Daniel Eran Dilger
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Soviet Microsoft: How Resistance to Free Markets and Open Ideas Will the Unravel the Software Superpower

Soviet Microsoft
Daniel Eran Dilger
Somewhat ironically, one of the most financially successful capitalist companies of the 90s has positioned itself as a modern counterpart to the old communist Soviet Union. Microsoft’s ideological contempt for and resistance to free markets and the open expression and propagation of fresh ideas and technologies is not only a close parallel of the old USSR, but also a clear reflection of why Microsoft is currently failing and why its troubles have only just begun. Here’s a comprehensive look at why this is the case.

Talk to the Hand.
The free market is hailed for its powers as a magical omniscient hand that sorts winners and losers objectively based on merit. It also sets prices with accuracy and precision, rewarding excellent products with premium prices and rewarding efficient production with higher sales volumes.

In the last century, passionate intellectuals fought against the powerful, all knowing hand of the market and lost. They hoped to solve the frequently brutally and indiscriminate actions of the capitalist free market, which set prices that bankrupted the weak and rewarded the rich without regard for grandmothers and children, wars and disease, fraud and treachery, and various other side effects of humanity.

The Communists hoped to replace the free market with a planned economy, where growth would only proceed orderly in one direction. Anyone in the way of such progress could be carefully removed by the appropriate bureau and reassigned to a different role that served everyone else collectively in the best possible way.

In the same way, Microsoft ushered in Windows as a common platform for all computers in the 90s. Windows promised to replace the risk and uncertainty of a world splintered by different platforms under just one operating system. Anyone who didn’t play along with the official party line was ostracized to a Siberian gulag, or at least ridiculed as an enemy of compatibility and a threat to low Total Cost of Ownership. Pundits warned of the risks of associating with alternative platforms, and expressed fear, uncertainty, and doubt concerning the future prospects of anything independent of the Microsoft Mother.

The Problem with Communism.
The problem with the ideas from the left edge of reason is that nobody on Earth is smart enough to plan such an economy, and everyone else is smart enough to be wary of anyone ready to accept the challenge. The only way to usher in communism is to remove alternative thought by convincing the populace that the only good choice is no choice, overturn the establishment, and then prop up the centrally planned system with misinformation campaigns that assure everyone they’re better off not wanting to experiment with dangerous outside ideas.

On the other hand, the best way to prevent anyone from trying to take over and establish such a centrally planned system that insists on making all the decisions is to marginalize power in an informed democracy, so that any political change based on unworkable ideas is at best glacial and difficult.

The less forced political change can occur, the more the invisible hand of the market can make decisions that benefit individuals. Socialist ideas about insuring the health of the populace, educating children, transporting people and goods effectively, and looking after the welfare of the weak and less fortunate can be addressed by the market with minor changes that don’t demand misinformation, removal of choice, or violent political upheaval to enact.

The Power of the Invisible Hand is People.
That’s because the free market isn’t really an invisible hand, but a collective of individual human actions that involve conscience. The market is both the world’s democracy and its commune. Every dollar spent is a vote, and every dollar earned is political capital to carry out plans. Once the hippie generation realized that the free market was actually the ultimate commune, the most competent members sprang into action and changed the world in a way that really changed the world.

Apple’s Steve Jobs was a long haired dropout experimenting with Eastern philosophy and LSD. However, he saw the potential in personal computer toys and teamed up with hardware genius Steve Wozniak to develop and market them. He then saw the potential in technology being developed by Xerox and worked to make it affordable and relevant to consumers. He then saw the potential of object oriented development and the leveraging of open source code at NeXT, and later returned to Apple in 1997 to turn around a dead corporation and give it a new vitality and productivity that no Ten Year Plan could have have ever decreed in a state sponsored program.

Apple founders Steve Jobs and Steve Wozniak

Silicon Valley is full of old liberals who once thought that human nature could be shed along with the trappings of the past to usher in an Age of Aquarius where everyone was just cool and everything just worked out. They discovered that their parents had been right in a manner of speaking; you can’t change everything about yourself even if you do change everything about yourself.

Individuals with a humanity large enough to share were attracted to the rebellion against old thinking in the 60s, but the 70s began to slowly teach us that rebellion has its own problems. Our ancestors have amassed too much knowledge to ignore, and at least some of the solutions they created for dealing with the problems of life are far too valuable to simply throw out. Ignoring the wisdom of the past is as dangerous as ignoring fresh ideas for the future.

Bridging The Gap.
That leaves humanity stuck with no easy answers. How much of the old ways of thinking are worth holding onto, and how quickly should new ideas be adopted? Over the last thousands of years of recorded history, it seems clear and predictable that the old will demand an end to change and the young will always push for complete revolution. The only way to allow anything to get done is to balance things out so that the old can push their efforts to stop progress and the young can force efforts toward change without either side winning all of the time.

Of course, being old or young politically isn’t just a product of age and experience. There are conservative youth groups just as there are plenty of progressive older people, some of whom have done the most to affect positive change because of their experience and wisdom. In fact, while the youth culture has made the most light and noise, it has rarely done as much to actually introduce real change without also ushering in disastrous consequences on the side.

The power for political and social change has to be orchestrated with the same objectivity as the overall economy, leveraging the same hyper-intelligent collective of thought that sets prices and sorts out competitors. Politics and culture need a free market.

Hacking the Market.
The biggest problem with free markets is that most aren’t really free. Free markets represent the needs and demands of consumers. The collective buying decisions of millions of people statistically reveal the collective reasoning of the masses. The problem is that this virtual network of human supercomputers is easy to pollute with viral misinformation, and like any system, can only return garbage output when it is fed false information.

When vendors manipulate the market to limit the availability of competing products or dump bad products on the market to overflow its buffers in an attempt to hack control in the future, the market no longer reflects the composite intelligence of a huge audience, and instead inherits all the problems of a communist planned economy where a few people making decisions simply can’t outthink the needs of millions, despite their best intentions.

This is what Microsoft did in erecting artificial barriers to competition to Windows and Office in the 90s, and what Microsoft and both NBC Universal and Paramount/Dreamworks are doing in media, and what Microsoft is doing in opposition to free and open source software: reigning in on the free market in efforts to instead establish a politburo where Microsoft remains the only game in town.

Universal vs Apple in the iTunes Store Contracts

The New Soviet Union.
Microsoft isn’t evil for being Microsoft, but because its leadership values control above delivering good products or advancing the state of the art. Rather than competing in the market, Microsoft’s leadership has pursued a strategy of repeatedly deceiving the market. The result has been decades of productivity losses that negatively impact the rest of the world’s economy and distract humanity away from technical achievement to instead fiddle with shoddy software that is weak because it was developed outside of competitive pressure.

The other result is that one of the richest companies in the world is falling apart for the same reason the Soviet Union did: both attempted to develop power and influence by restricting ideas and forcing adoption. Those restrictions worked in the short term; the USSR roughly maintained and sometimes exceeded the technological capacity of the West across three decades, just as Microsoft briefly eclipsed independent development in a variety of areas.

However, the iron fist of resistance to outside ideas was as destructive to the USSR as the inbreeding of royalty was to Europe’s empire nations before it. Microsoft is facing the same failure by arrogantly pushing old strategies and ignoring the potential of open source. Microsoft’s anti-open rhetoric even sounds a lot like the Soviet’s view of free markets, laced with fear-based propaganda that promises dire consequences for experimenting with the open source ideas that are already proven to work outside of the Red Square of Redmond.

The Hot New Cold War.
As the USSR’s failure to maintain parity with the West became increasingly obvious, a conservative American movement launched in the early 80s alongside President Ronald Regan increasingly claimed credit for winning the Cold War. It fought battles of little consequence in Nicaragua and invested billions in Star Wars technologies theoretically intended to shoot down incoming missiles. Neither did anything to really accelerate the demise of the USSR and its network of satellite nations behind the Iron Curtain.

In the same way, companies such as Netscape and Sun launched ineffectual wars of rhetoric against Microsoft’s monopoly, but ended up doing very little to actually challenge its dominance.

What really destroyed the USSR was the rapid advancement of technology developed within the fires of cooperative competition among Western nations. The Soviets had brilliant scientists and researchers, but they couldn’t outmaneuver the efforts of thousands of individual companies, whose efforts were being selected by merit in a free market by millions of consumers.

Individual Western companies would have found it extremely difficult to compete against the vast resources of the Soviet Bloc. Similarly, many of the individual companies that launched into direct competition with Microsoft failed. Working collectively and in competition however, Western companies exponentially outpaced development of the USSR. This type of collective competition will also be the undoing of Microsoft.

After the failed ashes of Netscape were formed into the Mozilla open source project, it grew under the support of a number of companies to become Firefox and rival Microsoft’s domination of the web browser market. Parallel efforts by Opera and KHTML/Safari have cooperated and competed with Firefox to offer an even stronger standards-based challenge to Microsoft’s Internet Explorer. That threat induced Microsoft to ship IE7 after years of leaving the web browser to stagnate, and has more recently forced it to exempt users from installing its Windows Genuine Advantage compliance/spyware system in order to download it.

