Open Standards Aid Microsoft

Microsoft benefited from commoditization in the past.

Microsofts out to better know its enemy. To this end, the company has promoted a new competitive strategist, Martin Taylor, whos said hes after "just the facts" and whos established a testbed of open-source software on the Microsoft campus to find them.


Read Microsoft Watchs recent interview with Martin Taylor.

Even so, the company line out of Redmond is still governed by ideology. In the talk he gave last month at a financial analysts meeting, Microsoft CEO Steve Ballmer spoke in terms of commercial (he avoids the term "proprietary") versus open and innovation versus commoditization.

If open commodity standards and technologies are Microsofts primary foes, then the firm could learn just as much about its enemy with a mirror as with a new open-source software test center. Thats because Microsofts past, present and future successes all rest upon a foundation of open standards and commoditization.

It was within an ecosystem of relatively open, commodity hardware that DOS and Windows were born and grew to prominence, and it was the open platform of the Internet that gave businesses and individuals around the world a very compelling reason to purchase new PCs, almost every one with a copy of Windows.

The Internet, multilaterally developed and commoditized as it may be, is still the site of Microsofts richest opportunities, which is why just about every bit that the company ships plugs somehow into that platform.

Microsoft had selfish reasons for turning the Web browser into a commodity, a move that meant curtains for Netscape and, seemingly, for the innovations of the browser wars. However, by turning nearly every desktop computer into a Web-ready terminal, commoditization of the browser broadened access to the Internet and expanded the size of the market.

Today, there is actually more Web browser innovation than ever. Theres room for open-source projects such as Konqueror and Mozilla, proprietary software firms such as Opera, as well as for others that choose to mix open and proprietary code, as Apple has done with Safari. Curiously, while Microsoft has cautioned us all against expecting much innovation from Internet Explorer until Longhorn arrives some three years from now, theres still plenty of room in the browser space for Microsoft to create value, if it so chooses.

Commoditization and openness, far from being anathema to innovation, broaden markets while prompting industry players to come up with improvements to differentiate themselves. And yet, in the context of software, Ballmer uses the word "clone" as if it had four letters, pushing instead the idea of integrated innovation in the form of a single-sourced "stack" of software.

The Beta 2 kit for Microsoft Office System is 12 CDs of software, including Windows 2003 Server and the latest beta of Exchange, as well as copies of Microsofts SharePoint Portal Server and SharePoint Services. Its a lot of code, and while this monolith may be intended to fit together, its a lot of ripping and replacing to ask of an enterprise looking to get at the collaboration benefits in the latest version of Office.

What Microsoft markets as integration, many will see as entanglement. When the German city of Munich opted to migrate its IT infrastructure away from Windows to Linux, it was city officials caution over single-vendor lock-in that ended up shifting their decision against a heavily discounted Microsoft offer that had reportedly dipped below the bid assembled by SuSE and IBM.

Ballmer talks about the challenge of competing with software thats "free to acquire," but the firms embracing open source in some form—pretty much every one of Microsofts competitors—arent doing this for charity, theyre doing it for competitive advantage.

The good news for Microsoft developers, though, is that if, while testing out all that new software in their labs, they stumble across something they like, theyre more than welcome to put it out on the market themselves under a GPL license.

Free software may not be amenable to complete control, but the richest opportunities never are.

Senior Analyst Jason Brooks can be reached at