Summary: The press seems pessimistic about Microsoft, which is increasingly seen as unable to evolve and innovate; Microsoft's security problems (and security PR) persist in a major way

THIS VERY large post contains a lot of details (and new references) about the weaknesses of Microsoft and the endless spin it continues to rely on. We begin with this article from a former Microsoft chief who publicly blasted the company's technical capabilities. We wrote about this in a previous post that complained about the way he rewrote history when he called Microsoft a "largely accidental monopolist." From The Source we have this response:

Other stuff: Playing Monopoly

It’s interesting that the official Microsoft Blog didn’t address some of the other interesting claims from Mr. Brass.

Take for example his assertion that Microsoft is “at worst” a “highly repentant, largely accidental monopolist”. Largely accidental? First off, I question the idea that a company can “accidentally” stumble into monopolizing an industry. Secondly, we have reams of documentation (like Comes v. Microsoft) that show Microsoft at all levels is deadly serious about eliminating competition, regardless of the means.

Even if you accept “highly repentant” – which I emphatically do not – Microsoft certainly did not become a monopoly largely by accident.

Other Stuff: Sustaining Economy

Another interesting assertion by Mr. Brass is that Microsoft “helps sustain the economies of Seattle, Washington State and the nation as a whole.”

Perhaps Mr. Brass is not aware of the $1 Billion Microsoft Tax Dodge? Or the over $650 Million in tax breaks Microsoft recieves? That’s just at the state level.

Well, since the tax dodge was brought up, Jeff Reifman's writings about Microsoft's massive tax dodge [1, 2, 3, 4, 5, 6, 7, 8] are worth commending. It seems to have had an impact in the sense that the Seattle Weekly has just placed the issue at a highly visible part of the paper. It says:

As our cash-strapped state prepares to cut services for the poor and mentally ill, billions of dollars in tax breaks and exemptions are still being doled out.

[...]

Deferral of state and local retail sales and use taxes are also allowed for the construction of buildings for high-tech projects involving research and development. That has Microsoft and its ever-expanding campus written all over it, allowing MS to avoid sales tax on construction costs, materials, and new equipment, for example. Another 500 small and large companies also benefit, says the state. The exemption was created in 1994 and extended in 2004 for another 10 years. Over a decade, that's $650 million the state is not raking in.

Almost 1,700 high-tech firms also share another $50 million in B&O tax credits for research and development under an exemption that was also renewed in 2004 for another decade. And a $12 million property-tax break goes to companies that use custom computer software.

Microsoft, incidentally, has also avoided paying a ton of state taxes by moving offshore, so to speak. According to writer and ex-Microsoftie Jeff Reifman, Microsoft opened a small Nevada office in 1997 to record software-licensing revenue and skirt Washington's half-percent wholesale tax on software-licensing royalties. Reifman estimates that has helped the company of billionaires Bill Gates and Paul Allen avoid more than $700 million in Washington taxes. With interest and penalties, the total exceeds $1 billion.

There is also this open letter to Steve Ballmer. It protests against his tax evasion in the Seattle Weekly.

Microsoft Nick (from Ziff Davis [1, 2, 3], not the Seattle P-I) has responded to the article from Mr. Brass in eWEEK ("Microsoft Suffers from Creative Difficulties, Says Former Exec") and in Microsoft Watch ("Microsoft Failing in Innovation, Former Executive Asserts"). Joe Wilcox, who used to edit Microsoft Watch, does a series called "Microsoft Confessions" in which he shows how rotten things have become inside the company. "Microsoft Confessions: 'Deeply dysfunctional family'" was one part of it, but another one, "Microsoft Confessions: 'Killed over politics'," says that one confession goes like this: "When Bill Gates first started the 'aggressive schedule' mantra to get people to work harder, [it was] tell folks we only had 2 months left, when we knew it was six. How could I as a manager look my people in the face and seriously tell them we're two months from shipping -- work your ass off -- knowing the bug count was high, the find rate was high and undercover dev work was still being completed?