Apple in the Web Browser Wars: Netscape vs Internet Explorer
The Web Browser Renaissance: Firefox and Safari
The Future of the Web: Safari, Firefox and Internet Explorer

Winning By Merit.
Throughout the first half of the 90s, Apple offered ineffectual competition against Microsoft because it was developing all of its own technology just like Microsoft, while lacking the same access to resources that Microsoft had. When Apple began incorporating an infusion of open source technologies in the second half of the 90s, it broadened its ability to compete by leveraging the work already done elsewhere.

Microsoft’s refusal to participate in open development and its vilification of open source signal that the company still doesn’t understand what is happening in the world around it. Having established itself as an enemy of open development, it now faces the embarrassing prospect of being beaten by open companies while being unable to open itself to change, its only real recourse.

At some point, Microsoft will have to reorganize itself in a way that opens the door to open development and exposes itself to competition. Doing so will require the company to give up its buffer zone of comfort provided by its satellite bloc of competitive barriers, to disband its astroturf misinformation and propaganda ministries that underhandedly function like the KGB, and to participate in the global economy by dialing down its doomsday clock and ambitions to rule the world using the technology from previous decades.

iPod vs Zune: Microsoft’s Slippery Astroturf

Microsoft’s May Day Parade.
Instead, what Microsoft is actually doing is falsely proclaiming victory across its failing businesses in a way that looks a lot like a Soviet May Day parade: lots of impressive tanks that rumble past the harsh reality of a starving populace.

Just within this year, Microsoft CEO Steve Ballmer proclaimed in January that his Zune music player had grabbed 20 to 25% of the market within a few months of being on sale, despite knowing that the company hadn’t sold any significant amount. The Soviet looking player got shipped to 30,000 stores, but nobody bought any until the price was dropped in a fire sale clearance sale ten months later. Microsoft then tried to stoke the story that its bargain bin sales were indicative of high demand for its Zune products.

Facing the conundrum of selling PlaysForSure DRM that doesn’t play on its own Zune product, and vice versa, Microsoft has now rebranded PlaysForSure DRM as “Certified for Windows Vista,” using the same logo it uses for Zune DRM content. This muddies the waters to confuse customers so they lose sight of the fact that Microsoft is selling two artificially incompatible DRM formats, and further suggests Vista as a solution, when nothing in Vista helps sort this problem out at all.

Why Microsoft’s Zune is Still Failing
Winter 2007 Buyer’s Guide: Microsoft Zune 8 vs iPod Nano
Microsoft Re-Brands PlaysForSure — DRM — InformationWeek

Ballmer also mocked the iPhone for being the “most expensive phone in the world” while in reality, his own Windows Mobile phones all cost significantly more to own. He also suggested that Microsoft had or would soon claim 60 to 80% of the market for smartphones but that Apple would be lucky to get 2%. In reality, Windows Mobile had a worldwide market share close to 6% at the time. After just one full quarter of sales in the US, Apple has already outpaced Microsoft in US mobile market share, which is the largest regional market for Windows Mobile by far. As Apple rolls out the iPhone globally, Microsoft’s efforts will look increasingly weak.

10 FAS: 1 - iPhone Price and Profits vs Nokia, LG, HTC, RIM, Palm

iPhone Price and Profits vs Nokia, LG, HTC, RIM, Palm
iPhone Grabs 27% of US Smartphone Market

Microsoft has also laughed off competition from Apple on Windows desktops, but the Mac maker has since surpassed Dell and HP in valuation because Apple’s sales are growing several times faster than its PC rivals. Apple’s laptops scored a major jump among consumers throughout the year, but Mac desktops are now seeing similar growth. Changewave is also pointing to forward looking plans by both consumers and corporate buyers that indicate a significant rise in plans to buy new Apple hardware.

Among consumers, Changewave found that expectations to buy new Apple systems had interest in both HP (21%) and Dell (28%) in laptops and beat HP (24%) and approached Dell (31%) in desktops. Just a year ago, Dell exceeded 40% of the vote in both categories, while Apple lagged at 11 to 16%. Apple is also up significantly in corporate purchasing plans, jumping from 2% to a 6 to 7% share of future plans, but still lags behind Dell and HP. Following its blockbuster year of 2007, those plans suggest that Apple is just getting started in its market share expansion.

 Assets Alliance Reports Pc 20071203 Chart1

Apple Macs: Dominant PC Story of 2008 – ChangeWave

Fueling that growth in part is Apple’s strong showing with Mac OS X, recently upgraded to the Leopard reference release. Reviews of Leopard have been stellar. Despite the usual efforts needed to migrate to a new system, the new update has suffered none of the show stopping problems of the year old Windows Vista, which has been plagued with poor sales and consumer resistance. Pundit’s efforts to tar and feather Leopard with Vista’s problems have been vigilant, but ineffectual.

 Wp-Content Uploads 2007 11 Leopard.Vs.Vista.016

Ten Myths of Leopard: 10 Leopard is a Vista Knockoff!

In desktop applications, Microsoft has tight control over Office, but this year was forced to announce a reduction in the entry price on the Mac side from $300 to $150 in order to compete against Apple’s new $79 iWork 08. Within just weeks of being on sale, iWork 08 has captured 16% of the Mac market. On the Windows side, the lack of any strong competition has kept Office 2007 expensive and unrivaled in overwhelming market share. That lack of competition has also resulted in no new updates for Office for a three to four year period.

Microsoft’s Outrageous Office Profits

Microsoft also likes to talk about its position in digital media. It is vigorously pushing its Windows Media/VC-1 in HD-DVD and its Xbox Live online video download store. However, the reality is that HD-DVD only has any support because Microsoft and Toshiba are propping the failure up by paying one studio to exclusively support it: Paramount (which also owns Dreamworks). The agreement excluded Steven Spielberg films, but not those by director Michael Bay, who has expressed fervent disapproval of the ploy, because it will result in putting a damper on HD sales of his blockbuster CGI movies such as “Transformers.”

Blu-ray vs HD-DVD in Next Generation Game Consoles

Among downloads, Microsoft’s online TV and movie business with Xbox Live isn’t significant enough to be counted among the top 99% of sales. That comes despite the fact that Microsoft maintains monopoly control over the PC market and can ship its media player software on all new PCs. When free market choice is involved, Microsoft frequently can’t win even with a huge head start.

Apple TV Digital Disruption at Work: iTunes Takes 91% of Video Download Market
Should Apple TV Copy Tivo and Media Center?

The Xbox 360 entered the market with a year long lead over rival new consoles from Sony and Nintendo. Despite using a strategy that flooded the market with unsold inventory and then advertised a huge margin in its installed base, Nintendo outsold the 360 within months, and Sony has outsold the 360 in every market outside the US. Even in the US, Sony’s Playstation 3 has achieved first year sales that compare to Microsoft’s.

In its rush to create the appearance that it controlled the gaming market, Microsoft ended up rolling out hardware with significant heat issues that resulted in a billion dollar Red Ring of Death recall. Gamers also complain about the noise of its disc player and its penchant for scratching up media.

Nintendo Wii vs Sony PlayStation 3 vs Microsoft Xbox 360: Q2 2007
PlayStation 3 vs. Xbox 360 vs. Nintendo Wii

The consumer market is voting against Microsoft’s products everywhere it has a choice. The result is that stock market is also voting against Microsoft’s future, leaving its stock flat over the last half decade. The conservative Dow Jones Index has outpaced Microsoft’s stock by a factor of two; Apple has outpaced Microsoft’s valuation increase by a factor of 100 over the same period. (click to expand)


The Floodgates of Competition.
While the USSR struggled to maintain the appearance of parity with the West in terms of flashy technology, it left its citizens unsupported and unfed. Similarly, while Microsoft can throw out clever impersonations of the Apple iPod, Google search, Adobe Flash and PDF, MPEG video, the Apache web server, and other leading products, it’s sticking its core customer base with old software, high prices, and unsolved problems such as security concerns, malware, and instability.

Once the people of the former Soviet Union gained access to Western goods refined by a competitive marketplace, they increasingly sought more independence and more competition. Microsoft still has yet to suffer the full brunt of competitive efforts currently tearing down its walls.

For example, Apple’s Mac desktops are competing against Windows hegemony and challenging the idea that homogeneous desktop solidarity is the only way to deliver software to the people. As Apple pioneers successful independence from Windows, other competitors with less marketing clout will also be able to make inroads to compete against Windows.

Once the competitive barrier cracks, alternative desktops and appliances running Linux or BSD will rapidly eat into the volume of Microsoft’s Windows PC empire, offering far lower prices for basic computers that browse the web and email. That will in turn destroy the market for Office for Windows, replacing it with a common office document format that can be read by any vendor’s software, just as the web and emails can be accessed by any browser and mail client.

Like the old Soviet hard line, Microsoft will initially respond with tanks and more barbed wire to contain its losses, as it did when attempting to stifle development of the XO laptop for children in developing countries, or in threatening open source developers with patent lawsuits, or its attempts to pad standards committees with paid votes to declare its ambiguous and interoperability-resistant OOXML Office format as the lingua franca of business for the next decade.

