Fog Creek Software
Discussion Board




Innovator's Solution: who can disrupt Microsoft?

Hi all,

I'm reading The Innovator's Solutions. WOW! Great book. 

Got me to thinking: who can disrupt Microsoft?

The only low-end disruption I can think of is GOOGLE. They could do email and some basic features like photo sharing, or whatever people are most interested in. (And, hey they just bought Picasa)

They can provide that service cheaper than microsoft and it's a low margin business (for the most part).

The problem with disrupting MS is that they're SMART. They don't neglect even the low margin part of thier business (like MSN).

But google is the only company I can think of that could possibly disrupt microsoft. If google partnered with a discount nationwide ISP, that might be an interesting mix.

Mr. Analogy
Tuesday, July 27, 2004


With so much cash in the bank and an army of programmers? I doubt anyone can stop Microsoft at this point other than their own stupidity. Even than they have a loooooooong way to fall before they will be disrupted...

:(
Tuesday, July 27, 2004

>>If google partnered with a discount nationwide ISP, that might be an interesting mix.

IMHO, if google wants to stay successful, they will continue to be google and stick to doing what they do well.  To me, that seems to be indexing and searching data.  They don't need to take on Microsoft in an attempt to rule the world.  Companies that are good at one thing and then try to become good at everything ususally become good at being irrelevant (see HP/Compaq 3 years ago).

Brian
Tuesday, July 27, 2004

Maybe you missed the news, but Microsoft's cash in the bank is evaporating very quickly - $35 billion as a dividend payout (the tax man will appreciate that), and then another $30 billion in stock buybacks. At the current warchest levels that would leave them with a negative balance I believe, although they are making a heady profit per quarter to finance it.

In other words going forward the mythical war chest to head off any challenger is disappearing. It will also serve to diminish the motivation for the likes of the EU to impose giant mega-taxes just to loot the bank of Microsoft.

However there is a disruptive technology, and it's the web - it's the great leveller. Cue the fanatics who'll talk about how much the web sucks and that rich clients and one-click deploy is where it's at, but my experience with very large organizations is that quite a few of them have largely decoupled themselves from the Windows platform by moving all administration systems to web applications (rather than traditional VB form apps that represented a massive investment in the Windows platform) - these organizations could do wholesale shifts to virtually any platform with minimal impact.

Dennis Forbes
Tuesday, July 27, 2004

However much cash Microsoft does or does not have won't impact on whether the EU enforces its decision.  What may have an impact is that the commissioner responsible for pursuing the anti-bundling case has now been replaced and its unknown who will be replacing him as Commissioner for Competition. 

Mario Monti was replaced by Italy which was somewhat of a surprise.  Conspiracy theorists can speculate on why Berlusconi would want to replace the most vigorous Competion Commissioner the EU has had.

The UK has been the most frequent office holder but they only have a single Commissioner now with the expansion of the EU.

The thing I don't understand is this, why would anyone with their own economic self interest in mind want to disrupt Microsoft? 

Simon Lucy
Tuesday, July 27, 2004

"However much cash Microsoft does or does not have won't impact on whether the EU enforces its decision."

I was speaking in a future context, and it does entirely encourage settlements against Microsoft to hear that they have $60+ billion in the bank. It makes it seem to be "fair game".

Dennis Forbes
Tuesday, July 27, 2004

Why would anyone with his own economic self interest in mind want to disrupt Microsoft?  To stop paying monopoly rents on the desktop OS and basic office applications!  How's that for a reason?

name withheld out of cowardice
Tuesday, July 27, 2004

Microsoft became the company it is today, because it was usually the disruptive firm.  They disrupted the mainframe and minicomputer market with applications for the masses.  They're still trying to do the same for datacenters.  Additionally, they buy small "disruptive" companies, so the disrupter is absorbed (or in slash dot terms, assimilated).

Because of Microsoft's business acumen, I believe any disruption to Microsoft will have to come from somewhere (some technology) that isn't on anyone's radar screen.  Note that, given all of Microsoft's missteps with the Internet and application frameworks (COM), the company still has not been deterred to any extent.

Ewan's Dad
Tuesday, July 27, 2004

Dennis, I can here Philo typing now.

Formerly someone else
Tuesday, July 27, 2004

If you go back to the days before the dot.com boom, personal computers were really only used for small business applications (spreadsheets and word processing) and games.

