Jeff Bone (jbone@activerse.com)
Tue, 19 May 1998 14:53:12 -0500

Okay, it's 2002. Antitrust against Microsoft either failed or was
dropped. Microsoft continues its anticompetitive practices. Most
importantly, all pretense of any Chinese wall that may have been in
place before the '98 legal action has been dropped. Here's what the
world looks like.

Microsoft has just shipped Windows Millenium 2.0. It looks pretty much
like Windows '95, but with a bunch more arbitrary UI changes.
Everything is rendered HTML/DHTML/XML. The Active Desktop has *finally*
(in the 2000 release Millenium 1.0) become pretty spiffy. There's now a
single-rooted filesystem, and the filesystem and Web have been
conceptually unified. It's a decent product. It ships with an
integrated browser interface. Further, MS has unified its office line,
consolidating Works and Office into a single product suite. It has
claimed that this product suite is an essential OS facility and begun
shipping it in the box to OEMs. Millenium Server Edition now contains
all the services of Backoffice &c. You get DNS, mail services,
directory services, web services, a database engine, user management
services, etc. etc. in the box with the server version. The window
system still isn't networkable.

Lotus is now, for all intents and purposes, dead. Novell has been dead
for a couple of years. Adobe is dead. Netscape is a second-tier
"portal" --- nobody even remembers that they were a product company
once, for the most part. Apple, with Microsoft and MS interests now in
control of more than 51% of the voting stock, is essentially a MS
lapdog; MS keeps them around because it's good to have a weakened
competitor around, one that can't get *too* competitive. Their little 2%
sliver of the market isn't all that important, and besides, MS is
shoving as much of its technology as possible into the forthcoming MacOS
10.1 release. Intuit has been (finally) aquired and assimilated, and
MS QuickMoney and MS QuickWallet now ship with every OS as an essential
feature. Etc., etc.

SGI and HP now ship high-end NT (oops, Millenium Server) workstations
and servers. Aside from a "maintainence" level of high-end UNIX server
sales, essentially the only game in town these days in Windows and NT,
and that mostly on Intel. Sun, Corel, and a handful of consumer
electronics companies have rallied around Linux (!) and Java as a new
consumer platform, with some degree of success. The battle lines are
now drawn on the consumer electonics front where Sun has retreated, and
Microsoft is working it way through that industry with just the same
ruthless efficiency and dubious business ethics that allowed it to
conquer the traditional computing market.

Most important, though, is the effect on the "bottom" of the industry.
The *engine* for all the wealth creation that happened from 1994-1997
was the phenomenal growth of startup-stage ventures. As Microsoft has
continued to make it clear that they will own any and all strategically
important application areas, investment has dried up for such ventures.
In this world, the best a horizontal software product startup can hope
for is to get aquired. Given the eventual "success" of Microsoft over
the other "big guys," this means in 2002 that the best one can hope for
is to be aquired by Microsoft. Since typically Microsoft will only
aquire one player in each strategic area, this really skews the odds for
any venture capitalist getting their desired ROI. Consequently, there
is *nothing at all* going on in the horizontal product company arena,
except perhaps in the game developer boutiques. If you want to get a
new company funded these days, you have to either have a service
business model or be a vertical, or both.

The creation of wealth in the software industry, compared to its growth
rates in the mid 90s, has bottomed out. Even insanely great, innovative
product ideas with great TAM (total available market) can't funded
adequately. Microsoft has essentially FUD'd the software industry into
a comatose state. The software market, fueled by the large number of
people that moved into it back in the 90s, is now a crowded job market,
as the folks that were populating those countless startups now vie for a
very few jobs with the remaining software product companies, or work as
consultants or on in-house corporate IS. The one area of job growth is
in system administration, as Windows still hasn't become any easier
cheaper to own and use.

Me? Screw Disneyland, I'm going to MARS!!!