Windows 8 Hype Check: Google’s Not Going Away the Way Netscape Did

    With just over a month to go before the launch of Windows 8, Microsoft is positioning the new release as an even bigger deal than the launch of Windows 95 back in The Day. As anyone who was following Microsoft back then knows, that’s saying something. The problem for Microsoft is that it doesn’t matter, because it’s no longer in a position for the hype to be as effective now as it was then.

    Consider Microsoft CEO Steve Ballmer’s interview last week with Janet I. Tu of The Seattle Times, and this question in particular:

    Tu: You’ve talked about this year being the most epic. Is there another year in Microsoft’s history you could compare this to? Maybe the launch of Windows 95?

    Ballmer: You know, Windows 95 was certainly the biggest thing in the last 20 years until now. I think Windows 8 certainly surpasses it. It’s a little hard to compare things like the founding (of the company) and the introduction of the first popular PC and the system that popularized it, but it’s at that scale.

    So the stage is set: Windows 8 surpasses Windows 95 in the “biggest thing” category. To put that in context, let’s go back to an interview I did with then-CEO Bill Gates in December 1995, just four months after the launch of Windows 95. I began the interview by asking Gates this question: “If you could have one other software vendor’s technology dropped in your lap free of charge tomorrow, with no worries about Department of Justice investigations, what software vendor’s technology would you pick?”

    The response was quintessential Gates:

    Well, the most profitable software franchise in the world is [IBM’s] MVS. They have an installed base of 25,000 that’s growing zero units a year, and they make $6 billion a year. We’ve got an installed based that grows 60 million units a year, and our systems software business is about $1.5 billion. So the most profitable software franchise ever is what IBM has done there. But it’s not some big technical thing that’s attractive.

    Bill was being Bill: He couldn’t bring himself to admit that any other company had anything he would want on the strength of its technology. So my follow-up elicited this exchange:

    Me: What attracts you from a technical standpoint rather than from a profit standpoint? I would have guessed maybe some Internet software.

    Gates: I wouldn’t say that, because an Internet browser is a trivial piece of software. There are at least 30 companies that have written very credible Internet browsers, so that’s nothing.

    There may be some other exploited assets at IBM research that they just don’t have the management structure that lets them take advantage of, and that we probably could take advantage of more effectively.

    There aren’t that many research-oriented organizations. I mean, our software research group is very large, and a lot of the good research starts in universities around the world, as opposed to in commercial establishments.

    We’re very capable of hiring smart people and writing software. There are companies out there that have strong positions, like Intuit in home finance. But believe me, technology was not part of that deal. That’s a fairly straightforward piece of software, and they were very clear on that themselves.

    Me: Netscape has certainly come on awfully strong.

    Gates: How many software developers do you think they have?

    Me: I gather you’re not particularly impressed with Netscape.

    Gates: Oh, they’re very good people. But there is such a thing as an overreaction in this world. In a gold rush, people forget there is such a thing as an overreaction. But I’m betting that a few years from now that will be a heck of a good headline: “Overreaction Now Recognized.”

    So Gates dismissed Netscape as an insignificant startup that was creating little more than an overreaction. As we all know, the Microsoft of 1995 wielded so much power that it could almost will the competition out of contention. Indeed, Netscape would be acquired by AOL, which stopped development of Navigator at the end of 2007. In 2012, Netscape’s “trivial piece of software” has all but disappeared.

    But something else has all but disappeared in 2012: Microsoft’s power to will its way to success. Today, being an enormous company with legions of software developers is no longer seen as a hallmark of technical prowess—apparently, not even by Microsoft itself. Check out this exchange in Tu’s interview with Ballmer:

    Tu: Competition for young, top talent can be incredibly fierce. And you’re competing directly with companies such as Facebook and Google that are perceived as fresher, more dynamic places to work. How does Microsoft compete with that?

    Ballmer: I’m not sure you’re right about that. I think Google is just another big company at this stage. I’m not saying they’re bad. They’re a good competitor for talent but it’s not like they’re some small startup.

    We’re a great company, good-sized, that’s doing great work. Google’s another big technology company. It’s not like they have the charm of smallness or pre-IPO-ness with them.

    Facebook’s got a little bit more of the charm of small, but of course they’re post-IPO now and that bubble burst, and burst pretty hard, for their employees …

    So just as Gates dismissed Netscape because of its relative smallness back in 1995, Ballmer in 2012 is dismissing Google as “just another big company” that lacks “the charm of smallness.” It used to be that Microsoft could get away with that sort of mind-bending about-face of its hype apparatus, on the sheer strength of its market dominance. After all, the more dominant a company is, the more likely it is that the market will buy in to the company’s hype.

    But no matter how you size it up, Google is no Netscape, and the world Microsoft finds itself in now is no 1995. Microsoft is going to have to do a lot more than ratchet up the hype to make Windows 8 matter.

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