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Eye on Microsoft: Assortment of Key Observations

Those who don't understand Linux are doomed to reinvent it, poorly.

This set of reports is intended to keep track of anti-competitive behaviour in particular, but also in these "Eye on Microsoft" posts, signs of the demise of Microsoft are being accumulated for future reference.

Past and Future



Today's report starts with Borland's story, which was shared here before [1, 2, 3]. Glyn Moody bring up his own memories.

Microsoft essentially won the battle for the hearts and minds of the developer community, and Borland became something of a lost soul, wandering the fringes of computing, trying to find something to do in the shadow of Big Bill and an even bigger Microsoft.

One of the people at Microsoft tasked with destroying Borland was Todd Nielsen, who was general manager for Microsoft's developer relations and platform marketing.


"Destroying" is a strong word, but we saw that before.

Several months ago, Steve Ballmer expressed no desire to resign from his post. That may change now as he uses a condition to excuse himself.

According to scuttlebutt from Microsoft’s annual employee meeting, which was held in Seattle on September 18, Ballmer told attendees that he is going to stay on at Microsoft until Microsoft’s search share exceeds Google’s.


Whether or not that ever happens (unlikely), the fact that such hubris is showing was worth noting, as well the mentioning of a departure. Microsoft's hostile behaviour typically descends from the top. Matt Asay once confirmed this in an E-mail to us.

"I See Dead Products"



The heading is a film reference, but it reflects on a trend that was mentioned here a couple of days ago. Several key Microsoft products/services/units shut down.

“Remember that amazing relationship you once had where you didn't even see the breakup coming?”A reader has sent us this example, describing it as: "How Microsoft shafted Ensemble studios (why should Novell be luckier?)

"Remember that amazing relationship you once had where you didn't even see the breakup coming? Well, that's sort of what Ensemble Studios founder Bruce Shelley sounds like when talking about Microsoft's closure of his studio. Shelley explains he "remains very disappointed" and that everyone at the studio still has a job until Halo Wars is finished later this year.

"Shelley does give some detail on why the ax got dropped on the studio, explaining that Microsoft wanted to shift the budget to other development houses which were "expected to deliver" more strategic and profitable games."

In other news from yesterday, Associated Press dumped Microsoft. That short affair is officially over.

Until now AP used Microsoft's MSN media player to distribute videos. Vole flogged ads alongside the material, sharing the revenue with AP.


The Microsoft Tax... Evasion



We wrote about Microsoft's tax evasion (or tax trickery) several times before [1, 2] and included some references to the developments in India. Well, the following article, which disappeared from CNN, had fortunately been mirrored a couple of days ago and also published. It seems to suggest that Microsoft might be dodging the law (with excuses). It just sounds suspicious.

Microsoft India Says Hasn't Received Tax Notice,Can't Comment



The Indian unit of Microsoft Corp. (MSFT) said Wednesday it is yet to receive any tax notice from the government.

Earlier in the day, the Economic Times, citing unnamed sources, said the Indian service tax department has asked Microsoft India to pay INR2.56 billion ( $57 million) in taxes and penalties.


Antitrust



Microsoft is not off the hook -- and rightly so. Later today there will be a formal discussion about Microsoft's antitrust status.

Microsoft and antitrust regulators will be back in federal court on Thursday, for a regularly scheduled status conference on the software giant's compliance with the final judgment order stemming from its historic consent decree.


The antitrust development from Japan -- that which was mentioned 3 days ago -- has just reached the Australian press, which has more details.

JAPAN'S Fair Trade Commission has told Microsoft, the world's largest software maker, to void clauses that it says violate anti-monopoly law in contracts with Japanese personal computer makers.


Yahoo!



As Microsoft goes into debt, it becomes unlikely that it will ever buy Yahoo. Nevertheless, some people still discuss the possibilities.

Yahoo (YHOO) this week holds its first board meeting with new director Carl Icahn at the table. And Carl is not being quiet about what he wants. In an appearance on CNBC’s Fast Money on Friday, Icahn repeated his stance that eventually the company will need to do a deal with Microsoft (MSFT).