At some point however, Microsoft will be forced to face the reality that it can’t contain its citizens behind its walls forever, and that resistance to free and open markets is futile. The process will be painful for Microsoft’s users, who will face coping with a rapid upgrade of technology. For independent spectators, watching Microsoft’s hard liners fall will be a mixture of long awaited celebration and a new era of optimism in the future of free and open technology markets.

Microsoft's Unwinnable War on Linux and Open Source

Microsoft’s Unwinnable War on Linux and Open Source

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  • http://www.fipscamp.com Michael Vasovski

    An excellent article that ‘just makes sense’, kinda like my guy, Ron Paul!

    I really enjoyed the insight. It doesn’t take a lot of foresight to know that this future is screaming, like a freight train, toward the Voles. *I’m also an Inq reader, as I’m sure you can tell.

    Painful as it may be, there’s a beauty in watching the market evolve into its ever-different forms. Maybe jobs will be lost. But that talent will find new homes, in whoever comes along to replace their former boss. Who knows? They may even become bosses themselves. And that’s the amazing thing about. You make your own choices. No one decides for you.

    Keep up the good work.

  • Rich

    I think attacking Microsoft for not being open is a very dangerous game. Let’s look at Apple:

    Software: OS X comes bundled with as many apps as Microsoft Windows. Apparently bundling Windows Media Player is monopolistic but bundling iTunes is not. The same goes for Internet Explorer/Safari. If Apple enjoyed 90%+ desktop OS market share then it would have been hit with just as much anti-monopoly legal action as Microsoft.

    Hardware: PCs have fallen in price because of the competition between hardware vendors. It’s one of the main reasons why Apple moved to Intel. Yet Apple still refuses to license OS X to other hardware manufacturers.

    iPod: A recent iPod firmware update broke the iPod’s compatibility with the Xbox 360. There is also the issue of Apple not licensing its DRM technology to 3rd parties, thus keeping users locked into the iTunes/iPod combination. Games and third party software are also tightly restricted.

    iPhone: The iPhone is locked down to one carrier and Apple keep breaking people’s attempts to unlock it. There’s currently no SDK and the up-coming SDK is likely to be very restricted.

    Yet despite this lack of openness, I still own a lot of Apple hardware. Going down the open route is not always the best solution. Being closed sometimes gives a better user experience.

    You’re spot on about Internet Explorer though. It was shelfware until Firefox gave it some real competition. A lack of competition leads to a lack of innovation.

    However, your tirade against the Xbox 360 is misplaced. Let’s remember that the PS2 constantly outsold the Xbox 6:1 through-out its lifetime. Now the PS3 is struggling to match the Xbox 360’s figures. That’s a pretty remarkable turn-around that no-one would have predicted three years ago. In terms of games sold (a good indication of whether a console is actually be used), the Xbox 360 is way ahead of the Wii and PS3. 12 million people have bought an Xbox 360 and it’s obvious that Xbox 360 users keep coming back for more.

  • John Muir

    A great article, tying together many threads into a cohesive and surprisingly apt narrative. I was expecting a section on the enterprise being Microsoft’s core, where literally millions of sales are chosen right over their users heads by a handful of people: just like in the Soviet Union. It’s that nut which will be the toughest to crack, and very likely Microsoft’s last stand in the years ahead.

    @ Rich

    You must be new here. Have a read at the articles on “iPod / iTunes vendor lock” and the like. You might even want to read Steve Jobs’ own essay on why Apple doesn’t “share” its DRM, and is in fact openly campaigning to kill it when the record labels agree!

  • Steve Nagel

    Rich, I agree with John. Take a look at the articles Daniel has developed over the last couple years. You might be in for a shock.

  • Les

    IMO free markets, like democracy, are the least bad of all the current bad alternatives. They’re by no means perfect and will in most cases lead to a short term focus and a lot of waste.

    As for open source, it’s pretty damn close to communist (or socialist) ideals. Rather more than the perverted party dictatorship in the Soviet Union ever was.

  • Jetpack


    “Apparently bundling Windows Media Player is monopolistic but bundling iTunes is not. The same goes for Internet Explorer/Safari. If Apple enjoyed 90%+ desktop OS market share then it would have been hit with just as much anti-monopoly legal action as Microsoft.”

    You’ve made the point and counter point in the same paragraph. If Apple had 90% market share they’d be hit with anti-trust suits just like MS. Since they don’t there’s no argument here.

    “Hardware: PCs have fallen in price because of the competition between hardware vendors. It’s one of the main reasons why Apple moved to Intel. Yet Apple still refuses to license OS X to other hardware manufacturers.”

    Actually Apple moved to Intel because Intel outpaced PPC advancements. Prior to the switch, PPC was ahead of Intel processors for a long time. Prior to PPC, Motorola was kicking Intel’s ass in processors. Then Apple, IBM, and Motorola developed PPC which kicked Intel’s ass for another decade, until Apple’s partners decided it wasn’t worth developing PPC at the same pace that Intel began advancing.

    “iPod: A recent iPod firmware update broke the iPod’s compatibility with the Xbox 360.”

    Don’t know anything about that. I’d expect Microsoft to want to break compatibility more than Apple though (buy our Zunes!!!). :-)

    “There is also the issue of Apple not licensing its DRM technology to 3rd parties, thus keeping users locked into the iTunes/iPod combination. Games and third party software are also tightly restricted.”

    Read about the DRM issue. From what I remember it’s the labels that don’t want to license the DRM, not Apple (Apple doesn’t even want to have DRM). I think Daniel covered everything you’re saying (up to the iPhone) in other articles.

    The X-Box is an interesting issue. It has been losing money until the 360 came out, at which point I believe they made a small profit during one quarter (compared to what they lost on the whole ordeal over the years). It’s probably the first MS product in the last decade (other than Windows/Office) to be profitable at all.

  • Jetpack

    Oh and I forgot one more thing:

    “Yet Apple still refuses to license OS X to other hardware manufacturers”

    There’s no reason at all for Apple to do this. It would literally kill the company. The business model of licensing an OS to a hardware company is dying. Operating Systems are going to become a commodity in the future (if it hasn’t already happened). Linux is free (and low end PC makers are taking advantage of that, look up the $200 gOS computer), OS X costs a negligible amount compared to Windows.

    There are also other reasons why Apple shouldn’t license OS X to other companies. For instance, one of the main selling points of Macs is OS X and the tight integration between the OS and the hardware. I don’t know if you’ve noticed, but one of the biggest issues in Vista has been the huge amount of hardware incompatibility problems. Drivers that don’t work or aren’t compatible. That’s one reason people are staying with XP.

    Finally, not licensing OS X doesn’t mean Apple isn’t open. Darwin — the core of OS X that’s based on NeXT/BSD is open source.

  • Robb

    Good points, except the attack on the Xbox 360 seems to be used with only half the story. Sony has been struggling to sell the PS3 everywhere (the 360 even outsold the PS3 for one month in Japan this year) and had to prop us sales by re-issuing the PS2 and to slash prices to compete with the Wii.

    It’s not terribly different from the story with the Zune, but we have no problem saying that’s astroturfing.

  • tmay

    You are no Paul Krugman.

    The problem with free markets, if there are any, is that they are prone to instability, and even minimally regulated markets can and do bust and require a and government bailout (witness the housing crisis).

    Microsoft grew fat on a monopolistic market, and have been minimally punished for it. But in protecting that market, they have let a more agile adversary develop and exploit the more profitable niches.

    I would argue that Apple’s success is directly tied to DRM. Were it not for DRM, Apple would not have been in a position to exploit their particular instance of an mp3 player. They did, putting together all of the pieces including itunes and the itunes store.

    MP3 players are now in a mature phase of the market, and Apple is exploiting additional functionality in the iPhone. This time around though, I see that the telecoms have responded much earlier, and Apple will undoubtedly see less success than in the MP3 market.

    I would as well assume that Apple will ultimately have a lesser impact on the video download market as the barrier to entry is fairly minimal and individual studios still have control of the content. They now see Apple as a threat, and will make plans accordingly.

    I recall that Dell was a behemoth based on their instance of a business model and a supply chain. Recently, that business model has become the standard for all of the players, and Dell lost considerable market share. Now Dell has added retail to its business model, hoping to revive its fortunes with innovation, and their own exploitation of the game market (Alienware).

    Apple’s business model is as well being copied, and innovation and industrial design are now standard practices in consumer products. Apple’s continued innovation is no quarantee of future success, but lack thereof will surely lead to its decline, and all its competitors are aware of this.

    One should note that Vladimir Putin was reelected, probably not transparently, with votes of a people that were grossly abused by Capitalism’s worst in the 90’s. I would argue that these same people are quite a bit happier to have a little authoritarianism on top of their little “c” capitalism. Distribution of newly found oil wealth probably doesn’t hurt.

  • Rich

    @most people :)
    I read the articles on *why* Apple have gone down a closed path and I don’t disagree with any of the conclusions. I’m just pointing out that Apple are just as closed as Microsoft, if not more-so. It seems silly to berate one company for being closed whilst praising/excusing another company for the same thing.

