Resistance: Fall of Microsoft

Let‘s be clear about what is really at stake in this “console war“ between Sony and Microsoft. People don‘t realize that they do not own their Xbox 360 any more than they own the set top box from their cable company. They rent it.You have an internet connection on Microsoft‘s console, but the only place you can go is Xbox live. The hard drive installed in the Xbox 360 has a proprietary connection to the rest of the system, so it cannot be accessed without using computer code owned by Microsoft. Microsoft has total control over what you see and what you download, as well as what games you can purchase.

Microsoft released the first Xbox after the PS2, then rolled out the Xbox 360 before the Playstation 3. There are still high quality games being made for the PS2 like God of War II and Final Fantasy XII, while the Xbox is basically a dead system. Microsoft ripped off their own customers who bought their original console, then dissed Xbox 360 buyers by selling them a poorly designed system.

To make the Xbox 360 so powerful, Microsoft designed a triple core PowerPC chip and a massive graphics processor for their console. These chips require a lot of power and generate immense heat, so much heat that the Xbox 360 sounds like a hair dryer because of the fans inside the case. When the first Xbox 360s came out, many of them overheated and crashed.

There were reports of failure rates as high as 20% on the first consoles, although Microsoft insists the rate was no more than 5%. This despite the fact that a Google search containing the words “xbox red ring” reveals a cottage industry of websites catering to customers whose consoles have failed. One man in Chicago had the temerity to sue the Software Giant, that case was settled out of court, allegedly for an undisclosed sum…

All the photos of the Xbox 360 that you see in advertisements do not include the huge power brick that steps up voltage from a wall socket to the console. Of course, they could have avoided the problem of overheating and requiring an external power brick by simply making the case bigger. This would haves allowed for more air around the circuitry and provided room for an internal power supply.

Notice how the case of the Xbox 360 slopes inward allowing as little space as possible between the hardware and the case. This makes it nearly impossible to install a “mod chip” in the Xbox 360, but it also makes the console nearly impossible to cool properly. Again, people don’t own their Xbox 360s, they rent them, and no modifications to the console will be tolerated.

On October 31st, 2006, Microsoft installed a “Fall Update” through Xbox Live that contained faulty code that disabled an unknown number of Xbox 360s. Thousands of consoles were “bricked“ by the Fall update, and internet rumor has it that this was a deliberate tactic to disable modified consoles. Microsoft is again being sued by an Xbox 360 owner whose machine was disabled, that case is still pending.

All the bad press about Sony’s launch of the PS3 is nothing in comparison to Microsoft’s sleazy tactics. Microsoft ripped off their own customers when the withdrew support for the original Xbox. Then they marketed and sold the over-powered, poorly ventilated Xbox 360 without proper testing, just to ensure that they got the drop on Sony.

Now contrast Microsoft‘s console launch with the debut of the Playstation 3. The biggest initial complaint against the PS3 was its unprecedented cost, $600 for the premium model. Of course press reports seldom mention that the console costs Sony over $800 to manufacture. That’s because the CELL processor is expensive and the Blu-Ray disc drive is even more expensive.

There was an initial shortages of PS3s because the blue diode that powers the blue laser in the disc player is very sophisticated and hard to produce. Sony invested in more manufacturing capacity and airlifted PS3s to market in order to meet demand, and those shortages were soon overcome. Sony could do this because they actually make their own product.

Anyone who takes an unbiased look at the PS3 must admit that the console is an excellent machine. There were reports that Sony was using low quality components to reduce costs. But repeated analyses of disassembled PS3s have shown that the design and parts, including the Blu-Ray disc player, are of very high quality.

The Playstation 3 has more computing and graphics power than the Xbox 360, but customers who buy the PS3 are getting much more than a superior game console. A Wi-Fi internet connection is included on the deluxe version, and all models have a standard hard drive. This means that customers who buy a PS3 actually own their consoles.

In addition to accessing the internet and downloading files in any format, the PS3 even allows customers to choose their operating system. Linux is an open source OS with a growing fan base and increasing developer support. Several versions of Linux are now available on the PS3, some of which are free.

Sony is a world class electronics manufacturing company. They have given us the Walkman, the floppy disc, the CD and DVD, as well as the PlayStation game consoles. And to get where they are Sony had to compete against world class Corporations like Sega, Nintendo, and Toshiba.

Microsoft is a bunch of evil nerds who lucked into owning the instruction set for the PC, then hired a bunch of lawyers to enforce that monopoly. Microsoft is worth more than Ford Motor Company, Boeing, or Sony. And they‘ve done this without manufacturing anything, or competing fairly against any other company.

