One of the things I don't think I fully realized until I started blogging is how often a blog post dies on the vine.  By that I mean you start to write it and then either can't make it work, don't get around to posting it because another more compelling topic arises or any of a hundred other reasons. 

This post was destined for that fate but I really felt bad for having not taken a  moment to acknowledge the retirement of Bill Gates.  A man who, though his detractors might not want to admit it, is almost certainly responsible for the age we live in today.  So the post got a reprieve (which also handily gives me time to catch up after my vacation)

That said, Bill Gates is/was a true visionary.

I think the passing of time tends to diminish the greatness of visionaries as their visions become common knowledge.  If someone were to come up to you today and say that its software and not hardware that's important in the digital revolution you'd think they were stating the obvious.  Which is why it becomes hard to grasp how much of a revolutionary Gates was to realize that before everyone else did. 

But he did and in doing so he gave birth to an entire industry.

If that wasn't enough he actually managed to ride that initial vision to even greater success.  Try to find any other area of business where one company has dominated not one, not two, but three successive generations of innovation.  The sheer fact that there's a rivalry between "The Valley" and Microsoft attests to just how influential the company is.  Where else can you find one company pitted against an entire industry?  Just to survive under such a circumstance is impressive but to come out on top more often than not is nothing short of phenomenal. 

That said, and with all due respect to Gates' contributions to technology, I think his greatest contribution was as a business man. 

Ideas such as hedging every bet and creating a culture of competition were nothing short of bizarre in the buttoned down world of an IBM dominated IT industry.  I doubt all those suit and tie IBM drones could imagine a corporate culture in which you checked your morning e-mail to find a message from the CEO cussing you out for being an idiot but that's exactly what early Microsoft was.  More importantly, it was a culture in which an employee could yell back and, if they were right, actually come out on top. 

To really appreciate the beauty of these innovations you have to look at all the things Gates missed on the technology side.  He backed OS/2 over Windows, he focused on the Mac instead of the PC, he even handed the original IBM OS contract over to another company because he didn't initially see the advantage of controlling the PC Operating System.  But in each case his business acumen created an environment where he could still succeed.  He kept Windows going even as he proclaimed OS/2 the way of the future, he developed DOS versions of Microsoft Office even though he thought the Mac was the way of the future and he quickly found an OS to sell to IBM once Gary Kildall dropped the ball back in his lap.  

There's no doubt he could go overboard even coming into conflict with the world's governments at various times.  But the arrogance that caused that trouble was only possible because of how utterly dominant Gates and Microsoft had become from a business perspective. 

In closing I have to give Mr. Gates one more piece of praise.  Of all the innovations Microsoft has created, all the successes they've had, there's one thing that I'll always be grateful for on a personal level and that is the fact that Microsoft was the first company to appreciate the value of developers.  Mock Steve Ballmer if you must but the fact that Microsoft is a company whose chief executive is willing to look foolish to demonstrate the importance of developers shows just how dedicated they are to the community.  Even now initiatives like MSDN put the offerings of other companies to shame and allow developers unprecedented access to literally every product Microsoft offers.  No one before or since has done the same and that is a testament to Microsoft's continued devotion to developers.

So as Gates rides off into the sunset I wish him all the best.  In an industry full of blowhards claiming to have invented everything short of the kitchen sink Gates is a true titan.  There are very few men who can claim to have changed the course of the known world but I truly believe the world we know would be far different and far worse had Bill Gates not been a part of it. 

As a general rule I try to avoid historical comparisons until they become blindingly obvious.  The reason is I find it too easy to draw inappropriate conclusions from just a few similarities. 

That's my mind set when reading this quote from Silicon Alley Insider regarding Google's Cell Phone platform Android...

But someone who's actually seen the gadget -- similar, if not identical to the one in the photo -- tells us that both the hardware (from handset-maker HTC) and Google's Android software suffer from a similar problem: They're technically powerful but not as elegant as Apple's (AAPL) iPhone and OS X.