“Yahoo…eventually…in my opinion…they have to do something with Microsoft eventually, they have to do it, or Google is going to kill them,” Icahn said.


Google's deal with Yahoo is still facing challenges (risk of being derailed) only because of Microsoft, an almost-sole opposer with AstroTurf platforms. It was the same with DoubleClick (few more details in [1, 2]). The American Antitrust Institute has just published a paper on the subject.

The American Antitrust Institute (AAI) today released a white paper on the proposed alliance between Google and Yahoo, concluding that the transaction should be viewed as presumptively anticompetitive, although it may also contain possible pro-competitive benefits.


Debt



We have already expressed our views on the Microsoft buybacks. Roughly Drafted has some more ideas.

Spending your capital to buy back stock also indicates that you have no ideas for using that capital to build your business, and are instead converting it into value for shareholders, including executives and employees holding options (the opposite of diluting your stock by creating new shares).

[...]

If Microsoft had any implementable ideas, it would be using that $40 billion to make more money, just like Apple has used its capital to rapidly expand its business while earning more cash on hand. Apple isn’t buying back its stock because it thinks it can make more for investors building new business than it can by simply giving the money back.

Critics who can find no problems with Microsoft’s record earnings and its dominance of Gartner’s market share reports have fallen for the market share myth. Linux, Apple and Microsoft aren’t companies selling competing widgets. Apple sells PCs that don’t have Microsoft’s OEM software on them, while Linux is used as an alternative to Microsoft’s software. Rather than directly competing for ”sales,“ Apple and Linux both serve to compete with Microsoft for attention (development) and air supply.

Comparing ”market share,“ particularly when talking about Linux, which isn’t even sold, is absurd. One might as well be describing a man in a sealed room with a fire burning in one corner as safe because the fire only consumes a very small portion of the the room’s ”cubic inch share.“ The real problem is that it is eating up the room’s oxygen and putting out toxins.

Microsoft has worked well with a monopoly over the PC OS and software markets. But with competition from non-Windows PCs (both Macs and Acer/ Dells running Linux) and from alternative server software (open source servers, which power more web servers than Windows Server), Microsoft is now finding its air supply getting cut off while its proprietary business model is poisoned by the insidiously opportunistic spread of open source. That’s why Microsoft calls it a ”cancer.“

[...]

Microsoft is still making loads of money, but Windows has hit a brick wall with Vista, its consumer products have all tanked and are losing loads of money, and competition is just barely getting started.

Apple is growing 10x faster than the PC market in general, and the top PC makers (HP, Dell, Acer) are all actively working to find new ways to use Linux or develop their own OS in imitation of Apple. Even if Windows 7 turned out to be a good product in 2010, it wouldn’t matter, because nobody wants to pay for a PC OS anymore.

Microsoft is fundamentally screwed. The worst part is that it is not taking any effective stabs at building a new model or innovating itself out of crisis. Shifts happen all the time. If big companies can’t adapt, they die, and Microsoft isn’t proving it can adapt. It’s merely reacting with stock buybacks and imitative advertising (including its $300 million ads that primarily draw attention to Apple’s brand.)


Patty Stonesifer Lands in Public Sector



This cannot be good news, due to the known impact of former Microsoft employees outside Microsoft. Patty Stonesifer used to be in the Gates Foundation and her husband 'planted' a series of articles praising Bill Gates in Time Magazine. That was about a month ago. It's part of these attempts to hide truths and publicly glorify those who pay the bill. One reader believes that Stonesifer's appointment in the Smithsonian Institution is bad news.

The Smithsonian Institution Board of Regents elected former Microsoft executive Patty Stonesifer on Monday as the next chairwoman of the board overseeing the world's largest museum and research complex.


Having seen the Library of Congress accepting millions of dollars from Microsoft to pollute its Web site with Silverlight [1, 2, 3, 4], one reader worries that Microsoft influence in the Smithsonian Institution might do the same to more public archives. Another reader has just said that Stanfard is being 'infected' by this Linux-hostile technology as well.

Silverlight puke, barf

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