"I finally had enough when my last reorg had me put under a brand new manager, with less weeks experience than I had years doing his job, telling me I wasn't doing my job properly. I asked him how many products he shipped. A couple was the answer. Meanwhile, I had three full Lucite blocks packed with ship-it awards on my desk. At that point, I gave my notice.

"How many [Microsoft] reorgs have ever benefited anyone except the folks on top? In all my reorgs, I only ever had one that actually benefited the troops; and that was a super good manager that said if you take me, you take my team. He was one of the best I'd ever worked for -- and, of course, he is no longer at MS either. To me, that speaks volumes."

One last part, titled "Microsoft Confessions: 'Poor worker bees,'" goes like this: "My former team required 60-90+ hours a week of its employees for several years straight. The average across many weeks was 80-90 [hours], for months on end. If you were unwilling to do the hours any more, you became persona non grata. This meant the least desirable assignments, poor reviews and so on. While the conventional answer to a bad team situation in a big company is to transfer teams, it didn't work for people on that team."

It's all rather revealing, isn't it? Microsoft is crumbling from the inside because it mistreats employees and brings many from other countries to compete with those who adhere to workers' rights. Other responses to the article from Mr. Brass are:

● The Instability of Monopolies

● Weekly high-tech hot topics in the blogs: Microsoft's creative destruction, Nexus One

● Sack Ballmer? Break Up the Company? How Microsoft Could Innovate

● Global CIO: Microsoft's Suicidal Infighting: An Insider's Story

Late last year, I wrote about how Microsoft had lost its will to lead and had become a big but passive follower and imitator whose competitors regard it this way:

"They see Microsoft as drifting toward fat and complacent, prone to bold talk but tepid action, and increasingly satisfied with being a not-so-fast follower instead of the brash and aggressive embracer of high-risk strategies and approaches that enabled Microsoft to dominate markets by sheer dint of its unmatched will and its sometimes-brutal assault on any and all obstacles between it and the top spot."

● Has Microsoft become clumsy, dysfunctional and uncreative?

Bill Gates is no longer a day-to-day force at Microsoft Corp., but you have to wonder what he makes of the smackdown delivered by a former Microsoft vice president in the New York Times.

● Former VP Says Microsoft is 'Failing' Despite Windows 7 Profits

Executive blames lack of creativity for the supposed problems at Microsoft, points to RIM, Apple, and Amazon as innovators

● How the mighty fall

A sensational piece in today’s New York Times by Dick Brass, former vice president at Microsoft between 1997 and 2004, on the continuing struggles at the software giant. Mr Brass worked on the company’s unsuccessful attempts to develop popular tablet PCs and e-books. You might think he is writing out of bitterness and disappointment. But he offers a measured (and fascinating) commentary on the difficulty big, successful companies have in changing to adapt to new times.

Microsoft responded and IDG has covered this response. "Microsoft flings chairs at former VP," is how The Inquirer chose to put it:

SOFTWARE MONOLITH Microsoft is fuming after a blog post penned by a former vice president claimed the outfit had lost its edge and is "failing" as a result.

As this new article reminds us, Microsoft is not innovative and competitors have said that for a long time. Oracle's Larry Ellison, for example, has memorable quotes.

Here's some quotes from him about Microsoft: "If an innovative piece of software comes along, Microsoft copies it and makes it part of Windows. This is not innovation. This is the end of innovation". And "Microsoft is already the most powerful company on earth, but you ain't seen nothing yet."

Going back to the "largely accidental monopolist" remark, here is what Groklaw had to say about it, preceding it with the example of history being rewritten by the BBC:

I had no idea when we began working on this project that the Comes exhibits covered such a broad time period, so far from 1988 to 2003. I woke up this morning thinking about the BBC's truly offensive series on innovation and the internet, which you can only view in the UK, in which Bill Gates of all people is one of those highlighted as an internet innovator, if you can believe it. Maybe because ex-Microsoft employees seem to be running things there? Having just transcribed several emails that prove that Microsoft was perhaps the very last to hop on board, I realized that with this collection of exhibits, we are indeed publishing The True History of Microsoft. Please feel free to help out. You can either transcribe any exhibit in full, in part or just describe it enough so it's keyword searchable. Come on and join us if you'd like to help historians in the future know how it really was and what really happened, keeping always in mind that this is still only part of a complex picture, despite their great historical value.

