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Lessons learned by IT in 2009 #2: Microsoft sheds its ‘Dr. Evil’ costume

By Scott M. Fulton, III, Betanews

The personification of evil in the modern world: Dr. Heinz Doofenschmirtz, from Disney Channel's 'Phineas and Ferb.'
The personification of evil in the modern world: Dr. Heinz Doofenschmirtz, from Disney Channel’s “Phineas and Ferb.”

The problem with characterizing any kind of business, including information technology, as “war” is that it immediately polarizes the opinions not only of the war’s practitioners but also of its observers. Once an enemy is formally declared, the concept of “If you’re not with us, you’re against us” becomes self-fulfilling.

Inevitably, since everyone’s hands emerge equally bloodied, the original, unifying sense of polarity that marked the outset of the war, becomes lost. Any ethic or principal or qualitative substance that characterized one side from the other(s), is usually compromised. Before long, people forget what it was they were fighting for, or fighting against. And often, the war gets cancelled for lack of funds.

In February 2008, Groklaw reporter Pamela Jones uncovered a piece of public evidence from the Comes v. Microsoft antitrust trial in Iowa, that spelled out the symbolism that characterized Microsoft’s public stance throughout the 1990s and for the first part of the following decade. Early in 2000, a company technical evangelist named James Plamondon produced an internal company presentation entitled “Effective Evangelism” (PDF available here, from Groklaw), but which came to be known by its initial heading, “Evangelism Is War.”

“Our mission is to establish Microsoft’s platforms as the de facto standards throughout the computer industry,” Plamondon’s narrative began. “Our enemies are the vendors of platforms that compete with ours: Netscape, Sun, IBM, Oracle, Lotus, etc. The field of battle is the software industry. Success is measured in shipping applications. Every line of code that is written to our standards is a small victory; every line of code that is written to any other standard, is a small defeat.”

Technologists were shocked, shocked, to discover that Microsoft ever adopted a belligerent stance against its competitors, forgetting that perhaps all of the companies on Plamondon’s list at that time took similar stances against each other and Microsoft. Although it can only be said that Plamondon gave this presentation and that his viewpoints may or may not have reflected the official stance of the company, it speaks of the aggressive and conquering nature of a company that had already achieved unquestionable market dominance.

It also foretells of the strategy shift to come: the disruption of existing competitive alliances, the more compliant and even compromising position with respect to countries’ federal regulators and authorities, the building of bridges as opposed to dams, and the knowledge that the world was looking over its shoulder. No move could go unchecked.

But the real strategy shift story of 2009 only begins with Microsoft. With the economy for a time in free-fall and the revenue picture looking bleak, especially among many companies that rely to some extent upon Microsoft’s platforms, the typical belligerent stance — even to the extent that Plamondon presented it in 2000 — ceased to be cost-effective in 2009. In short, making enemies wasn’t paying off…for anyone.

The unbundling of marketing from warfare

The year 2009 began right away with the European Commission asking a question that at the time seemed like a re-animated corpse: Should Internet Explorer continue to be bundled with Windows? It was the notion upon which Microsoft’s entire defense against the US Justice Dept. was based a decade earlier: that the Web browser and the operating system were irrevocably sewn together.

Microsoft had the option of publicly arguing that Mozilla Firefox, Opera, and the other major Web browsers in the Windows market were non-commercial, at least in the non-enterprise space if not entirely, and were therefore not officially “market” competitors. That argument may actually have carried with it some legal precedent, and the company may conceivably have even won…after a costly struggle marked by a very likely congregation of public sentiment around the underdogs in the fight.

A slide from a 2000 Microsoft presentation from technical evangelist James Plamondon.  [Courtesy Groklaw]

To say that we in the technology press would not have relished every moment of such a fight is to ignore the essence of who and what it is we are. It is a fact that Microsoft’s James Plamondon pointed out very effectively, as evidenced by this slide from his 2000 presentation to the Developer Relations Group. Most every serious technology issue of the past quarter-century has been earmarked by the telltale abbreviation “vs.” or, when matters turn worse, just “v.”

By the end of 2009, Microsoft would settle the issue of browser bundling with the European Commission using a strategy whose roots may lie in the era of the Plamondon preso: It complied, and made every effort to present itself as willing to make restitution.

As a result, Microsoft lost the ability to bundle IE8 with Windows 7 in Europe, and is being compelled to give all European Windows users the option to install competitive browsers. But what else did Microsoft lose? Not very much. It certainly did not lose face.

What was gained? Look at the dramatic change in public sentiment, which began the day that the EC expressed skepticism over Microsoft’s intentions. Was “complying” some sort of evil plot to mask a secret desire not to comply? As Betanews reader kashin wrote at the time, “This whole EU fiasco is turning into a case of, if a company is too successful, we must find fault, punish it, and treat it as a cash cow by imposing various fines, all the while pretending we’re doing it for the benefit of the public.”

Then on the day the Commission and Microsoft reached a compromise on the contents of the browser “Choice Screen” presented to European Windows users, in declaring victory, outgoing Commissioner for Competition Neelie Kroes invoked an analogy that may later come back to haunt her successors: If multiple bottles of shampoo are available in a market, she told an audience, a supermarket should carry each one: “What we are saying today is that all the brands should be on the shelf.”