    Don’t you agree?

  • gus2000

    Great article, Dan. Remember when Regan said “Mr. Gates, tear down that wall!” Or something like that.

    It looks like this article has attracted the kooks (“happier to have a little authoritarianism”??!?) so the next article should be “Why Apple ISN’T A Communist Bloc Company”.

  • tmay


    It’s “Reagan” not “Regan” though there was a Donald “Regan” who was chosen by “Reagan” for his Treasury Secretary.

    Don’t think that I merit “kook” status for basically stating the current case in Russia. You might want to read a bit on current events. Maybe a bit on history as well.

    I would make the same argument that the people of the United States are quite willing to put up with a bit of an authoritarian goverment (you know, the war on terra’, blacklisting, witch hunts) in the (mistaken) believe that it will enhance their security. Kind of a common theme throughout world history, so nothing new there.

    Funny how the eminent Sovietologist Condileesa Rice missed predicting that whole Berlin Wall thing. But, hey, look at her track record since!

    As for Apple, they have and should continue to be agile, much the press will be unforgiving of failure.

  • tmay


    BTW, I forgot to mention that Putin leads the United Russia Party, not the Communist Party. His had something in the neighborhood of 65% of the vote versus 11% for the Communist Party.

    from MSNBC:

    “In Berlin, government spokesman Thomas Steg said Germany considered Russia’s vote neither fair nor free, adding that the country could not be considered a democracy.

    The Bush administration and Britain’s Foreign Office urged Russian authorities to probe alleged voting irregularities.

    “In the run-up to election day, we expressed our concern regarding the use of state administrative resources in support of United Russia, the bias of the state-owned or -influenced media in favor of United Russia, intimidation of political opposition, and the lack of equal opportunity encountered by opposition candidates and parties,” said Gordon Johndroe, spokesman for the U.S. National Security Council.”

    Definition of Irony: see above.

  • John Muir

    @ tmay

    On your Putin point: I strongly recommend the recent documentary “The Trap” by Adam Curtis which covers the parallels in rushed free market creation in Russia in the 90’s and Iraq since 2003, and might lend an alternate light on your view that Russians just like an iron fist. Alas, since it was made for the (tax subsidised) BBC it may well be nigh on impossible for you to find it!

    I do love the BBC really: for their documentaries and news. But whenever they touch technology, they seem to have the most appalling instincts. PERL on Rails??? Yes, that’s one of theirs. As is tje Windows Media DRM powered “iPlayer” experiment.

    @ Rich (again)

    Right, let’s just have a quick run through the DRM differences between MS and Apple…

    MS: Windows Genuine Advantage “anti-piracy” (yet ineffective) spyware / nagware which went down at the server side recently … inconveniencing millions.

    Apple: OS X doesn’t even have a serial number when you install it. (Though OS X Server does, but still no WGA and just check out how much cheaper it is per client.)

    MS: exploding Windows Media DRM, in TWO ENTIRELY INCOMPATIBLE versions to differentiate the Zune, thrown on your own content when you “squirt” it at other Zune users whether you like it or not … pretty galling

    Apple: one single DRM system, no exploding content, absent from the VAST majority of most iTunes users files, and the CEO is openly critical of DRM’s future prospects

    There’s a meme out there that the iPod and iTunes only exist to “tie” people into Apple’s FairPlay DRM system, but Daniel’s already taken that one out to the trash numerous times. Apple have DRM now because of the record major’s insistence and the need to market content which IS NOT Windows Media restricted. CD’s make the overwhelming majority of everyone’s libraries and still top the sales, but Apple essentially made the safe choice in countering a problem which was long in the making and could have gone the other way.

    Hell, if I were a greedy Label CEO I’d have met with the other three chiefs of the cartel and made DRM-free CD’s history by now! It was just that Windows Media DRM future Apple was reacting against. Phase two comes when more labels join in with EMI and go DRM free, which it’s increasingly clear is the inevitable future.

    That so many go on about Apple being closed, as a way to justify Microsoft’s many dodgy steps, is one of the principal themes of RoughlyDrafted. Don’t mistake your choice between Dell / HP and homebrew labels on your Vista box as true freedom!

  • http://www.roughlydrafted.com danieleran


    You are right that “OS X comes bundled with as many apps as Microsoft Windows.” The reason why “bundling Windows Media Player is monopolistic but bundling iTunes is not. The same goes for Internet Explorer/Safari” is not just that Microsoft owns +90% of the desktop but primarily because Microsoft has exclusive licensing deals with every PC hardware maker that prevent any sort of competition within the PC market.

    The market in “PC market” suggests there is a market, not a monopoly. There is no similar “market” among Apple’s Mac hardware, among BMWs, among the Sony Walkman, or within any other brand of something. Sony had overwhelming market share in the 80s, but nobody said it had a monopoly on cassette players. Anyone could choose a Panasonic cassette tape player or one of any other of lots of brands that were easy to buy. Sony could add Bass Boost or any other feature to its Walkman with impunity, even if it had 99% market share, because it had no control over competition.

    Microsoft does exert control over any competitors. If it sold MS PCs, and owned a 99% share of the market because they were the desirable brand everyone wanted, but Dell and HP and Apple could compete against them, there would not really be a monopoly. But Microsoft set up a collusion of agreements that prevent competitive markets from developing. Windows isn’t the hot brand to buy, its a default non-choice that prevents further choice and competition in the market.

    There is no other reason why Linux isn’t being sold on any significant number of PCs. If Dell sells and advertises Linux PCs outside of the very narrow “hobbyist” guidelines Microsoft has decreed, it has to pay millions more to license Windows on its other PCs, which would eat away its razor thin profit margins and prevent it from competing against HP. The high retail price of Windows, which as only ever gone up, from $99 to now ~$400 for Ultimate, is exactly what could be expected of a market with no competition.

    I didn’t really address examples of Microsoft not opening up or giving away its technology, but rather focused on being closed to outside ideas. Those two ideas are different. Microsoft, like the Soviets, was closed to certain outside ideas. Of course, both readily stole outside ideas, but the point I was making was that both decreed that open markets and free speech were the enemy of their core system, and were then faced with the problem of being unable to benefit from the kinds of freedoms that promoted new ideas and innovation in the West.

    The West did not give away all of its technology, nor does Apple, nor does the GPL. In fact, unless you violate its license, the GPL does not allow you to do a variety of things. I’m not arguing that Microsoft give up its proprietary tech, I’m saying it will fall for being resistant to change and due to being soft from a lack of competition.

    As for the Xbox, remember that Sony’s PS2 flopped its first year, not due to disinterest, but because Sony had supply problems. The Xbox wasn’t around then, and didn’t come out until the PS2 had recovered. The PS2 continued to outsell the Xbox and even outsold the 360 all of its first year (2005-2006), making more money all the while. The PS3 has sold better out of the gate than the PS2 did in its first year (PS2: 6m in 1 year; PS3 6m in ~5 months).

    Apple has closed tech just like every other company; however, it has–particularly since the NeXT infusion–embraced OSS development in both directions. Safari is open and contributing greatly toward making KHTML the best mobile browser (which is why Nokia uses it too); Calendar Server is a big new and valuable project Apple gave away as an Apache project (that is huge); iTunes/QuickTime migrated away from proprietary codecs like Sorensen to align behind openly interoperable MPEG standards; I could keep going.

    Microsoft calls Open Source a cancer and communist, but only when it is competing against the company. Microsoft happily took its network code for NT from BSD. It is now dialing up the rhetoric against FOSS into an argument that is silly and hypocritical. For the record, Bill Gates made the same turn around on software patents, proclaiming in 1991 that they prevented progress, while now that he has patents, saying that Linux is infringing and threatening to sue developers who don’t pay extortion money for patented concepts. As Richard Stallman noted:


    For the record, I wasn’t calling Microsoft communist (because it really isn’t of course) but rather comparing it with the Soviets, because it does mimic the same type of closed, resistant system based on misinformation. It can’t deliver, and a bit of a crack opening things up, and the whole system will fall apart. Microsoft’s 2000s have been the Soviet’s 80s, so the 2010s should look like the USSR’s 90s.

    There is really nothing “communist” about cooperative efforts within an open economy. Shared ideas are the foundation of technical and industrial progress of the West, and the original intended goal of copyright: ie, granting a limited period of exclusive use IN ORDER TO get investors to publicly share and document their inventions. Intellectual Property has since turned into a river with too many robber barrons to support effective trade and competition.

    The idea of communal sharing is also a part of Christianity and other Western ideas, it’s just that forcing it to function as a replacement to an open economy as part of a political experiment has been repeatedly proven to be unworkable.

  • gothgod

    Oh, you are so far off the mark this time! I like these articles and I have read most of them, sometimes they are intelligent, sometimes fun and sometimes both. This time however you simply don’t know what you’re talking about. The parts about computers are fine I guess, but the connections to politics are definitely not.

    First there is no free market. There never has been, never will be. Stop talking about it. If it were, corporations like microsoft could never exist in the first place (and its plain that you know this very well). The markets that exists are closed, either in regard of information (the consumers can’t know anything to make an informed choice) or it is simply owned by a few companies dividing the market among itself. Sometimes the market is given to certain companies by law (as in the soviet union), there are several options to a market but not any free ones.