Now with the Internet the PC is a major part of our lives, communication, shopping, information searching, etc.

Microsoft still rules the business applications and games, but the Internet (not a Who but a What) is where a Microsoft browser can be replaced.

Businesses will follow the money, trying to disrupt Microsoft is silly. But trying to build a profitable business that's Microsoft agnostic (such as Google has done) is the future. If Microsoft is disrupted by that it's not my concern.

Tom H
Tuesday, July 27, 2004

"Maybe you missed the news, but Microsoft's cash in the bank is evaporating very quickly - $35 billion as a dividend payout (the tax man will appreciate that), and then another $30 billion in stock buybacks."

But that's not being done all at once.  Read the press releases -- that money will be paid out  over a few years.  In the mean time, their still in business and they'll have a few billion rolling in every year.  Their "war chest" will be smaller, but they'll still have more money in the bank than just about anyone.

M. Night Shammalamma
Tuesday, July 27, 2004

Microsoft will more likely be disrupted by some open source projects rather than companies.  I can think of two:

1. Mozilla.  I am *hoping* this will disrupt Microsoft enough to relent on it sstance that IE will only be upgrade through OS upgrades or service packs.

2. Eclipse.  This one may be a stretch, though.  But if Eclipse is expanded to handle C++, .NET, etc., and do it as well as it does Java, it would be a viable alternative to Visual Studio.

A Programmer
Tuesday, July 27, 2004

Oh there's no doubt that Microsoft has a lot of cash in the bank and a lack of debt that gives them a tremendous effective financial flexibility. However the point was that as of December of this year over a half of that war chest will disappear (all at once - a one time massive $32 billion dollar special dividend payout). Following that the increase of regular dividends will eat into the growth of the war chest. Over the next four years Microsoft will be buying back some $8 billion worth of shares a year, so factor that in as well.

In any case, the days when Microsoft could blow billions on money losing ventures without shareholders noticing may be a thing of the past - notice how Microsoft recently, and in an unprecedented move, cut employee benefits to save a billion dollars.

Dennis Forbes
Tuesday, July 27, 2004

"1. Mozilla.  I am *hoping* this will disrupt Microsoft enough to relent on it sstance that IE will only be upgrade through OS upgrades or service packs."

I would like to believe this, by my cynical side thinks that Microsoft is going to come out with IE 7 that blows the industry away, and again every site will go to IE 7 specific artifacts. The alternate browser makers simply aren't doing anything revolutionary to keep the fire and motion on (things like new forms technology [how about a bloody combo box?], vector graphic inclusion, or really anything except for waiting for the W3C to toss something out). IE 7 is invariably going to come out with a lot of neat new technologies that improve the web experience, and unilaterally the extensions will be considered a standard.

Dennis Forbes
Tuesday, July 27, 2004

Robert Cringley: 'the only way Microsoft can die is by Suicide':
http://www.pbs.org/cringely/pulpit/pulpit20040408.html

bah_humbug
Tuesday, July 27, 2004

"IE 7 is invariably going to come out with a lot of neat new technologies that improve the web experience, and unilaterally the extensions will be considered a standard."

I think that will only happen if MS decides to let IE 7 run on "legacy" OSes like XP.  If they only offer it on Longhorn, it will take a long, long time before any web sites at all start using any IE 7-specific features... let alone have them be considered a standard.

So a couple of things could happen - Mozilla could fill the niche and be the browser of choice for all non-Longhorn OSes.  Or, Microsoft could sense the threat and change their stance and distribute IE 7 so it doesn't require Longhorn.

But either way I'd say is at least somewhat disruptive...

A Programmer
Tuesday, July 27, 2004

"IE 7 is invariably going to come out with a lot of neat new technologies that improve the web experience, and unilaterally the extensions will be considered a standard."

IE7 is already out.  Where have you been?

http://dean.edwards.name/IE7/overview/

Jim Rankin
Tuesday, July 27, 2004

from what I have read & thought on disruptive technology...it is never one thing which is going to do Microsoft in.

It is more likely to be a combintation of a browser, OS, storage that will marginalize Microsoft, and its going to take time. The company most likely to do it will be google.

Prakash S
Tuesday, July 27, 2004

Dennis,

look out for google to debut a browser that is totally reveloutionary sometime next year.