Here's Microsoft Corporate's response to the NY Times Op Ed piece, to be complete in our coverage, and fair, but also so you can compare it and Brass's words with what you find in the exhibits. I think you will agree with my opinion, that Brass's characterization of Microsoft as "a largely accidental monopolist" is hardly accurate.

A few days earlier, Jones wrote: "I think if you read through the exhibits we are publishing from the Comes v. Microsoft antitrust litigation, you will see that it was hardly accidental."

Groklaw also gives the text of the "we were smoked" memo (exhibit PX07219 (2003) [PDF] from Comes vs Microsoft), which we are appending at the bottom. We previously wrote about Microsoft's fear of Apple and Bill Gates wanting to maximise “patented stuff”. That was another memo which was similar.

As for the BBC, on it goes with the same shameful agenda. Part 2 of "The Virtual Revolution" is out right about now (available for viewing only in the UK) and our reader who has already watched it gives the following errata:

(9:50) she trots out that old chestnut, that the the Internet was designed to defend against nuclear missiles. At least that's what is implied with the visuals.

At (51:38) she mentions DOS attacks against Estonia, absolutely no mention that they are caused by a vast army of compromised Windows 'computers'.

I'll watch this show later tonight and hopefully add more to the above.

This reader of ours has noticed that Microsoft uses yet another publicity stunt with kids in it. It is "Paying dividends in good publicity already," says our reader. "Of course the kiddies will be attracted to the filth, like moths to a flame...

"Microsoft exploits parental fears to push Internet Explorer 8," he later added, linking to this post from Microsoft Jack [1, 2, 3]. "Personally," he argues sarcastically, "if you mention something to a kid and tell them not to do it, then they'll want to do it..."

Our reader ThistleWeb points to Rory Cellan-Jones from the BBC, calling it "More MSBBC PR". Rory's headline is "Government advice: Browse safely with Microsoft"

He is not joking, but he asks ORG for a response at least:

But open-source campaigners are concerned that Ceop has been just a little too eager to promote the Microsoft solution.

"Microsoft have scored a publicity hit for a little cost," Jim Killock of the Open Rights Group told me. "It's important that Ceop doesn't persuade people to use a single browser, particularly one which has had a history of security lapses causing other threats to home users."

Microsoft has a good record in helping to promote safe internet use in schools and homes - and Ceop is working hard to educate parents and children about internet safety.

That last sentence says it all about Rory's consistent denial of the company's incompetence, never mind the many crimes (with convictions). The BBC is deep in Microsoft's pocket because former Microsoft employees are running the show [1, 2, 3, 4, 5, 6]. We'll come back to security in just a moment.

Many people will not have the time to read Comes vs Microsoft exhibits for themselves, but they ought to trust the judgment of those who did go through the documents. Groklaw complains about a silly, misinformed, and biased article from Randall Kennedy (IDG). Pamela Jones writes: "My vote for funniest column of the day goes to this article. The author thinks Microsoft brings standards to the world, and so a world without Microsoft would be so innovative, it would be chaotic without Microsoft's steady hand making us all follow standards. Because I've spent the last couple of weeks transcribing and describing the exhibits from the Comes v. Microsoft antitrust case, I confess I found his "vision" of a Windows-less world simply hilarious. But for any who might take it seriously, it is Microsoft who has a history of "extending" standards in its own proprietary ways, not Open Source. And it was Opera who just pointed out to the EU Commission Microsoft's refusal to follow HTML standards. The Commission got Microsoft promise to improve, but Kennedy's vision of Microsoft somehow making the world follow standards... well, it's priceless. Is he Rob Enderle's son or something?"

To be fair, he has always been focused on Windows everything. Linux Insider (ECT) gives a ride to that piece of FUD.

One reader sent us a pointer to this article, noting that "Th[is] letter from 2003 sheds some light on how long that Microsofters have been aware of the scam perpetuated there.