Anyone who remembers back to the mid-to-late 90s will remember that exact same phrase being attributed to Microsoft Windows.  Time after time Windows was derided as an inelegant solution and time after time it managed to best the Macintosh in sales. 

So the question is: Will Android Manage To Do The Same Thing To The iPhone?

There are a lot of factors that point to that being the case.  Google has managed to co-opt several of Microsoft's best tricks including licensing their OS, embracing Developers and inserting Apple's features into a less elegant package.  It would seem to be PC vs Mac all over again.

But at this point, I still don't think so.

Google's sort of like a little league baseball player.  They've got the right moves but they still need to be able to execute on them effectively.  Google has, as of right now, not managed to effectively execute on any of it's goals beyond its initial victory in Search.  An especially sad record when you consider they give everything away for free.  So while they can mimic Microsoft they haven't shown they can turn that into the same success record.

Beyond that they're lacking a few key advantages that Microsoft had in the PC wars.  First, Microsoft started with the support of all the major players while Google lacks support from all but the small, no name providers.  The "license the OS" strategy only works if you can achieve critical mass.  In addition, Android doesn't have price to fall back on.  Though the iPhone is still far more expensive than Android phones are expected to be AT&T has stepped in with a contract to remedy that situation. 

That means consumers will see roughly the same price when they go to buy. 

So while Google might seem to be employing a historically successful strategy that isn't necessarily the case.  It just looks that way because of a few well placed similarities.  Android could still defy the odds and become a hit but only if Google quickly manages to become a lot more like Microsoft of old.

Read This.  I'll Wait. 

Good Yes?  I really did love this blog post.  So much so that I'm not even going to quote it as one last attempt to get you to read the whole thing. 

If you still didn't read it (what is wrong with you?) I'll summarize really quickly.  Basically the author makes the point that concept designs (a.k.a. those product designs that are shown off as "products of the future" during tech presentations) are pointless.  They never come to anything and are almost always leap frogged by people designing actual products (Tivo, iPod, etc...)

I could not agree with this sentiment more.  Research and Development that isn't attached to an actual product doesn't work because you have no idea if the average consumer will have any interest in what you're developing.  TV Executives, for example, spend millions of dollars a year to gauge how the public will react to certain shows and still fail more than they succeed when it comes to actually making successful shows. 

Yet we're supposed to be believe a researcher inside a company like Microsoft is going to be keyed into the wants and needs of the average person?  Doubtful.

Consider this, Microsoft spends more on R&D than any other company on Earth.  So why is the crown jewel of their next OS something they had to steal from an Apple product?  More importantly, what of value has Microsoft R&D ever managed to produce? 

I can't think of anything.

That's $6 BILLION dollars per year being flushed down the toilet (that's average, it was actually $7 billion in 2007).  Think much you could do if you spread that money around to various startups.  Sure many of them would fail but a few wouldn't and at least then you would have produced SOMETHING with your $7 BILLION dollars that year. 

Which brings me to my point: Corporate R&D should focus on actual products, albeit high priced ones. 

There are always going to be very rich people in the world which means there's always going to be a market for products that push the boundaries of what we can do.  Given that there's no reason for any person at Microsoft to be working on something that can't be turned into a product of some kind. 

It doesn't have to be profitable it just has to be something usable.  Something that someone will want to buy.  That way you can determine if the thing you are working on is something no one wants to buy and change gears if there's no interest. 

By doing this companies like Microsoft could actually manage to produce revolutionary consumer devices.  It's been my observation that the world follows a pretty simple cycle in this area...

• Products are made that cost too much for anyone but the richest of people
• The richest of people buy those products which increases production
• Prices fall
• Those ultra expensive innovations reach the public at large

This isn't rocket science.  It's been happening since the beginning of time.  Long before "smart" people conceived of spending monstrous amounts of money on ventures that never produce a working product. 

Sorry for the multiple posts today but I couldn't help but make a brief comment on this.  According to Search Engine Journal, Yahoo says...

we will sell the entire Company to Microsoft for $33 per share or more if Microsoft will negotiate a transaction that delivers certainty of value and certainty of closing.

