Tuesday, October 26, 2010

Internet: Destroyer Of Firms

Anyone remember AOL?
It exists as a shell of its former self, a testament to the hubris of a corporation that thought it would own the Internet and its content.
Now, whither MicroSoft? A PeeC based software company is likely doomed in an era where you can (and probably should) do everything on the Internet. In this day and age of mobile computing involving devices that don't carry a lot of programming or the capacity to house them, the idea of a hardware-based computing device seems quaint, limited to people with severe security issues and proprietary data.
Adapt or die.
MicroSoft has shown little ability to do more than two things: imitate and dominate. The company they've most imitated, Apple, has gone in a wholly different direction than MicroSoft's strength, which is in software.
Sure, Apple has iTunes and iLife and the Mac OS, all of which have been adopted by MicroSoft in some form or other, lately with spectacular failures (Zune, anyone?). MicroSoft has made some stabs at hardware, most notably the X-Box gaming system, with mixed results. Where Apple has been the design and innovation leader, MicroSoft can't seem to get more than a foot off the starting line without stumbling.
In consumer electronics, you can lead or lag (meaning you can invent or you can make cheaper versions) but you can't stay in the middle forever. The most successful companies in electronics have either made enormous advances or made a nice comfortable career at the back end of development.
The computer used to be different. MicroSoft used to be able to get away with playing things very cautiously, thanks to the remarkable short-sightedness of two companies: Apple (yes, them again) and IBM, both of whom passed on Bill Gates novel ideas about how computer operate. He saw the world in terms of digits. The rest of the planet looked at the hardware.
MicroSoft now faces a challenge it could not possibly have foreseen thirty years ago. The Internet has allowed anyone with a few clicks of a computer mouse to do online what MicroSoft engineers sweated months to create for the PeeC. Need to remote control a computer? There's an app for that (or you can buy a Windows server program for thousands of dollars). Need to create an invitation to a party? There's a website that will do that for you, or you can go buy an off-the-shelf program that took months to develop.
You use the 'Net, else you wouldn't be reading this. What else are you doing on the Internet that you did at home previously?
And maybe the confusion in the last part of that question highlights MicroSoft's problem: you ARE doing it at home, you're just not doing it IN home.
MicroSoft joins a long line of companies that were big in technology that have or are withering away: IBM, AOL, and Hewlett-Packard are the big names at the top of that list, but the list really does go on and on. Think about even five years ago, what websites were popular? I'd bet you can't find half of them now.
The Internet really does have a voracious appetite for companies.