"Stuz had lots of good quotes:"

A retiring Microsoft executive delivered a kick in the pants to his former employer, warning in a version of his resignation letter that he posted to the Internet that Microsoft is in danger of being swept away by open source.

Microsoft faces the same embrace-or-be-destroyed alternatives with open source that it faced with the Internet years ago, David Stutz said, Microsoft's group program manager for the Shared Source Common Language Initiative until his recent retirement.

Our reader then commented on Microsoft's corporate culture:

Yes, the work culture there has always sucked. It's not a new thing. The management has always sucked, that's not new either. The employees have always sucked, too. Between them and the management,that's why nothing works or is completed on time.

What is new is that individuals go strange. Matt Asay probably went Microsoft quite a long while ago. It's not uncommon for Windows trolls to use OS X. He's probably not a Windows troll, maybe just an apologist. Whatever.

I find his amnesia regarding Microsoft unconvincing, to say the least. Didn't the same strangeness turn up in Patrick Durusau, too? He did a 180 on Microsoft after a 'meeting' with some representatives:

http://www.robweir.com/blog/2008/03/contra-du... http://www.openmalaysiablog.com/2008/06/the-weed... http://www.openmalaysiablog.com/2008/06/a-memo...

What'd they do to him? money? threats? abuse? chemicals? blackmail?

Matt Asay almost went to work for Microsoft a few years ago, but very few people do understand this. Either way, his new role at Canonical [1, 2] will hopefully not shock. As for Patrick Durusau, we wrote about the subject in [1, 2, 3, 4, 5, 6, 7]. There was a lot of money at stake.

Microsoft had lost over $5,000,000,000 just trying to dethrone Google (in vain) and Microsoft's latest poor results (which Microsoft scrambled in order to confuse people [1, 2, 3, 4]) showed that the losses online continue. "Admit It, Microsoft: You Suck at the Web," says GigaOM (not Malik himself, as he is the one who received money from Microsoft). The rant says:

And what does it have to show for all its effort? Years of losses. Since 2002, when Microsoft began breaking out MSN and online services as a separate category, the division has seen aggregate revenue of $20 billion but a total operating loss of nearly $7 billion. In the past 18 months, the losses in proportion to revenue have only grown larger. Microsoft now spends nearly two dollars on its online businesses for every dollar it makes in revenue. Major points for trying, but it’s time to call a failure a failure.

Another insight: "Why Microsoft Can’t Grow– And Why Its Shareholders Deserve More Cash"

There is no shame in Microsoft coming to the realization that they have one and a half valuable properties and that they are wasting time and money on everything else (see chart below).

This takes us back to the subject of security, on which the BBC are others are currently deceiving by advertising Microsoft. One of our readers complained about the following analysis which neglects to blame Windows botnets as the cause.

Covering the last six months of 2009, the report is based upon the findings of the ThreatSeeker Network which is used to discover, classify and monitor global Internet threats and trends courtesy of something called the Internet HoneyGrid. This comprises of honeyclients and honeypots, reputation systems and advanced grid computing systems, all of which combine to parse through one billion pieces of content every day while searching for security threats. Every single hour the Internet HoneyGrid scans some 40 million websites for malicious code as well as 10 million emails for unwanted content and malicious code.

How about Microsoft's role? It neglected to patch its browser for almost half a year and Internet Explorer users paid the price [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12]. Shortly after the "emergency" patch, yet another flaw came to the surface, followed by another:

Microsoft's Internet Explorer could inadvertently allow a hacker to read files on a person's computer, another problem for the company just days after a serious vulnerability received an emergency patch.

Microsoft's Internet Explorer was subsequently subjected to backlash and in recent days we have found news reports, such as:

● Microsoft warns that IE zero-day vulnerability causes data leakage

Microsoft issued a new advisory late Wednesday, warning Internet Explorer (IE) users of the potential for data leakage as a result of new publicly disclosed IE zero-day vulnerabilities.

● Microsoft were aware of Aurora security flaws

In a blog posting by Jerry Bryant, a Microsoft security programme manager, "when the attack discussed in Security Advisory 979352 was first brought to our attention on Jan 11, we quickly released an advisory for customers three days later."

