Apple is deliberately sabotaging this format. The new iBooks 2.0 format adds CSS extensions that are not documented as part of the W3C standard. It uses a closed, proprietary Apple XML namespace. The experts I’ve consulted think it deliberately breaks the open standard.
I’m inclined to agree. Like Mr Bott, I see this as a variant of Microsoft’s old strategy of “embrace, extend and extinguish”.
From today’s NYTimes.
The world’s congested mobile airwaves are being divided in a lopsided manner, with 1 percent of consumers generating half of all traffic. The top 10 percent of users, meanwhile, are consuming 90 percent of wireless bandwidth.
Arieso, a company in Newbury, England, that advises mobile operators in Europe, the United States and Africa, documented the statistical gap when it tracked 1.1 million customers of a European mobile operator during a 24-hour period in November.
The gap between extreme users and the rest of the population is widening, according to Arieso. In 2009, the top 3 percent of heavy users generated 40 percent of network traffic. Now, Arieso said, these users pump out 70 percent of the traffic.
Michael Flanagan, the chief technology officer at Arieso, said the study did not produce a more precise profile of extreme users. But the group, he said, was probably diverse, with a mix of business users gaining access to the Internet over a 3G network while traveling, and individuals with generous or unlimited mobile data packages watching videos, the main cause of the excess traffic.
Interesting data. At the moment, only about 13 per cent of the world’s 6.1 billion cellphones are smartphones, according to Ericsson, the leading maker of mobile network equipment, but the rate exceeds 30 percent in larger markets like the United States, Germany and Britain. My (informal) guess, based purely on observing those around me in the street and on trains, is that the proportion of smartphones is much higher than that in the UK.
The increasing penetration of smartphones is a one-way street — and, as Jonathan Zittrain, Tim Wu and others have pointed out — the destination it’s heading towards is not necessarily an attractive one in terms of freedom and innovation.
As the NYT report puts it:
The more powerful phones are rapidly replacing the simpler, less voracious devices in many countries, raising traffic levels and pressure on operators to keep pace. In countries like Sweden and Finland, smartphones now account for more than half of all mobile phones … About 35 percent of Finns also use mobile laptop modems and dongles, or modems in a USB stick; one operator, Elisa, offers unlimited data plans for as little as 5 euros, or $6.40, a month.
As a result, Finns consume on average 1 gigabyte of wireless data a month over an operator’s network, almost 10 times the European average. As more consumers buy smartphones, the level of mobile data consumption and congestion will rise in other countries.
This morning’s Observer column.
Microsoft is a huge and important company. But guess what? It’s in danger of being dwarfed by an outfit that it once regarded as a joke. In terms of market capitalisation, Apple passed Microsoft ages ago. When I last checked, Apple was valued at $364bn, compared with Microsoft’s $230.5bn. And at the moment, there is only one other corporation in the world – Exxon Mobil – that is bigger than Apple.
Last week, Apple unveiled results that suggest even Exxon may not be safe from the relentless growth of Steve Jobs’s empire. Apple made a net profit of $7.31bn on revenues of $28.57bn for the quarter ending in June. That's the best three months it’s ever had, with revenues up 82% and profits up 125%. The company also revealed that it’s sitting on a $76bn cash mountain. Just to put that in context, Apple could currently buy both Tesco and BT and still have some loose change. The news sparked an 8% rise in the share price, with the stock breaking the $400 barrier for the first time.
So is Apple the new Microsoft? Answer: no – and the quarterly results explain why…
LATER: Even stranger is the revelation that Apple has more cash in hand than the US Federal government.