Prakash S
Tuesday, July 27, 2004

The OP concerned disruptive technologies that might disrupt Microsoft. By there very nature disruptive technologies swing in from outside and influence life in an unforeseen manner - that's why they're called disruptive. Microsoft benefited from the last major one - namely the introduction of PC's in the mid-eighties - to an extent that I believe even its founders could not have foreseen and (certainly) to a hugely greater extent than its originator (IBM) might even have dreamt of.

The web might have been such a technology, but I'm rather inclined to assign its success as one that disrupted the telecommunications arena rather than computing, although perhaps to a lesser extent than the introduction of GSM which hugely altered the voice communications market away from monopolies based on ownership of the fixed wires.

Note that disruptive technologies do not have to do away with the incumbent, but merely radically alter the market structure. I doubt that many owners of a mobile phone don't also have access to a landline, and most companies that had 'glass house computing' still have something similar, whether mainframe or server based. Both these technologies added to rather than replaced the incumbent.

The question, therefore, should not be one about minor tweaks to an application such a browser, but rather what computing technology might disrupt the present PC market. I doubt anyone really knows, and if the do I certainly doubt they'll share it! If I had to make a wild guess I would suggest that it's likely to come from some convergence of wireless communications with consumer electronics.

David Roper
Tuesday, July 27, 2004

> The question, therefore, should not be one about minor
> tweaks to an application such a browser, but rather what
> computing technology might disrupt the present PC market.

The funny thing is that the "PC disruption" did no happen overnight... From 1950's when they discovered the transistor, to the first power desktops (shall we call it Pentium 1's?), there have been lots of "tweaks" before PCs made it to a large number of houses... My point is that none of it happened overnight.

I don't think internet "happened" yet. I think MS senses that too, however, I don't think they have any geniuses over there who figured out what could be the next big thing. They are just trying to stay one step ahead of their competition. That's all... Perhaps they want their competition to figure it all out, and they'll step in to take over the spoils. Hasn't that been their policy all along except for MS-DOS perhaps... Oh wait.. They stole that from the Macs.

I recommend they fix what they have first before they start figuring out what the next big thing is... :)

:(
Tuesday, July 27, 2004

The EU isn't interested in pursuing MS because they have money, the fine is not the point, the point is that they change their marketing methods.

As for Microsoft becoming what it is by disrupting the industry as it was at the time.  This is entirely illusory.

MS got to be the size it is today because of two major factors.  It successfully negotiated contracts in parallel with Intel to gain a royalty on every motherboard produced with an Intel processor from !982 (might be 84), until around 1994.  This they naturally leveraged for the rest of their products.

MS hardly grazed the surface of mini and mainframe shops at this time, its networking product barely competed with Novell until the mid-90's and it was Novell that suicided rather than MS doing anything in particular to gain that market share from them.

The second major factor was application software tightly coupled with a presentation interface which they solely controlled.  They certainly spent a huge amount of money upfront in maintaining that presentation layer until it had run out of rivals and later had largely run out of office application rivals.

Simon Lucy
Tuesday, July 27, 2004

Who the f*ck cares about a browser? Who has ever made a dime of the "browser market". You might as well talk about the PDF reader market, or the notepad market.

MilesArcher
Tuesday, July 27, 2004

Opera has made money from the browser market. Not only on the desktop, but other form factors as well

Dan G
Tuesday, July 27, 2004

The whole thing with disruptive technologies is that they're not perceived as a threat. It's a piece of the market that the giant is glad to get rid of - the difficult to do, not very profitable stuff that they're glad to let the little guys gobble up so they can focus on their "core" business.

After a while, the little guy gets more & more of a foothold and more and more contracts and eventually becomes bigger than the big guy.

So what business is Microsoft NOT paying attention to right now that they'd gladly give up to some smaller company?

Here's a short list of what Microsoft dabbles in from their website:

*Windows
*Office & Productivity
*Developers (C#)
*IT Professionals
*Servers
*Business Users
*Data Analysis
*Mapping Tools
*Home Users
*Hardware
*Games and Xbox
*MSN Services
*Mobile Devices
*Graphics & Desktop Publishing
*Kids & Education
*Personal & Business Finance
*Books & Training

Funy thing is, in just about every niche, you can think of someone who does it better.

www.MarkTAW.com
Tuesday, July 27, 2004

I think large solid-state storage + x86 Virtual machines (VMware) could disrupt Microsoft by decoupling the O/S from the PC platform. What if we could carry our data, O/S and applications in a small storage device and run it anywhere?  Disruptive because the PC won't need to have Windows installed. Disruptive because Microsoft won't be able to tie OS & application upgrades to hardware upgrades.