First, let me say I doubt this is what they told Microsoft originally because Microsoft originally offered $31 a share and I can't see a deal this big collapsing for $2 a share.

That said, $31 was astronomical AT THE TIME!  Before Yahoo lost the great majority of their talent, before hundreds of executives jumped ship, before Yahoo's management instituted several technological and business related poison pills to prevent said merger.  NOW they want $33 a share?!?!?

Its a more than 48% premium on a stock price that's still being inflated by the possibility of a  merger with Microsoft.  It's a more than 73% premium on Yahoo's stock price right before the merger was offered. 

Get Real!

(For the record, a lot of sources apparently reported this before SEJ and usually I try to link to the first source.  But SEJ put the meat of the letter in their headline which is what caught my eye on Techmeme and which is why I linked to them)

This kind of says it all...

There was a book published in the late 90s entitled "Barbarians Led By Bill Gates" which was a fairly bitter tale of how backwards one employee (co-author Marlin Eller) felt Microsoft was in the early days.  Unfortunately, the book suffers from all the negativity. 

But one chapter really shines and that is the Chapter on Pen Windows.  Pen Windows was a project attempting to add a Pen interface to Windows 3.1 and it was a project that Mr. Eller worked on directly.  At the time a company named GO was making a lot of noise in tech circles by convincing people that Pen based interfaces were the next big thing.  So Pen Windows was Microsoft's response to that. 

I should mention that, by "Pen interface", we're not talking about drawing on the screen like a tablet but instead about drawing on a Desk pad as a mouse replacement. 

In the end, Pen Windows was a failure and GO went completely out of business.  As a final assessment of the situation Mr. Eller quotes himself as saying this to his partner on the project...

Greg, Look.  This wasn't a thing about making money.  This was all about 'Block that Kick.'  We were on the special team.  We were preventing GO from running away with the market.  That was our job.

Look, your background is in applications, you have to ship the application.  My job is in systems.  Systems, for much longer on, has been completely 'Don't let anybody else steal DOS from us.'  That's all we're doing.  We weren't trying to sell software, we were trying to prevent other people from selling software. 

From my view, Pen Windows was a winner.  We shut down GO.  They spent $75 million pumping up this market, we spent $4 million shooting them down.  They're toast!

I bring this up because news broke yesterday that Facebook will be Open Sourcing their platform in the next week and I think the above quote does a lot to illuminate why. 

The best way for Facebook to eat away at their competition is to keep their competition from innovating.  The easiest way to do that is to hand out the Facebook platform.  That way your competition thinks they're getting the holy grail when in fact they are stunting their own growth.

If a Social Network works exactly like Facebook than there is absolutely no reason for users, developers, et al to leave Facebook.   So while Facebook's competitors probably see the ability to integrate the Facebook platform into their service as a huge opening its actually just Facebook "preventing other people from selling software" 

Plus Facebook gets to kill off Google's OpenSocial in the process.  Not bad for a day's work. 

I think its important to remember that the old rules still apply in the software business.  People might pay for software with their eyes rather than their wallets but they are still paying for software and companies still need to compete for that currency.  I might not like tactics like this one but they show Facebook is paying attention to the past and in my book that puts them ahead of the competition. 

I'm a little annoyed... 

You see, a couple years back Microsoft announced that they, like Google, would start indexing books and professional journals which were only available in print and then integrate those results into a specialized search engine.  I'm a big supporter of this movement because I believe its very important to index those printed documents so they don't get lost in the new digital age. 

Back to Microsoft, To do this they joined with the Open Content Alliance, a non-profit group dedicating to archiving this sort of thing.  At the time it was a coup because Google had chosen to go it alone with their book search making Microsoft look like the good guy. 

Good PR all around, Until Today...

This also means that we are winding down our digitization initiatives, including our library scanning and our in-copyright book programs. We recognize that this decision comes as disappointing news to our partners, the publishing and academic communities, and Live Search users.