"As part of that investigation, we also determined that the vulnerability was the same as a vulnerability responsibly reported to us and confirmed in early September."

● Has Microsoft shot itself in the foot with Security Essentials?"

● Expert finds vulnerabilities in Microsoft browser

● Microsoft probing new hole in IE security

The newer problem is covered in:

● Internet Explorer Bug Can Disclose Local Files

● New attack against IE could expose all PC files

Microsoft's popular Internet Explorer web browser suffers from several minor flaws, which, when combined, can allow an attacker to read all the files on a user's computer, according to researchers at penetration testing vendor Core Security Technologies.

A lot of patches are coming today (we wrote about it here).

● Microsoft slates colossal Windows patch next week

● Unlucky 13 Microsoft Patches Due Next Week

● Microsoft Patches Coming Tuesday: Brace Yourself

And a system restart will be required for these Windows patches, which will mean down time for servers. In fact, 10 of the record-tying 13 bulletins require a restart.

How about this: "Microsoft to patch 17 year old bug"

Like many teens, the 17 year old bug does not do much other than lounge around the hard drive unable to speak. It only exists because the Vole wanted users to be able to run ancient programs on newer machines and had an insecure app to do it.

Having first appeared in Windows NT 3.1, the vulnerability has been carried over into almost every version of Windows that has appeared ever since.

Despite the obvious problems, Microsoft still treats itself as though it's an authority in security (there is a press release even) and sticking its nose in Super Bowl security (probably for some publicity). This company is preaching about safety while being utterly negligent by choice [1, 2, 3].

With fake cures and despair, fingers keep being pointed in the wrong direction. Microsoft has a serious design issue that cannot be fixed with patches. For instance, there are no repositories in Windows, so the users rely on a poor system/framework of trust. No wonder this type of stuff still appears in the news:

Fake Microsoft Outlook Update Installs Trojan

A malicious spam campaign caught by Panda Labs is using a fake Microsoft Update notice to trick victims into installing a Trojan. While well crafted, the attack still provides dead giveaways.

Will Microsoft ever abandon Windows and build something atop another platform? It has probably run out of time by now. As Jim Allchin put it 7 years ago (see E-mail below), Microsoft was "smoked". Back then Microsoft still had some savings in the bank, but now it's just borrowing money. ⬆

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Appendix: Comes vs. Microsoft - exhibit PX07219, as text (not complete text, see original)

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----- Original Message ----- From: Bill Gates Sent: Wed 4/30/2003 10:46 PM To: Amir Majidimehr; Dave Fester Cc: Will Poole; Christopher Payne; Yusuf Mehdi; David Cole; Hank Vigil Subject: Apple's Jobs again.., and time to have a great Windows download service...

Steve Jobs ability to focus in on a few things that count, get people who get user interface right and market things as revolutionary are amazing things.

This time somehow he has applied his talents in getting a better Licensing deal than anyone else has gotten for music.

This is very strange to me. The music companies own operations offer a service that is truly unfriendly to the user and has been reviewed that way consistently.

Somehow they decide to give Apple the ability to do something pretty good.

I remember discussing EMusic and us saying that model was better than subscription because you would know what you are getting.

With the subscription who can promise you that the cool new stuff you want (or old stuff) will be there?

I am not saying this strangeness means we messed up - at least if we did so did Real and Pressplay and Musicnet and basically everyone else.

Now that Jobs has done it we need to move fast to get something where the UI and Rights are as good.

I am not sure whether we should do this through one of these JVs or not. I am not sure what the problems are.

However I think we need some plan to prove that even though Jobs has us a bit flat footed again we move quick and both match and do stuff better.

I'm sure people have a lot of thoughts on this. If the plan is clear no meeting is needed. I want to make sure we are coordinated between Windows DMD, MSN and other groups.

.... Original Message .... From: Jim Allchin Sent: Wednesday, April 30, 2003 4:58 PM To: Amir Majidimehr; Chris Jones (WINDOWS); Will Poole; David Cole Subject: Apple's music store

1. How did they get the music companies to go along?

2. We were smoked.

jim