by Joe Heck, 28 April 2002
So I'll start this off with two ideas:
I believe the relative value of Microsoft Word in terms of price-performance, ease-of-use, etc - peaked at about 1995. (I rather suspect that other's believe that as well, since I've listened to them bitching about recent versions) Since then, it's incremental value has actually *decreased*. But Microsoft Word shouldn't be viewed as a single entity, but as one "node in a network". If it was used completely alone, and didn't interoperate with anything else, this wouldn't be true. But people want to, and do, share documents. Lots of them. (Just ask any email administrator how many attachments they have flying around their office. paper pushers love this shit.) And since you can view this as a product that derives value from interoperating with other products, you better consider it a network - and applicable to Metcalf's Law. And so, this product, which has actually degraded in quality, has increased in overall value...
It the jargon of chaos theory, it's "tipped", and it's growth is almost assured from here as more people continue to use it, it gains exponentially in value. It doesn't matter that it's a worse program today than it was in 1998 - the fact that a huge number of folks are using it insures a higher value standard.
This is one of the ways that Microsoft is leveraging it's monopoly of operating systems into monopolies of anything else. They build products that interoperate, they use the really inexpensive distribution channels to get those products out to people (Internet Explorer, Windows Media), and they give those things away (or make wild-assed lying claims that they're required to be part of the OS) and wait for the network effect to make mediocre (or even good) programs have more value than anyone else's. For someone to compete with this, they need to provide a product that has an order of magnitude more value to them. Otherwise, they won't switch. And making it default...
The downside for Microsoft is that once they've uttery destroyed their competition, there's no incentive to improve their product. And without any competitor, there's really no reason for us individuals to want to get new versions of their software. (Have you heard they're having a hard time selling XP and Office XP? Do you think that the corporations they're trying to sell this stuff to see an order of magnitude value increase?) In the case of MS Word, especially since the product isn't getting any better, people don't want to replace it.
In fact, I would assert the only reason anyone is upgrading computers today is because they're basically being forced to - old versions aren't available, the current version of Office isn't compatible anymore with old versions of Windows, etc. (That was my primary reason to get the latest Office for MacOS X - I saw a huge value increase in getting a program that ran natively under X, so it was finally worth it. I personally think MS Word version 5.1 for the Macintosh was pretty much the pinacle of the word processing world. After Wordperfect stopped competing, well - they just went to shit.)
The balance hasn't yet tipped in the streaming media technologies segment, although it's moving fast. Some would even claim (Microsoft especially!) that it actually already had tipped. Back a little bit ago, Microsoft started offering their products at no charge - effectively making it an order of magnitude (or greater!) better value than RealNetworks if it worked at all (which is did). Likewise, Quicktime was giving away their product as well - so... Real had to increase it's own value proposition by reducing it's player to be zero-charge.
Up until this point, Real Networks had really been the first out the door to get a bunch of folks signed up and running with their streaming video product set. They took advantage of Microsoft's desktop monopoly market share, developed heavily for that platform, and got a bunch of folks into the game. Nevermind that Mac's started this gig over 10 years ago - they didn't get the windows world involved until late in the game, and so Real ended up with the heavy-duty market share. Then comes the behometh: Microsoft gets Windows Media out the door, invests heavily to get it's quality up a tad past good, and starts bundling it with every copy of their OS.
The end-player technologies are all disparate, but they're being given away for free. Apple and Microsoft have both made their players work on each other's operating system, so the only real bonus MS has is utilizing it's monopoly desktop strength to bundle it's player out there and present it as a default. RealNetworks, notably, doesn't have a player that's functional on the latest MacOS, and it's Windows version is getting panned as being exceptionally poor. Only the fact that it maintains the market lead currently is keeping it from getting shitcanned in the marketplace.
So now everyone is giving away their player, and the money making technologies are on the encoding side. Apple is taking a swag at the order of magnitude value proposition by creating a product that's so easy to use that it's an order of magnitude better than it's competitors. RealNetworks has effectively conceeded the long-term game to MS, trying to get the value add (and revenue!!!) from a subscription content gig. Microsoft is in the position to own the market through brute force defaulting of the player.
So the general game plan has been to give away the clients, make the products interoperable so Metcalf's law can really take effect, and launch for the high end market-share to keep your ass on top - basically going for the tipping. (I might point out that Adobe has done an excellent job with Acrobat - it works everywhere, there's few competitors now, and they're offering value far and above what baseline HTML can do in the print document world.)
So in comes Linux - your sort of classic 'disruptive technology'. It's zero-charge-software, so it gets a value boost easily within that order of magnitude. People are moving. It's tipping on the server side...