Given the evolution of the Web and our strategy, we believe the next generation of search is about the development of an underlying, sustainable business model for the search engine, consumer, and content partner. For example, this past Wednesday we announced our strategy to focus on verticals with high commercial intent, such as travel, and offer users cash back on their purchases from our advertisers.

I have to say it...what a bunch of dopes.

Look, I'm for a sustainable business model as much as the next guy but when you have nearly 80,000 employees and make $51 BILLION per year it pays to look at the big picture.  The big picture where the cost of a few $35,000 a year employees is worth 10 times that amount in good will. 

I mean, this doesn't require highly paid programmers.  The technology behind the book scanning is long since worked out.  Its simply an issue of caring enough to keep some low level clerical employees on the job.  I'd think Microsoft would do that just to keep their search index growing. 

As Danny Sullivan of Search Engine Land put it...

Gosh, Google somehow seems to be able to run a sustainable business model and devote some energy and resources into indexing books and scholarly information, even if those generate little to no revenue. They do it in part because they think it's good business to provide all types of searches, not just those that will earn them money.

In the middle of a search war, I can understand that a "distraction" like book and academic search might seem like something to Microsoft that has to go. However, Microsoft's not hurting for cash to keep it up, if it wanted.

I mean what could Microsoft Execs possibly be thinking here?  I've been to Microsoft, I've seen parts of their org. chart, you can not tell me that cutting book search belonged at the very top of the cost cutting list.  This program could be funded for the cost of a couple useless Program Managers and Microsoft would probably be better off for having fired the Program Managers

(not that all Program Managers are useless but there are plenty working there who are)

Honestly, what a bunch of idiots.  If anyone with any power at Microsoft is reading this, follow my advice: Fire whoever made this decision and use their salary to keep the program going.  THAT would be a good business move. 

For anyone who hasn't heard, Microsoft has a new plan to gain search market share which is to share the wealth.  Basically they will pay you "cash back" every time you use Windows Live Search to find a product and then buy that product.  Here's a quote from Techcrunch that pretty much sums up the situation...

Google’s search dominance is growing, and everything Microsoft has historically thrown at them has done nothing to slow them down. This new approach is both desperate and brilliant. Desperate because Microsoft is giving away most of the search revenue to get market share gains. Brilliant because they have such a small share of search revenue today that they have little to lose, and they are hitting Google hard in their core business.

I also think this is brilliant but for a completely different reason. 

Though I'm not personally a fan of Live Search I know many people who seem to think its as good as Google.  It certainly isn't dramatically worse.  So the question really isn't a technical one at this point.  Google essentially has two things keeping them as the market leader right now. 

1.  Marketing: This is the obvious one, Google's name is synonymous with web search at this point. 

2.  Familiarity: This is the less obvious point.  My theory here is that even if Microsoft produced dramatically better results people would still think Google is better because they are so familiar with that experience.  Think of the people who still insist the sound quality on Vinyl is better than a CD and you'll start to see what I mean.  Except in this case, unlike Vinyl vs. the CD, Microsoft can never scientifically prove to people that their search is more effective.

These two things are a powerful one/two punch for Google.  They basically mean that people will always go to Google first and will always think Google results are better even if they aren't. 

What Microsoft needs right now is a way to lure Searchers to them and get them to use Microsoft search long enough to grow accustomed to it.  Paying people is as good a way as any to accomplish that. 

It's hard for me to put a lot into this post given the extensive coverage the topic has already gotten.  I, like most, think Microsoft dodged a bullet whether they realize it or not.  Yahoo on the other hand was in a bad place before Microsoft made the offer and has now lost a lot of time, money and valuable employees as a result of the offer.  They're obviously in some trouble.

A lot points to this not being over.  AOL might ride in and try the merger talks again, Google might cut Yahoo a sweet heart deal and Jerry Yang might get fired encouraging Microsoft to take another shot.  For now, no one knows.

But all that has been said to death on just about every other blog so I'll digress.  There are two unique things I think I can add to this.  Two items I haven't seen addressed elsewhere.  Those are...