    Secondly there is no market that could be “insuring the health of the populace, educating children, transporting people and goods effectively, and looking after the welfare of the weak and less fortunate”. If you have one single example of this, and not resorting to american indoctrination, I would really want to know about it. There have been several attempts of this, that all has failed miserably. Maintenance, in all its forms, simply isn’t handled well by the market, and thus must be stately funded. Look at the healthcare systems and maintenance of roads in the worlds as two good examples. (I know few people agree with me here, but it would take too much of both your and my time to try to explain and get into details, but this stuff is not hard to find out about if you want to)
    Now I dont say that the healthcare system of the USSR was a shiny example, just that the free market won’t solve all your problems (well, perhaps it would. If it existed.)

    Thirdly what exactly do you mean by “battles of little consequence in Nicaragua”? It spread a lot of serious FUD in a lot of US citizens (in the real sense of the words, and not Fear, Uncertainty and Doubt regarding some consumer product as usually used by this site). Without these constant “wars of little consequence” that the US are committing, do you think that the US would look the same today? Do you think that if US citizens were not afraid of everything else they would allow their country to start wars? Would they allow attacks on Irak and the upcoming one on Iran? And a lot of innocent people were killed just because reagan liked killing (or why was it that the war was started)? Is that of no consequence?

    Number four. “What really destroyed the USSR”… Are you serious with this? I feel so far away from you right now that I don’t know what to say. But let me give you a hint. They did not feel like “oh, their companies are better than ours. Let’s just abandon hope!” It was a power struggle were the people started a revolution against its oppressive, violent and totalitarian government. Totalitarians usually don’t give up if they don’t have to.

    Five. “Once the people of the former Soviet Union gained access to Western goods refined by a competitive marketplace, they increasingly sought more independence and more competition” -I just hope you don’t mean that seriously.

    Conclusion. Stick to the computers (for now at least), that’s something you know a great deal about and that you write well about. If you want to get into politics… Take a look at onebigtorrent.org they have a lot of good stuff, mostly things I disagree on but a lot of good stuff.

  • nat

    gothgod said:
    “[Daniel] you simply don’t know what you’re talking about.”
    Perhaps you simply don’t know what he’s talking about. Why make personal attacks like that against people you don’t even know?

    gothgod said:
    “First there is no free market. There never has been, never will be. Stop talking about it.”
    So, all iPods are being bought by people with guns to their heads? Those people driving those…cars…are doing so because someone (or worse, something) is forcing them to? The reason a company like Microsoft exists is because of an initial lack of competition (the stagnating Apple of the past) and then their use of anti-competitive OEM licensing deals with PC vendors, and then their current assault on open standards/creation of MS “standards” that tie users to Windows, which holds a monopolistic position. There IS a free market.

    gothgod said:
    “Thirdly what exactly do you mean by “battles of little consequence in Nicaragua”? It spread a lot of serious FUD in a lot of US citizens (in the real sense of the words, and not Fear, Uncertainty and Doubt regarding some consumer product as usually used by this site). Without these constant “wars of little consequence” that the US are committing, do you think that the US would look the same today? Do you think that if US citizens were not afraid of everything else they would allow their country to start wars? Would they allow attacks on Irak and the upcoming one on Iran? And a lot of innocent people were killed just because reagan liked killing (or why was it that the war was started)? Is that of no consequence?”
    You’re taking this too emotionally. What Daniel meant was that these wars had no affect on the downfall of the USSR. Reagan (and his fans) loved the idea that he brought down the Iron Curtain, but it was those people oppressed there and the anti-open USSR that ended cut the Curtain.

    gothgod said:
    “Number four. “What really destroyed the USSR”… Are you serious with this? I feel so far away from you right now that I don’t know what to say. But let me give you a hint. They did not feel like “oh, their companies are better than ours. Let’s just abandon hope!” It was a power struggle were the people started a revolution against its oppressive, violent and totalitarian government. Totalitarians usually don’t give up if they don’t have to.”
    What was the point of your third question? You answered it yourself in your fourth?

    You felt “so far away” from Daniel? I’m guessing the feeling’s mutual.

  • John Muir

    @ gothgod

    While reading your post, first I thought you were an insulted communist, then a libertarian, then I just wondered what the hell you were on about. But that’s politics!

    1. What effect do you think the internet is having? It is HUGE. Compare the publically visible wobbles MS is suffering while trying to hold on to its 1980’s monopoly while under assault from *free speech* instead of the easily bought tech media of the trade mags of old. And guess what: we ain’t seen nothing yet.

    2. Do many families starve on the street where you live? I know it’s a bit more harsh in America, but in Europe we have this thing called social democracy which although some of us aren’t completely enamoured with it (myself included) does a fairly good job of balancing the greater good with personal freedom. It’s not communism and it’s not the hypothetical pristine cut throat capitalism you may well be on about. And in actual fact it’s variations on this
    theme which exist in every democracy, everywhere.

    3. Daniel was making sure not to stumble into the conservative cliche that Reagan personally defeated the USSR. Contra and Afghanistan were certainly not what did for Moscow, and I think you agree there.

    4. A coup d’état killed the USSR. Remember the little putsch when the generals held Gorbachev hostage in his summer home while Boris Yeltsin seized the opening their ineptitude had created in Moscow? It was certainly a chaotic moment but “revolution”. The events in Poland, Czechoslovakia and Berlin came a lot closer to that but only because of the wobble Daniel wrote about, in large part thanks to Gorbachev being too optimistic about just what reform could do while the Soviet Union still existed.

    5. Back when Yeltsin’s administration hadn’t privatised everything in site to his drinking buddies and proven themselves ludicrously incompetent *quite yet*, there certainly was a lot of optimism and astonishment with the new wealth exposed in the west. This was a lasting effect outside of Yeltsin’s Russia: observe Havel’s Czech Republic and the fact that so much of the Warsaw Pact is now in the very bourgeois European Union, enthusiastic, and out competing western Europe in many ways. Russia’s particular problems after 1991 are not a valid argument against the end of communism, just look further west.

    Conclusion: maybe we should all stick to tech writing!

  • UrbanBard

    Too much, Daniel. That is too much to prove. It would take me a dozen pages to unwind all the contentions. Even so, I found myself nodding along until about a third way through the article. Then, you started repeating the arguments of Leftist academics and wordsmiths designed to deny Conservatives credit for the fall of the Soviet Union.

    Gorbachev disagrees with you, by the way. He gives a great deal of credit to President Reagan. But, it was also true that the internal contradictions of the Soviet Union caught up with it. The people had lost faith in the promised paradise to come and had stopped working. The Joke that went around was, “We pretend to work and the government pretends to pay us.” Everyone got their real money from stealing and selling on the black market. The Soviet Union was “eating the Seed Corn.”

    The other part you nailed. After President Carter’s “Stagflation,” the business market changed. Both business and labor were forced to be competitive. The Soviets could not compete.

    The worst part of your article, Daniel, was that you had no moral of the story. So, let me give you one. Markets are not perfect; they are often chaotic. They are only free when there is competition. There can be temporary dislocations, such as monopolies, which if the company holding the monopoly exacts monopoly rents will set forces into motion which will undercut the monopoly.

    The principle here is that if you do not act in accord with reality; reality will eventually bite you on the ass.

    Microsoft did not set up the conditions which gave it a monopoly. The IBM clone manufacturers found MS/Dos, and later Windows, an advantage when competing against other manufacturers. Then, Microsoft tricked everyone into supporting OS/2 before sabotaging it. Microsoft Office became the only business office package that would run reliably on Windows.

    Ever since that coup, Microsoft has been fighting a holding action. It’s internal contradictions have been catching up with it. The development of Longhorn and Vista was an embarrassment.

    Does Microsoft have a sufficient foundation to improve Vista? I don’t think so. I suspect that hardware developments will catch Microsoft off guard. I believe that Microsoft has become sclerotic. It has not the flexibility to adapt to changing conditions.

    Microsoft is backing into its niche market: the Enterprise market. That is a huge market, but a finite one. If Apple can grow the consumer market world wide, then the business market will, eventually, be forced to follow along. Microsoft will be forced into an ever smaller niche.

  • John E

    well, it’s fun to pose soviet communism as a metaphor for Microsoft. their are some good insights there to riff off of. but honestly, world/economic history of the Cold War Era was a lot more complicated than that, and taking the metaphor dead seriously is going way too far with it.

    instead i’d boil it all down to:

    Microsoft business strategy is predatory – to destroy viable competition and maintain monopoly any time and any way it can.

    Microsoft business goal is control – to dominate users via DRM and OS controls, and maximize what they must pay for everything they do.

    whereas i would like to think:

    Apple business strategy is seduction – to capture market share via product style and quality.

    Apple business goal is empowerment – to enable users to use Apple products as many ways as possible and as a result buy more of them.

    of course everyone notes the fundamental difference in their business plans of making money from selling software versus making money from selling hardware.

    and being #2 Apple does have to say “we try harder.”