That provoked this response from Betanews reader dkratter: “This is just proof that the EC is not interested in increasing competition or protecting the consumer, only in shrinking Microsoft’s share of the browser market. If the EC were actually interested in increasing competition, it would require all OS manufacturers to have the same browser choice screen…Typical EC nonsense.”

These responses typified Betanews’ small sampling of global public sentiment. But there’s no question that, had Microsoft chosen the opposite tack and fought out the EC case like it fought out the US case, such galvanization of any plurality of individuals’ opinions in favor of Microsoft would have been impossible to achieve.

Next: Turning the other cheek…works

Turning the other cheek…works

Where James Plamondon’s presentation to developer evangelists at Microsoft stops short of testifying to its current policy, is where the company takes the unprecedented step of declaring ceasefire. Where evangelism was war for Plamondon (who now works outside the company), the tack today looks less like Sun Tzu and more like Gandhi: sitting down in the face of a fight.

Whether directly inspired by Microsoft’s change of tack, or affirmed in the course of changing their own course, companies elsewhere in the technology field made similarly extraordinary decisions to lay down their arms and build bridges instead of dams. Most notable has been Intel and AMD, which called an official truce last November.

Although AMD’s and Intel’s settlement gives AMD a share of the spoils, it was AMD which also made a significant concession. The fight against Intel has been one of the company’s defining characteristics; a good portion of its marketing was based around the very story of fighting Intel, like an ongoing narrative of the battle of good against evil.

By setting aside that tack, AMD is left with proving its merits using more conventional means, such as technological prowess and market performance. But by limiting its weapons to just that, AMD sent a signal to the world that it believes it can champion Intel in a fair fight, with the result being a near doubling of its stock value since November 12.

What Intel gained from the settlement was a huge dampening of the momentum that would otherwise have driven the State of New York’s case against Intel, filed earlier in November, the EC’s ongoing investigation against the company, and the US FTC’s latest formal charges. Reporting from The New York Times indicates that Intel had every reason to believe the FTC would charge it with molding its platforms to manipulate markets.

But with Intel’s sole competitor now effectively indicating that any harm done to it has been put behind it, prosecutors worldwide are forced to prove Intel’s intent to harm without AMD helping to demonstrate it was harmed. That will require cooperation from Hewlett-Packard, Dell, and any other principal vendors with which Intel may have made deals. The evidence of those deals clearly shows that Dell and HP were not only negotiating their terms, but in many instances the architects of the deals — a fact which will make it difficult to prove that Intel intentionally manipulated markets.

The eventual outcome there, whether settled or ruled by judges, will probably be a microscopically granular splitting of hairs in which no side emerges the clear and singular victor, but all sides can claim some share of victory nonetheless. Such was the case last April with the settlement of what at one time was considered the poster child of all intellectual property disputes, until followers could no longer choose their favorite side: the Qualcomm v. Broadcom affair.

In a now-familiar pattern, Broadcom got the spoils of the deal on paper, and also earned the support of investors who now believe the company plans to do battle in the markets rather than the courtrooms. But Qualcomm emerged a victor there too, with a settlement that effectively unraveled the antitrust cases against it elsewhere. Although South Korea’s FTC would impose a colossal fine against Qualcomm for leveraging its platforms to drive up licensing fees, the company followed up with deals with its former enemies that could end up more beneficial than anything Qualcomm was trying to leverage the hard way, making bridges instead of dams.

Finally, earlier in December, the one-time dartboard of the hardware industry, Rambus, became the latest symbol of peace. It graciously agreed to royalties caps suggested by the European Commission, in a case that Rambus came from behind to win in the US. After what appeared to be a devastating 2006 defeat to memory companies claiming Rambus withheld its standards strategy to garner high royalties down the road, the stalwart memory technologies company held out as its accusers were found guilty of their own conspiracy to keep DRAM prices high.

That left Rambus emerging from the affair in an almost angelic light, effectively having been proven guilty of nothing. Its agreement to cap DRAM royalties, in light of the civil equivalent of an acquittal, is an indication that even companies with the ammunition and incentive to fight it out, are declining to do so.

The peace problem

Whatever shall we do? Assuming this peaceful course of action plays itself out everywhere, without the polarizing influence of a single and singular, actively anti-competitive, dominant player in any technology market, we may have to resort to fighting about politics and sports. Some of us may reacquaint ourselves with old hobbies and lost arts, such as exercising or going out on dates.

Ever since the information technology business has become personal, there have always been generally defined “good guys” and “bad guys.” Some had clearly earned the colors of their respective hats. However, for the most part, the ethics practiced by companies could almost always have been more accurately illustrated with various shades of grey. In 2009, those hats became whiter, everywhere.

As James Plamondon correctly pointed out, the press eats up stories of conflict. By resolving the conflict, the intensity of public scrutiny is reduced. Perhaps inadvertently, Microsoft, Intel, and others are discovering that waging peace can pay big dividends.

Copyright Betanews, Inc. 2009

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