1. Microsoft needs to target Yahoo now:  I don't think Yahoo was worth much to Microsoft but it does have value.  In particular, its valuable to any company that wants to beat Microsoft over the head with it.  A permanent Ad deal with Google or a merger with AOL could both cut into Microsoft's already miniscule bottom lines in both search and ad sales. 

This is strategy 101: first try to get the weapon.  If you can't get the weapon next try to deprive your enemy of it. 

Microsoft now has $44 billions burning a hole in its pocket and I think they should consider using a lot of it to tear Yahoo apart.  Stealing as many great employees and valuable customers as possible gives Microsoft part of what they wanted at a fraction of the cost. 

2.  Google might not be a Winner here: Many have pegged Google as a winner but I'm not so sure.  We in the United States have one of the most "Open Market" oriented Presidents in recent history right now.  That is a fact that is going to change in a few short months (no matter who wins the next election). 

Google is already skating really close to the anti-trust line and having MicroHoo to refute that accusation might have worked in their advantage when the time comes.  An ad deal with Yahoo on the other hand has the opposite effect.

That's it for me on this.  I'm posting this at 11:15pm so Black Monday is just around the corner.  I suspect things will be a lot clearer once we see how that pans out. 

Ed Bott of "Ed Bott's Microsoft Report" takes issue with many of the blogger's who reported on this story (I'd assume he includes this blog in his "echo chamber" comment).  Here's a quote

OK, now go read the linked story from the Seattle Times. There’s not a word - not one word - about back doors or encryption. Sadly, the usual suspects in the Techmeme echo chamber are whipping the inaccuracy around the infield at major league speeds. CrunchGear says Microsoft has “developed a thumb drive that helps Johnny Law quickly extract information, encrypted or otherwise, from computers.” And Valleywag talks about “a USB dongle that plugs into a computer, bypasses any Windows passwords or encryption, and quickly downloads sensitive data such as your Web browsing history.”

and

In fact, if this rather unremarkable collection of Microsoft-developed hacker tools actually did contain anything new, I would certainly expect that the highly vocal security community would have said something. If there turned out to be a back door in BitLocker or any other form of encryption, the real experts would be publishing the results. But they haven’t said a thing, because there isn’t a story here.

Let’s see how long it takes for the corrections to begin appearing. I’m not holding my breath.

The problem is this: While Ed Bott rightfully "calls everyone out" for jumping to negative conclusions on limited facts he then takes the same limited facts and jumps to the opposite (positive) conclusion.  He even goes further by assuming Microsoft's COFEE is the equivalent of another tool on the market (again, based on no real evidence)...

For anyone who is ill-informed enough to think that these tools are going to land in the hands of bad guys, I have some bad news. They’re way ahead of you. The community-developed USB Switchblade has been around since at least September 2006. And as security expert Jesper Johansson points out, it has an impressive feature set:

In truth, Microsoft is vague on what exactly is in this device and their claims lead one to think there are "back doors" involved.  When they say that the device can retrieve password protected data off a PC in "as little as 20 minutes" they open themselves up to suspicion.  Especially as the maker of the system doing the password protection. 

As for corrections, I said this (bold added for this post)...

Microsoft's job when making an OS is to make it as secure as possible.  I, as a Microsoft customer, trust that they will do everything they can to make their system secure (as they claim to do).  The fact that they'd even build a device like this seems like a violation of that trust.  Especially since it seems they put hooks into the OS to facilitate its creation.

and I stand by it.  The logical conclusion based on the comments Microsoft had made was that Microsoft used their extensive knowledge of Windows (including the source code) to create this device and make it as effective as it is (for the record, Microsoft has since denied using any "back doors")

Finally, even if it doesn't contain a single piece of inside information I still take offense at Microsoft pointing out ways to crack my OS.  Again, it comes down to me as a customer putting faith in them as a software developer to do everything they can to boost my security (as opposed to circumventing it).  Creating a way to crack that security and giving it away as marketing is still very upsetting.

P.S.  Given how condescending Mr. Bott's post was I think I deserve some kind of karma credit for getting through this entire post without once using the phrase "poor man's Mary Jo Foley"