  • kruiningen

    Thanks for the interesting article, some interesting insights into the mindset of the old guard in Redmond.

    @gothgod, I think Daniel can relate his area of speciality (technology) to another (politics) in order to shed some light on the former. It is called analogy. As anyone that does any significant amount of reading can tell you, “analogies only go so far.”

    @UrbanBard, JohnE
    same thing, it’s an analogy (not a metaphor). As such the similarities are more pertinent to discussion and only insofar as they shed light on the subject; not an exhaustive handling of the mirror, because there will always be areas that grow a little thin around the edges, no matter how good the writer’s imagination and readers will always disagree. Therefore there is much less to prove. I got the point that “markets are only free when there is competition” straightaway from the memorable article and was not helped, but rather confused, by both of your “helpful” explanations. Perhaps it is with good reason that I remain unconvinced from the article about the exact causes of the downfall of the Soviet Union. Sure it doesn’t tell the whole human story, but it isn’t incompatible with it. Once people in the USSR gained access to goods, they could not fail to see the deception and bankruptcy (both economic and ideological) perpetrated by their leaders. I can see the analogy to MS and PC users. Point made. Of course political realities are a little more complex — what’s your point? That if Daniel had added “of course on the Soviet side it’s a little more complex than that” that would have redeemed the whole article?

    conclusion for all: a little less deconstruction and reader-centric reading; watch the desire to censure the creative expression of a writer on his own blog for using literary devices to shed light on the technology industry. and don’t be too quick to jump on every phrase and weigh every nuance — unless they come from MS shills who show no imagination with their talking point propaganda ;).

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  • lightstab

    I think those of you who are steadily picking apart Daniel’s great thesis are missing the point. You’re taking something that’s supposed to be broad and making it specific and in doing so, you’re missing the big picture.

    The analogy to the Soviet Union may not be perfect, but it has loads of similarities that strike at the heart of what’s wrong at Microsoft.

    For example, in much the same way that Microsoft stole Windows from Apple, the Soviet Union stole nuclear weapons technology from the United States and rocket technology from Germany. As a result, they became the world leader in space exploration and a threatening superpower. But like Microsoft, they stagnated, steadily losing the space race to the United States.

    As a result, the Soviet Union was eventually copying American innovations instead of innovating. So why did this happen? Why did their technology stagnate?

    For a very simple reason: The Soviet Union vied for world domination and power instead of satisfying their native population. In contrast, Western private enterprise vied for useful technology and often incorporated many of the technologies that the United States was using to contain communism at every turn. Technology like satellites, which was used for dual purposes such as astronomy, meteorology, map-making and navigation. Nuclear power, which was used for energy. The Arpanet that would become the internet.

    As a result, the people of the Soviet Union or the ones that could break through the Soviet propaganda by tuning into freedom radio signal blasting out of Western Europe, they longed for what Westerners had, until their dissatisfaction was enough to erode the Soviet System from the inside.

    So in this sense, Microsoft has stagnated much like the Soviet Union stagnated. Why? Because, like the Soviet Union, Microsoft’s innovations evolved from its need to monetize the PC market for its own ends, to grab POWER, rather from the kind of true innovation that springs forth from satisfying consumer need.

  • Stravaign

    Definitely a Zune award to you this time Daniel.

    I hardly know where to begin to respond to this inanity. But…

    If you stopped thinking of ‘Capitalism’ as the ‘Free Market’ you might start to get your analysis right. As someone else pointed out, there is no such thing as a ‘Free Market’ economy. I really don’t have to explain that.

    In your article you make the most bizarre analogy between products such as Microsoft Windows and the Mac OS and other products and two so called different ideological concepts i.e.. the ‘Free Market’ (Capitalism) and so called Soviet style ‘Communism’ i.e.. (State Capitalism).

    I have enjoyed your tech writing for over a year now but this article is so fundamentally misinformed that I couldn’t believe the depth of your ignorance, and some of the contributors to the comments page.

    This invisible hand of Capitalism, the ‘Free Market’ that you on the one hand champion and then simplistically re-define “a collective of individual human actions that involve conscience. The market is both the world’s democracy and its commune.” is the system that has managed a world in which absolute poverty has grown, not declined, in the last 25 years. 1.3 billion people, more than a fifth of the human race, live in absolute poverty, lacking access to basic necessities such as food and clean drinking water. One-third of the world’s children are undernourished, and 12.2 million of them die before the age of five every year, 95 percent of them from poverty-related illnesses.

    Over 400 armed conflicts have occurred since the end of the Second World War. These have caused the deaths of over 20 million people directly and an estimated one and a half million indirectly. Total world military spending stands at around $750 billion a year – equivalent to the annual incomes of the poorest half of the world’s people. And I could go on and on. (I can refer you to the source of this info if you want) but I really shouldn’t need to.

    You extol the idea of competition as a virtue. The idea of competition is drummed into us at school. From sports days to quizzes to exams, it’s a matter of competing against others. Not just a question of doing your best but of doing better than other pupils. It’s all good for us, we’re told, it gives us an incentive to improve and it fits us for the wider world of work.

    But most of the time we don’t compete with other people; instead, we co-operate with them, working together to achieve our aims. So people may take it in turns to drive on a long car journey, may combine their efforts to tidy up a garden, may share out various household chores etc. Paid employment too would be impossible without co-operating with our work colleagues.

    Simply, competition is the carrot that the so called Free Market system encourages, so you and others who buy into it can produce more and make bigger profits.

    If you don’t, you get the Stick. And please, for the time being stick to the Tech.

  • Will

    Rich –

    ‘Yet despite this lack of openness, I still own a lot of Apple hardware. Going down the open route is not always the best solution. Being closed sometimes gives a better user experience.’

    Splendid contradiction and I agree heartily!

  • http://ephilei.blogspot.com Ephilei

    I agree that the Soviet-Microsoft is appropriate, even if simplified a bit. However, let Mac fans realize that Apple would do no better. Call it Evil or call it Smart, Apple loves the closed system.

  • UrbanBard

    kruiningen said:
    “@UrbanBard, JohnE
    As such the similarities are more pertinent to discussion and only insofar as they shed light on the subject; ”

    Yes, that was my problem, too. An analogy or a metaphor only works when you compare the known and settled to the unknown. I agreed with Daniel with much of this.

    I didn’t think it was an apt metaphor, though.

    Daniel thinks that his Liberal politics are proved and settled, when bringing them up merely confuses an issue. If he had been less partisan, so would I.

    ” I got the point that “markets are only free when there is competition” straightaway from the memorable article and was not helped, but rather confused, by both of your “helpful” explanations. ”

    The reason I brought the competition issue up is that Daniel implied that “Free Markets” should be perfect. They are not and don’t have to be. Eventually, corrections set in.

    The only way to maintain a monopoly is to NOT exact monopoly rents. Alcoa Aluminum kept over 90% of the market from the 1890’s to World War II when the US government wanted a second source and spent $100 million to set up Reynolds Aluminum. Alcoa kept its market share by dropping aluminum prices as soon as technical improvements warranted it.

    Microsoft got its high market share by underhanded methods, but there were strong motives among Microsoft’s Enterprise customers to maintain that monopoly. The reasons for Microsoft’s success are slowly crumbling, but Apple is not engaged in a frontal attack.

    “Perhaps it is with good reason that I remain unconvinced from the article about the exact causes of the downfall of the Soviet Union. ”

    Success has a thousand fathers; failure is an orphan. It’s hard to define the exact causes of the Soviet Union’s demise, because both internal and external forces were at work. The breakup took the CIA by surprise, but I read about the coming break up several years before from Conservative sources. But, I took them with a grain of salt.

    “Once people in the USSR gained access to goods, they could not fail to see the deception and bankruptcy (both economic and ideological) perpetrated by their leaders. ”

    I see this more in terms of information flow, rather than goods. The Soviets in the early ’80’s produced a propaganda film showing the poverty of the poor, especially the Blacks, in America.

    The problem was that the Russian people saw that even the poor in America had relatively good clothes, uncrowded living conditions, refrigerators, cars and that the poor were fat.

    Once doubt was introduced, it was hard to keep information out.

    Of course similarly, information is flowing to PC buyers about how good Apple products are. This is overcoming decades of FUD.

    ” a little less deconstruction and reader-centric reading; watch the desire to censure the creative expression of a writer on his own blog for using literary devices to shed light on the technology industry.”

    I agreed where I could. I cast doubt where I could not. I tried to deliver clarity where Daniel muddled things. The point is that these threads are designed to provoke discussion.

    Perhaps, I was too sparing in my praise. Daniel, this was an ambitious article. There were parts that I could completely agree with.

  • UrbanBard

    lightstab, I can agree with most of what you said.

    My point was that the Soviet Union failed because it was false. Microsoft will fail for the same reason. That is a much easier metaphor to prove than Daniel’s.

    The problem is that Daniel was caught in a bind. He had to confuse the issue. The ideologies which led to the Soviet Union’s demise are also in Daniel’s Liberalism.

