Summary: 2006 may well be Microsoft's year, with upgrades to its flagship Vista OS and Office 12 products. But only if Google lets it be their rival's year. We don't yet know what Google has up its sleeve - when will they release their own browser, or their web-based Office suite? We'll find out perhaps in 2006.
Brad Feld thinks 2006 will be "The Year of Microsoft", citing the release of Vista and Office 12 next year. Paul Kedrosky hedges his bets, saying "the current consensus is awfully negative about Microsoft, despite the company heading, in 2006, into its busiest product cycle in recent memory." Fred Wilson thinks Microsoft probably won't succeed this time round. Fred finished a compelling blog post with this point:
"I can see an IBM-like scenario for Microsoft in its fourth and possibly fifth life. But I can't see them at the top of the technology hill planting their flag again for the fourth time next year."
Interestingly, that echoes what Tim O'Reilly said about Microsoft in my interview with him nearly a year ago:
"I just think that [Web-based] software services have a better model. So I think that Microsoft will continue to dominate on the PC, but the PC is going to be a smaller and smaller part of the entire business.
Similarly I think that Microsoft will increasingly feel margin pressure from Linux as well as people saying: well actually the applications that really matter to me are not on my PC. And so they're going to be able to extract less of a monopoly rent, so to speak. This is very similar to what happened to IBM - they had to shed hundreds of thousands of workers, they went from being an industry goliath to simply being an industry giant! I think that's exactly what will happen to Microsoft. They will lose their pre-eminent position, but they will still be an extremely powerful and successful company."
I generally agree with Tim and Fred, but with the proviso that it remains to be seen how Google is going to respond to Microsoft this year and next. If anyone is in a position to implement the web-based software services model on a grand scale, it's Google. Otherwise I think Brad may be right and Microsoft may come away with the glory.
Bill Gates view
In an interview with CNET at this week's PDC, Bill Gates talked a lot about Microsoft adopting a mix of its traditional software-based approach (Office being the main example) and more web services things - e.g. the APIs it released last week. Gates is also equating the 'software as a service' concept (which is by no means a new concept - think ASPs in the late 90's) with the web-based services that are a feature of Web 2.0 - the 'Web as platform'. He used the term "server-equals-service" to describe this.
The following is my favourite part of Gates' interview with CNET:
"We're getting decent Web search, we're getting RSS. So software as a service has been moving along. We needed the Internet. We needed low-cost connectivity. We needed XML. The scale economics of doing large server farms...you can do those and do those well.
So you will see the services thing increase. We bought a company called FrontBridge that's kind of a software service firm. We have a lot of expansion ourselves in this area. It's not just consumers. A lot of it, actually the majority of this, is focused on businesses. We're giving them a choice of how they do IT, and some of it is through services."
Frontbridge isn't a company I know a lot about. It describes itself as a "managed services" company whose technology forms "a protective bridge between the Internet and our customer's networks." Its products and services are focused on "corporate messaging infrastructure".
I'm still grokking what Microsoft's strategy is in Web 2.0, but with Office 12 and Vista they'll be aiming mostly at the Enterprise market - "focused on businesses" in Bill Gates' words. Frontbridge is definitely a business-focused product/service. And I find it interesting that Microsoft is trying to bring together the worlds of Web and desktop internet-connected software. You'd expect them to do that, of course, seeing as desktop software and the Windows OS is their cash-cow.
Who will win the World Heavyweight Championship belt?
I think it's entirely possible Microsoft may lose market share and become a mere industry giant, rather than a goliath, like IBM did. But I also wouldn't write them off in the Web 2.0 world yet. Brad's correct to say 2006 is a crucial year for Microsoft - as it will be for Google.
Microsoft has shown its hand already, with Office 12 and Vista. We don't yet know what Google has up its sleeve though - when will they release their browser, or their web-based Office suite? Those are two examples of rumoured products that everyone talks about Google developing. But they're exactly that for now - rumours. And Google hasn't really made a strong push for business customers yet. Well, they haven't needed to... up till now?
So I'd suggest 2006 may indeed be Microsoft's year, but only if Google lets them. What say you?