Apple Computer created the Graphical User Interface for the Mac, yet it took Microsoft years just to copy Apple’s innovation and deliver Windows with a GUI. Then came the web browser wars. And remember, Microsoft didn’t create a web browser until Netscape’s Navigator was already installed on millions of computers.

Now its the console wars, and once again, Microsoft did not invent the game console.

Microsoft owns Windows and the new Vista Operating System, proprietary code that runs 90% of the world’s Personal Computers. They own Direct X, the API that controls graphics on those PCs. Direct X is also the exclusive graphics software for the Xbox 360.

That means all PC games coded in Direct X can easily be ported to the Xbox 360, but not other platforms. In PC gaming, there was an open graphics standard called Open GL, that was championed by Apple, and numerous other Non Microsoft computer companies. Every time Microsoft updated Windows or Direct X, they attempted to stifle Open GL.

The Open GL standard is now represented by the Khronos Group, of which Sony is a member. Software written in Open GL will run on all platforms, whereas Direct X games only run on Windows and the Xbox 360. Since Microsoft controls the Windows monopoly, they can spend billions to subsidize the Xbox 360, and extend the Direct X API.

That’s really what this console war is all about. If Sony’s PlayStation 3 wins, or at least remains a viable competitor to the Xbox 360, then open standards and open systems will gain market share. If Microsoft wins, they will extend their computing monopoly to the console industry.

A. Scott Piraino

Published in: on June 4, 2007 at 6:11 pm  Comments (1)  

The Trials of Microsoft

A. Scott Piraino

Microsoft owes their monopoly to a crucial mistake made by IBM Corporation.

When IBM debuted the personal computer in 1984, it had a central processor made by Intel, and operating software from Microsoft. IBM did not seek patents for the entire computer, and soon other companies were copying, (or cloning), the PC. As more companies cloned the PC, Intel and Microsoft became the two key suppliers to the computer industry.

It is important that we realize this, now that Microsoft is worth more than IBM, Boeing, or even General Motors, all without manufacturing anything. The company did not become today’s software goliath through skill or innovation. Microsoft was only able to eliminate their business rivals after being handed a monopoly on computer operating systems.

Microsoft’s first competitor was an operating system offered by Novell corporation, called DR-DOS. Although the program had similar capabilities to Microsoft’s own DOS program, e-mails reveal a deliberate policy to spread “fear, uncertainty, and doubt” about the rival software. Programs were written to work with MS-DOS, but fail when ran under Novell’s operating system. It worked. DR-DOS disappeared, and today Novell is nearly bankrupt.

Next Microsoft copied technology from Apple computer to create the Windows operating system. This program had a user friendly graphical interface and quickly became the standard on all IBM type PCs. Since anyone could clone IBM’s computers, but no one else could manufacture Apple’s machines, sheer numbers of PCs reduced Apple to a fringe player.

By 1991 Windows operating systems were installed on 90% of all PCs. Microsoft then began leveraging their operating system monopoly into the market for software applications. Contracts with computer manufacturers required them to include MS Office when installing Windows on their machines. This put word processors, spreadsheets, and other programs from rival software vendors at a disadvantage.

The Justice Department took note and began scrutinizing Microsoft’s business practices. To avoid charges of violating anti-trust laws, the company signed a consent decree in 1994. This barred them from leveraging their Windows monopoly to control the market for other software products.

Microsoft had won the battle for the desktop, but a new challenge would come from the emerging World Wide Web.

In the mid 1990’s a silicone valley company created a computer program that allowed users to access the internet and view not just text, but graphics, video, and sound. This company became Netscape, and the computer program became the web browser, Navigator. Then Sun Microsystems debuted a revolutionary computer language called Java. A program written in this language could be accessed over the internet and ran on any computer, regardless of type.

A new, internet based computer architecture threatened to make the Windows operating system obsolete. As Netscape’s Navigator became the standard on all PCs Microsoft’s programmers rushed to create their own web browser. But the first version of Internet Explorer released in 1996 was clearly inferior to Navigator. To improve it, Microsoft had to have Java.

They licensed the new programming language from Sun Microsystems, then created “Wintel Java”, a version that only ran under Windows. Sun sued Microsoft for violating the licensing agreement, but the damage was done. Microsoft used their Wintel Java to create a new and improved Internet Explorer.

