WATCH THE BLIND SPOT
Much of the web chatter today is focused on the leaked memos at Microsoft that Bill Gates and Chief Technology Officer Ray Ozzie recently sent to the whole organization regarding the second Internet disruptive "services wave" (full text of Gates and Ozzie memos can be found here and here respectively, via Dave Winer).
Both are interesting reads and summarize fairly comprehensively the array of changes and competitors that Microsoft is facing over the next few years, including of course Google and Yahoo!
What's more interesting for me though is who is missing: Apple.
Ray Ozzie's memo mentions Apple twice, in the following contexts.
First in the context of Apple's role in mainstreaming the Graphical User Interface, as seen from an utterly Microsoft perspective:
"In 1990, there was actually a question about whether the graphical user interface had merit. Apple amongst others valiantly tried to convince the market of the GUI’s broad benefits, but the non-GUI Lotus 1-2-3 and WordPerfect had significant momentum.
But Microsoft recognized the GUI’s trans-formative potential, and committed the organization to pursuit of the dream – through investment in applications, platform and tools – based on a belief that the GUI would dramatically expand and democratize computing."
Second, Apple is mentioned in the context of its phenomenal iPod/iTunes success:
"The same is true of Apple, which has done an enviable job integrating hardware, software and services into a seamless experience with dotMac, iPod and iTunes, but seems less focused on enabling developers to build substantial products and businesses."
That's it. No more of Apple as a threat to the core Windows OS franchise, and with a 95% plus share of the global OS market, that's probably understandable. After all Apple is still under 5% of the PC market, and even Firefox broke through the 7% penetration (8.65% now) level in browsers to make it interesting for Microsoft to notice and re-introduce the concept of a standalone browser again.
But Apple could potentially change the game on the PC side. Back in August, in a post titled "On Google Peaking and Apple Ascending", I presented two hypothetical scenarios that Apple may use with its upcoming switch to Intel chips for Macs:
"...here is what Apple could do when they finally launch new Macs on Intel-based PCs. It involves two steps, both taken simultaneously.
1. They could offer a Mac desktop and/or laptop that has TWO hard drives in it. One has the latest and greatest Mac OS on it. And the second has Windows XP/Windows Vista on it, which of course, the customer pays for.
This makes it VERY easy for the user then to boot up into EITHER operating system, and have both Windows and Mac applications (and their own related files), on the same machine. They'd just be on two different drives on the same machine.
The customer then gets a machine directly from Apple that supports BOTH operating systems, provides the best of both worlds in terms of application software, AND...
has special Apple-enhanced, cool software that makes working with both operating systems seamless and easy. In effect, it encourages the customer to "SWITCH" operating systems AFTER buying and using the PC, rather than forcing them to commit to one or the other operating system today.
Very simple...Apple thus becomes a Windows reseller, which benefits Microsoft in the near-term.
But longer-term, it gets customers to try a Mac while buying a Windows PC...a no-lose proposition.
2. At the same time, Apple could announce a twist on Robert's idea above. In two years, iPods with a 100GB or more in storage space will be an affordable reality.
The company could offer a "Mac iPod", loaded with the latest Intel based Mac operating system, which the customer DOES pay for.
But this iPod has a special USB adapter, AND an on-board processor/CPU, much like I've discussed in my "computer-on-a-stick" posts before here and here.
The user can plug this into any existing Windows PC, whether it has Microsoft Windows XP or the new Windows Vista software, and in effect have a dual-boot computer that turns into a Mac. Of course, Apple would bundle all its cutting edge application software that it already delivers with every Mac.
It would be the new "Mac Micro-Mini"! And it could be priced under $700, possibly less."
So my interest was piqued when I saw this headline and article in Architosh, a trade publication focused on the Mac:
"Apple patent shows company possibly preparing for OS War:
...a reliable source had told Architosh prior to the highly anticipated Apple WWDC event earlier that Steve Jobs would make an announcement that would be ultimately about expanding Macintosh market share".
The piece goes on to say,
"The big news yesterday was the discovery of an Apple patent that allows the computer maker to protect the installation of Mac OS X. In this case, really limit it to just Apple-produced hardware.
However, the patent describes a process whereby users would be able to load on of three operating systems as their primary OS and then load a secondary operating system as their secondary OS."
The whole piece is an interesting read, but it is still informed speculation.
Regardless of how it's done, the fact remains that Apple is poised to employ a variety of strategies this time around that could result in increased market share on consumer desktops and laptops against the Windows world, for the first time in years.
And it should have potentially made it into one of the Microsoft Memos as a threat to watch.
Bill Gates in the opening paragraph of his memo states:
"Ten years ago this December, I wrote a memo entitled The Internet Tidal Wave which described how the internet was going to forever change the landscape of computing. Our products could either prepare for the magnitude of what was to come or risk being swept away."
On a personal note, as the first mainstream "Internet Analyst" on Wall Street, I had used the "coming Internet Tsunami" as a key metaphor in the first research report on the Internet and Online Services in a report entitled "Byways to Highways" in February of 1995 (the road reference being to the long transition from narrow-band consumer access to broadband over a decade and the then over-popular "Information Super-Highway" meme).
The Tsunami or Tidal Wave metaphor needs to now be supplemented with another metaphor for Microsoft. And that would potentially be the "Perfect Storm" (a subject for future posts).
Apple is just one of the changing and significant weather conditions fueling this storm.
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