Microsoft would prefer .Net to be the ubiquitous virtual machine, but it aint necessarily so.

_
Tuesday, July 27, 2004

No one is going to disrupt Microsoft, unless they attack the specific markets where Microsoft holds a monopoly.

a) desktop operating systems
b) Office software
c) and possibly, Windows development tools

It is unlikely there will be some new technology which makes a) and b) obsolete. So don't hold your breath for a new technology to dethrone Microsoft.  But, one would hope a new competitor could emerge who would break the monopoly.  I believe everyone would benefit if Microsoft had 70% market share in a) and b) instead of 90-95%.  So far, Linux and open source have not really made a dent in a) and b).  Linux has been very successful in the server market, but success in this area is not striking at the heart of Microsoft's monopoly.

free(malloc(-1))
Wednesday, July 28, 2004


There needs to be a huge earthquake on the west coast, open up a huge hole in the ground and swallow at least silicon valley and 1 microsoft way.

There is a disruptive technology for you... It's called mother nature!  :)

pessimist
Wednesday, July 28, 2004

Back in the early 80's nobody could shake Atari from the video game market... Until Nintendo came along. Nintendo was reignin king until.... Sony came along. Now Microsoft has entered the video game market, and things are getting very interesting. Oh I forgot Sega in there somewhere along the way.

Has Microsoft ever lost marketshare to someone else in any product area they entered?

Mozilla currently has about the same market penetration as IE5.5 and is about to overtake it in the marketplace, though it still has a long way to go to catch up to IE6.

( http://www.google.com/press/zeitgeist.html ).

www.MarkTAW.com
Wednesday, July 28, 2004

All these talks about GOOGLE remind me about how people thought about Netscape and Yahoo a few years ago. Microsoft is here for the long run. It has been here for more than 20 years and it will still be here after another 20 years.  Just think of IBM. How many times have people doubted IBM?
Google has no desktop program that is installed on over 90% of all PCs. People have been predicting the death of desktop for a long time. Personally, I think it will never go away. There are some people that will never switch to all web based programs. (Dentists and Accountants and believe me, I know)
Google is a one product company. It needs to reinvent itself in order to succeed in the long run. Judging by the SEC filings released by google, their founders still have a lot to learn. Making the world a better place?
As for the talk about Microsoft running out of cash, it is taking 1 billion dollars a month. It has to pay out the cash because it cannot make good use of the money. Try to buy out any good size company, anti-trust will kick in.

RZ
Wednesday, July 28, 2004

Umm to underscore. . .

I guess you missed the fact that Microsoft now has out Virtual PC and soon will have out Virtual Server.  Guess they have their foot in the virtualization market as well.

Elephant
Wednesday, July 28, 2004

Umm.. Nope, didn't miss that. But will they choose to go that route to the extent where they can no longer tie the O/S to your motherboard and control the O/S upgrade path via hardware upgrades? Doubt it. Which leaves the door open for someone else to do it.

_
Wednesday, July 28, 2004

> As for the talk about Microsoft running out of cash, it is taking 1 billion dollars a month.

1 billion dollars a month is approximately the price of the oil flowing through one pipeline.

Christopher Wells
Wednesday, July 28, 2004

Yeah..this defeat Microsoft thingy is boring, and unrealistic at this time.

It's more fun to watch the fight of oil supermajors (ExxonMobil, BP, RoyalDutch/Shell, Total, ChevronTexaco) or car makers, or retailers.

big w
Wednesday, July 28, 2004

More relevant is the fact that the "PC disruption" ONLY HAPPENED BECAUSE IBM WAS RESTRICTED BY ANTITRUST LAW.

Even though they were fighting it in the courts, their internal practices changed to a degress you can't even conceive of from what they were back during the bad old days.

The 1960s IBM would have squashed Microsoft like a bug.

Microsoft has changed very little compared to what IBM did (to itself, but because they knew that if they didn't, the Feds would do worse).

MD
Thursday, July 29, 2004

*  Recent Topics

*  Fog Creek Home