The problem was, Navigator was already installed on millions of computers. To overcome Netscape’s market advantage, Microsoft forced computer manufacturers to bundle Internet Explorer with Windows on all new computers. This excluded Netscape’s web browser from 90% of all new computers, and violated the consent decree of 1994.

Finally, in May of 1998, the Department of Justice and 19 states file suit against Microsoft for violating anti-trust laws and extending their monopoly on software. In opening arguments Microsoft argued that they weren’t a monopoly at all. But they couldn’t deny that Windows and Office were installed on 90% of personal computers. If further proof were needed, the price of Windows had not declined in ten years, even while computer prices dropped 50 percent.

As the trail progressed the central issue became Microsoft’s leveraging of that monopoly to control the market for web browsers. Judge Thomas Penfield Jackson issued a preliminary order to stop the bundling of Internet Explorer with Windows. Microsoft immediately appealed that order in another court and it was overturned.

During the two year trail Internet Explorer continued to be installed on all new PCs. Netscape was forced to distribute their browser for free, but with no revenue their business collapsed. In November of 1998 the company was sold to America Online.

Microsoft’s lawyers crowed that Netscape’s demise made the trail unnecessary, but it only highlighted their sleazy tactics. At one point during the trail defense lawyers brought a doctored version of Internet Explorer into the courtroom, they were caught. When called to the stand, Microsoft founder and CEO Bill Gates alternated between belligerency and amnesia, even denying knowledge of e-mails he had written.

Needless to say these antics did not endear them to the judge and the company lost the case. Microsoft has been found guilty of violating anti-trust laws and abusing their monopoly power. Judge Jackson’s decision was to order Microsoft split into two companies. One company would own the Windows franchise, the other would control all applications, including Office and Internet Explorer.

Microsoft pundits complained that splitting the company would be a disaster, citing the court ordered breakup of AT&T in the 1980s. Of course this was nonsense, AT&T was a huge company with employees and infrastructure throughout North America. Microsoft has no factories and virtually all their assets are electronic.

The breakup was to take effect within one year after all appeals were exhausted. Instead Microsoft lawyers maneuvered their appeal into the very same court that overturned Judge Jackson’s order during the trail. In June of 2001, the Washington D.C. appellate court overturned the decision to break the company in two.

Microsoft’s lawyers have dodged the legal bullet, but they are almost too busy to gloat.

The company has been sued for anti-competitive practices by the new owners of DR-DOS. AOL Time Warner sued for damages over the demise of the Navigator browser, the case was recently settled for 750 million dollars. The lawsuit with Sun Microsystems is ongoing, and the court has already found Microsoft to be in violation of the Java licensing agreement.

After a federal court has found them a monopoly, Microsoft faces hundreds of class-action lawsuits filed on behalf of consumers. The State of California just settled one such civil suit with the software giant for over one billion dollars. Many more class action cases are now being consolidated in a Baltimore court.

Microsoft’s business strategy is clear: Steal technology and ideas from competitors, and when sued for breaking the law simply tie the matter up in the courts. Microsoft has been sued by the company that invented browser plug-in technology, Apple Computer, Sun Microsystems, and numerous other software companies. One case in particular illustrates how ruthless Microsoft is, and how cheap.

Synet had already trademarked Internet Explorer as a brand name when Microsoft came calling, offering 75 thousand dollars for rights to the name. When they refused Microsoft stole the name anyway, and Synet went bankrupt fighting the software goliath’s lawyers in court. After filing for bankruptcy the company was forced to settle for a paltry five million dollars.

Despite their legal woes, Microsoft is still all powerful. The company has over 40 billion dollars in cash, more than enough to settle pending lawsuits and fight legal battles in the courts. Through greed and strong-arm tactics Microsoft has come to dominate the market for operating systems, desktop software, and web browsers.

Now Microsoft’s sights are set on the internet. The company has unveiled a bold new software initiative called Dot Net, (spelled .NET). This new software language is similar to Sun’s Java, in that it is designed for the World Wide Web. But there is one crucial difference, .NET only runs under Windows.

Microsoft’s next web browser will not include support for the Java programming language. Instead programmers of web based programs will be forced to write code using .NET. If Microsoft’s new programming language becomes the standard, the internet will only run under Windows.

Microsoft just might pull it off. The only challengers to the Windows franchise are Apple Computer and open source software programs like Linux and BSD. But while Microsoft’s Windows, Office, and Internet Explorer run on 90 percent of all desktop computers, any competitors face an uphill battle. In the meantime Microsoft owns the software keys to our computers, that and a lot of lawyers.

Published in: on October 10, 2003 at 5:05 pm  Leave a Comment