  • harrywolf

    @ GOTHGOD:

    sorry, you are quite wrong in your odd Marxist-style revolutionaries-bring-down-Marxist-USSR rap. (?)

    The USSR fell because the people of East Germany were artificially trapped by the Soviets, and they just had enough, as they saw their German countrymen in the West living well while they starved.
    Ethnicity proved stronger than politics, as usual.

    Once that wall had literally collapsed, then the rest of the satellite states saw no reason to prop up the Soviet any longer and old tribal and ethnic alliances came to the fore and Yugoslavia, Hungary, Poland, Czechoslovakia and all the rest said ‘Enough!’.
    The power of the EEC had a part to play, too.
    Russia should not be confused with the USSR – they are/were two distinct entities.

    The analogy that underpins Dan’s superb article (IMHO!) was not strained – its easy to see a connection between M$ and the USSR.
    There is no need to try to analyse that connection to the point of absurdity – if we did that with written works, then discussion and debate would disintegrate, and the fun would be lost!

    Its not a LITERAL thing – its an analogy, a metaphor. It is flexible in its very nature.

    To other points raised:

    Is Apple open source? – Well, no, but they are to a small extent, and that small extent has attracted a large number of Unix fans.
    M$ is NOT at all. There is a difference.

    Perhaps the point is that M$ is without doubt an illegal monopoly (proven in various courts around the world), whereas Apple is a small company that challenges M$ monopoly.

    If Apple and various market forces/other co.’s destroyed M$, it is possible that Apple could become an evil Empire too – but that is the free market doing its work – its a wave, it goes up and down.

    Is the market truly free? NO, of course not, but for the purposes of writing about it, we have to call it ‘free’. in the sense that it is free, but with all kinds of strange restrictions.
    Nothing exists in a vacuum, and even this article and the comments that follow have changed the universe in a small way.

    The point is that M$ is NOT innovating, it is protecting its turf – thats natural but not good, like an Ice Storm.

    The challenge to its turf will be successful while M$ continues to defend and stifle rather than attack and innovate.
    Its a FREE market, so they do have a choice of behaviour!

    DAN – if you continue to write such great stuff, you are going to have to list your sources, bibliography etc!
    Well done!

  • harrywolf

    @ URBAN BARD – smart comment – all good.

    Didnt see your posts as I am rushing to get to work (in the free market -aaaargh!)

    Some good writing and good insight here today.

    Most enjoyable!

    @ GOTHGOD – thanks for getting the row going – good post, very interesting perspective – got me thinking.

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  • Morris

    @John Muir
    “I was expecting a section on the enterprise being Microsoft’s core, where literally millions of sales are chosen right over their users heads by a handful of people: just like in the Soviet Union. It’s that nut which will be the toughest to crack, and very likely Microsoft’s last stand in the years ahead.”

    I think it’s more likely that these companies will wake up and realize that in buying in cheaper IT staff, they’ve ended up with a load of “me too” morons who only know Microsoft products, and have cost them far far more in the longer term. Enterprises have no commitment to propping up Microsoft, and will jump as soon as they can. (I love Google’s advert – “You don’t get a computer science degree to patch someone else’s software.”)

    @All the responses here from people who clearly only know Windows : You were part of the barbed wire fence – brush up on your plumbing, decorating, bricklaying skills, you’re gonna need ’em – it’s our turn* to feed again ;-)

    *The people who are in IT for the love of IT, not for the money.

  • UrbanBard

    Thanks for the kind words, Harrywolf.

    Free versus controlled in markets deals with how much governmental intrusion is involved. Monopolies are short-lived where the government does not interfere to protect them.

    Consider this, Microsoft has only had its monopoly since 1995. Most of that time, that was said to be a good thing. It was touted as a reason for why there would be no contender for Microsoft’s reign. “Microsoft is too big to be taken down. People want compatibility, too much,” it was said. Windows was “good enough.”

    Now, the Enterprise websites bemoan that Apple doesn’t care about them. Or they make defenses that the Mac operating system isn’t “good enough” for IT.

    We insiders can now ask, “how long will this travesty continue?” We can see Microsoft shoot itself in the foot with Vista. We can see potential contenders, such as Linux and Apple, warming up on the sidelines. We can ask why do IT personnel dislike Apple so much.

    Once these questions are being asked, the power and influence of a company or political entity is diminished.

    There is the Mind-share versus Market-share issue, too. Apple has traditionally had good Mind-share. You would see a disproportionate percentage of Macintosh computers in the movies. You would see the Mac’s desktop placed on the advertisements of competing products, such as Dells or HP’s.

    But, there were sufficient reasons to dissuade people from buying though. Buyers would say, “The Mac’s look pretty, but…” Apple has been overcoming that “but” with the move to Intel hardware and BootCamp. Apple’s prices are not much different from other name brands. The “Get a Mac” advertisements may rile the dedicated PC advocates, but the public thinks they are cute and funny.

    The borders of Microsoft’s “Evil Empire” are crumbling. Its commissars are in denial or desperate. But the “Berlin Wall” has not been smashed. The “captive peoples” are not in movement, yet.

  • John Muir

    @ Morris

    The Enterprise has had plenty of alternatives to Windows available over the years, but has still proven a tough old nut to crack. I fear what really drives that side of the industry is inertia: assumptions, good money after bad, and the old adage “no one ever got fired for choosing IBM”. (Replace with Microsoft where necessary!)

    As far as I see it, Windows in the home as well as in the enterprise and everywhere else has one thing going for it: it’s the Default. “You can’t go wrong with Windows.” Everyone else’s stuff will work with you because even on the rare occasion they’re not running it too, you’d better believe the onus of interoperability is on them! So what if viruses and malware plague your systems? That’s just computers for you. So what if no one at any level actually knows what’s going on or can ever fix anything? That’s why we were better off in the old days before all this newfangled flaky nonsense!


    Mac users overwhelmingly enjoy their computers and stick with the platform once they’ve arrived. So things are moving in the right direction there. But Apple only choose to compete in any real sense in certain zones of the battle, and Microsoft’s main rival is the chaotic field of Linux when it comes to where Apple doesn’t reach.

    Even Microsoft powered web servers are still doing well against the Linux and Apache alternative which should by right have buried them. Which returns me to my central point: the enterprise is not a free market. This is so whenever the people who choose to buy things are not the same as those who will have to use them.

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  • UrbanBard

    Hi John Muir,

    Where many people go wrong is that they obsess about the trends of the past. Microsoft’s domain, the Enterprise and Government markets, is huge and has been the major driver of computer sales, but that is about over. The Enterprise market is mostly a replacement market now. That it why it is necessary for Microsoft to obsessively maintain compatibility. This is true even when Vista demands much higher hardware requirements to run the full Areo features. Microsoft has taken legacy to ridiculous ends, because it can’t afford to lose any of its current customers. What this means is that it is all downhill for Microsoft.

    Apple has been active in pruning its computers that are older than five years. Oh! The old computers still work and are often useful, but they don’t get the latest OS. Apple, in five to six years, is likely to chop off all the 32 bit hardware which means the PowerPC processors and the Carbon API’s go away. We won’t notice this much because Steve Jobs has promised that Apple will be upgrading its OS at 12 to 18 month increments. So, during the next three to four “big Cat” OS’s, 64 bit Cocoa will become everything.

    Then, there will be the hardware issues. Computer-on-a-chip systems will become ubiquitous. Cheap. What this means that our peripherals will become specialized computers in themselves. They will multiply endlessly and wirelessly.

    You might be tempted to believe that this will make the operating system irrelevant, but I don’t think so. Interoperability will be the big thing. The system that delivers the best user experience will win the consumer market.

    Much of this will bypass the Enterprise market because their bases are covered now. They have invested huge amounts of money in maintaining past technologies. It is tempting for them to proceed down a path they have already taken. Microsoft, to lock them in, will do its best to encourage them to do so.

    Apple will grow the consumer market by making computers and electronic devises which non technical and anti-technological people will be tempted to buy. The IT personnel will laugh at such devises until they become aware that these have become the majority of computers sold. And that, while individually each devise cannot compete with the Enterprise’s model, together they are less expensive, more flexible and can do more.

    This will not strictly be Apple’s doing, either. Embedded Linux will take over many business applications. Much of Microsoft’s market share is in Cash registers and front ends for other computers or the web which don’t need a full operating system to function. As the old Microsoft based computers break, it will be cheaper to replace them with specialized Linux computers. Hence, Microsoft will be squeezed from top and bottom.

    Microsoft will cut itself off from innovation, because it will be catering to the most hidebound of computer buyers.

    Apple will continue to ignore the Enterprise market. It will not change its current system for a few extra sales. Not, when to gain those sales, it must throw away the future to grasp the past.

    Besides, small to medium sized businesses comprise 58% of the economy. And the majority of new employees added to the economy are by companies with less than 200 employees. Such companies are less likely to have oppressive IT departments. The user is more likely to have input to the computer they will use. Those users are likely to bring their personal computer or devise into work and demand to have it integrated into the business system.

    Since Apple does satisfy the users better and saves companies money, the word will get around. The small businesses will be more inclined to take advantage of Apple’s lower Total Cost of Ownership and higher user satisfaction and productivity.

