Peering at the world through a new set of Windows

• Source: Global Times
• [08:13 November 09 2009]
• Comments

The de facto standardization and resulting interoperability of computers stemming from Windows' market dominance has been crucial to the worldwide spread of the computer and to fostering the digital age that we now live in and take for granted.

One has only to look at other products and sectors that lacked standardization or fought "format wars" to fi nd counter examples that show how this is true. The classic instance is the struggle between Betamax and VHS over video formats in the 1980s, but think also of mobile phones that still can't be used in some foreign countries when traveling overseas, audio files that are only playable on music players from certain companies, and video games that are available for some game consoles and not others.

The computer company that actually tried to establish both a hardware and software monopoly was actually Apple. The result was that they transformed themselves into a niche player within the computing world. Only with the introduction of the iPod, and more recently the iPhone, did Apple revive itself as a major force in the consumer electronics market.

With the development of Windows 7, not only has Microsoft this time done a better job of listening to the consumer, but it now is apparently also doing a better job of listening to its own employees as well.

These two things may very well be related. Reports from current and former employees, and from industryfocused publications, indicate that changes within Microsoft helped improve its internal work culture.

More effort was made to improve the upward fl ow of information within the company's corporate structure. Utilizing better engineering and management practices during the development of the new software system seems to have played an important role in the better results that were achieved this time.

But Microsoft now runs the risk of becoming a victim of its own success: Computers are already so powerful and affordable that a minimum threshold has been passed. Newer, cheaper and less-powerful machines, notably "netbooks," do the basic tasks demanded of them sufficiently well for most users.

Microsoft has already started selling cheaper (and less profi table) versions of some of its software for the stripped-down laptops that are increasingly popular.

Other developments also threaten a major shift in the fundamental dynamics of the computer sector.

One is the rise of SaaS ("software as a service") and more broadly, cloud computing, in which software and storage space are on servers accessed online. Another is the trend toward a convergence between computers and other devices (mobile phones, gaming consoles, for example.)

Depending on how these trends bear out, the next time a new piece of software commands so much attention, it may very well not be from Microsoft.

The author is a long-time China watcher, and currently serves as Director of Investment Banking at New Century International Leasing