    Many things are in the works to expand that advantage in ways we cannot imagine now. Why?Because they aren’t invented yet.

  • humann

    Well, I enjoyed MS being described as analogous to the CCCP. It was even fun reading in the comments how almost every political stripe was against this analogy, often for diametrically opposed reasons. It reminded me again why I love this country. I was actually at my Vietnamese mechanic’s shop the other night where he was watching Al-Jazeera and I brought up what a Russian ex-pat had recently asked me.

    “In Soviet Union, we all knew that Pravda was a pack of lies. Please, tovaritch,” he said, gesturing to the TV showing Fox News above the bar,”Tell me that you Americans know this too is a pack of lies.”

    “Maybe half do by now,” I replied. But it made me think. Much like Daniel’s excellent articles and even some of the commentary.

    And I still want to read some of UrbanBard’s poetry.

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  • John Muir

    @ UrbanBard

    I doubt the operating system will ever be irrelevant. Certainly, Apple have gambled everything against it. The iPhone is the supreme example we have right now of how much can be achieved so quickly by such a portable strategy. I expect we’ll see a lot more of this kind of move from them into the future.

    My qualm with Linux inheriting the earth, so to speak, is the chaotic and often self-detrimental way the open source community actually operates. The same fundamental principles of human nature which ensured Marxism’s continual failure are also to be observed in this movement. I have nothing against the concept of open source and free software, but I do have an eye for good design and value all the time I can spend outside of the command line highly enough to be a Mac user.

  • UrbanBard

    Hi John,

    The Free and Open Source Community are the hobbyists’ hobbyist. They are part of the past too; they are a remnant of the Homebrew Computer club.

    The question is whether the FOSC have a business model they can survive on. Since they are volunteers, they serve their own needs or idealized community needs, not the specific interests of customers. If they start trying to serve customer’s needs, then they become craftsmen, not hobbyists. Craftsmen want to be paid. The GPL license does not encourage that.

    Computers started off being hard to use and underpowered. It took enormous amounts of ingenuity to accomplish anything. Computers were very human labor intensive. Only a tiny percentage of humanity would bother with them. As software and hardware improved, the intent was to make computers easier to use and more machine intensive. Ways had to be found for computers to appeal to ever wider groups of people with different motivations.

    The people who do not use computers in the US now are probably anti-technological. Computing devices need to be made for them if the market is to expand. Is Microsoft ready to do that? I don’t think so. Is the FOSC? No.

    That is why I see Microsoft and Linux having niches that they will defend. I see Apple going after the 40 to 50 percent of humanity who do not like computers, maybe even hate them. I expect Apple to grow the market rather than try to steal from Microsoft or Linux. That is much easier than fighting on someone else’s turf.

    The point is that Apple has vision. It isn’t perfect, but is crafting devises to serve the consumer’s needs. It is moving its devises away from being technological so that more people can use them. I watched a one year old baby on YouTube using an iPhone. That’s how anti-technological Apple devices must become.

    Microsoft, the IT personnel, the Enterprise market and FOSC have a vested interest in keeping computers be mysterious and hard to use. That is what will keep them in their niche.

  • UrbanBard

    “And I still want to read some of UrbanBard’s poetry.”

    Gosh, It’s been decades since I wrote poetry. Most of my writings are prose. I sing in choir, but haven’t composed much. All those would require me to specialize to get good at them, when I tend to generalize.

    Mostly, I have tried to clear my head of the rubbish that I learned in school, to test the conventional wisdom or discard the residue of an unhappy childhood. I no longer have any anxiety, fears or needs, so I have little reason to write.

    I’m pretty laid back, so I don’t need to push my views or values on people. I have no need to remake the world or set it on fire. The world can go to hell in its own way. It always has–and somehow, it has survived. I may make some comments about that, though. People my age often do.

    So, take my comments with a grain of salt.

    I enjoy an interesting discussion. I like having people challenge me, because I tend to get intellectually lazy, otherwise. I read widely but have a dilettante’s interests. I resist that by becoming an expert on some issue before moving on.

    I have plenty of lumber built up in my head; I don’t know what edifice I would build from that. Perhaps, just a lookout tower.

    I’m retired from a life as an electronics engineer. I do picture puzzles now. I have an exceptional memory for colors, shapes and patterns.

    Some of that bleeds over into my other passions: computers, history, politics, science fiction and public speaking. Make of that what you will.

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  • kunduz

    apple uses the same business practices microsoft uses …both will lock you in as much as they can get away with it ..

    ..the only difference is that microsoft is big enough for their business methods to matter to governments and apple isnt

    the only person who can credibly compare microsoft with USSR is a user of free software, not apple user/fanboy/fangirl

    if you are using apple product and you enjoy the apple world, you are as locked down as those poor USSR citizen ..

    if you are honest with youself, you will acknowledge it

  • UrbanBard

    I must respectfully disagree, kunduz. I suggest that the anti-captailist mentality of the Free and Open Software Community is biasing your viewpoint. Apple and FOSC are not antagonistic to each other, but they are going in different directions. They are serving different groups of people.

    I seriously doubt that you understand Apple’s history, how it lost its way while Steve jobs was off with NeXT and Pixar and why Apple is recovering now.

    Apple was always about producing excellence, not about making money. The best companies are like that. Microsoft would deliver junk and be unashamed of that, Apple would not.

    But, I suspect that I am wasting my time on you. You don’t seem to understand Apple’s goals. Or why Microsoft is becoming obsolescent while Apple is not.

    Those of us who use and enjoy the Apple world have different personalities from you Linux geeks. We want to be served by a company. You may be less locked down that we, but we don’t want to be you. We have different aims and goals. We don’t want to have to write our own software. We are not tinkerers.

    It’s a big world, kunduz. There is room enough for all of us. There is even a place for Microsoft.

  • Morris

    “I suggest that the anti-captailist mentality of the Free and Open Software Community”
    That’s a ridiculous opinion. FOSS is used by capitalist companies. GPL is to stop the self-interest clowns taking over peoples right to create.

    “We want to be served by a company.”
    Good for you if you need a “mother brand figure”.
    Extreme capitalism needs people like you to keep feeding it.

    Widespread Linux adoption will create much healthier economies. It’s really just about how fluidly money moves around. Software doesn’t need to be part of the mother ship model, in fact it’s just a bottleneck to development.

    Capitalism should be about moving money around to nurture new markets, unfortunately too many of you are blinded by “big names” and don’t care that you sustain the self-interest groups.

    Microsoft is living proof of what’s wrong with America. Pro-capitalists just need to accept that the world working together will do a far better job.

  • John Muir

    @ Morris

    I’d love to see Linux become the default operating system for generic hardware, just as Windows is now. It would be a tremendous achievement and a great period to be a Mac user too: as we benefit from open standards and open source on our side of the computing fence as well. All the more so once they are finally truly ubiquitous!

    However: I do have serious reservations about the Linux desktop usability, right down to its GUI core.

    There’s a feeling in the open source world that the interface to your software is a gloss, to be added at the last moment. People forever talk about “wrapping” some presumably more important and more interesting deeper technology. But how come even the best efforts in open source wind up retro and tacky (and the worst just down right unusable) compared to indie software and full blown commercial alternatives?

    In fact I realise that Gruber beat me to this argument again and I wholeheartedly recommend any Linux proponent read this:


    I must emphasise that I have nothing against the core beliefs and principles behind free and open development. But there’s a gulf between the ideals and the output which is clear for all to observe.

  • Morris

    @John Muir
    You seem to me to be making yesterdays argument with regard to the desktop. It is important to stay up to date because the rate of development in the FOSS world is quite something. I concede to surprise that there aren’t some really “wow” defaults for how the desktop looks. It’s only a case of people/companies putting some really pretty themes together.

    Staying bang up to date is not necessarily at the expense of reliability – I currently use Ubuntu on my work machine (I’m a SaaS developer) and run with the latest alpha releases to provide feedback to the development teams – without any problems worthy of mention, even though it’s alpha code.

    The GUI, on any O/S, always will be “a gloss” – it doesn’t actually do any of the work per say – so I’m not sure what you’re getting at there. Having it run as a process in its own right is invaluable.

    There is a key point to remember – SaaS, tons more FOSS developers, more readily available broadband – all of these things are helping the Linux cause. Microsoft continuing to shove alpha software out to consumers as product helps too.

    As a Mac user you may agree with the idea that people who care about computers don’t use Microsoft?

    Do you have any thoughts or predictions on the (new) low cost Linux PC market? I’d be interested to hear your take on that.

  • Morris

    @John Muir
    I have a feeling that you haven’t really used an up to date Linux in a while.

    The link (from 2004) you placed is very much out of date. The ending however :
    “It’s easy to ridicule the estimated 2006-or-2007 ship date for Longhorn, the next major release of Windows. But do you doubt for a moment that Longhorn will provide more improvements from Windows XP than desktop Linux will gain during the same period?
    More often than not, you get what you pay for.”

    ..certainly made me smile. I wonder if the author is claiming that he has a flawless installation of Vista these days?