Microsoft At Sea

Microsoft became the worlds dominant software company in the early 1990s and from then on continued to operate at an unprecedented level of profitability—building up a massive cash pile on a quarterly basis. By the late 1990s Microsoft strongly focused on generating software technology for the coming media boom.

A good many Microsoft detractors believe that Microsoft is inherently unable to produce good software. They argue that “Windows has always been flaky and in recent years it's become a security disaster, and the Office Apps are still lost in a desert of poor usability”. Arguably these things are true and Microsoft seems to have had a nightmare with Vista (which may not be over yet).

There is a counter-argument which I support, which says that Microsoft has invested strongly in really talented software engineers and has put together some awesomely good software. It could afford to—right? I support this argument because it's true. In the area of Media, Microsoft has some extraordinarily good software—far better than the competition. I have a friend who is developing something for Windows XP/Vista who never ceases to be amazed at how well thought out .Net version 2 is (and how good version 3 is going to be). To this you can add the fact that the Microsoft server-side products in middleware and database are seriously good.

The irony then is that Apple with its awesome accent on usability has stolen the market right from under Microsoft's nose. Microsoft comes to market later this year with its Zune music player, which is destined not to challenge the iPod. Meanwhile Microsoft's Media Center PC is about to prove irrelevant, because Apple has decided to complete its media jigsaw with a simple TV plug-in device. The video will play from a Mac somewhere else in the house.

What we are witnessing here is the “big Mo” where Mo is for Momentum. Apple has an end-to-end capability; web store, Mac, iPods, iTV (code name for the new Apple TV plug-in) and retail outlets (including its own). Very simple, in a way. With all its excellent media software Microsoft is destined to flounder trying to find a point where it can gain a foothold against Apple. It reminds me of IBM desperately trying to gain a foothold with OS/2 in the wake of Windows. Microsoft thinks it can buy its way in, but money doesn't help. It's about channel strategy. Apple has one, Microsoft doesn't.

Microsoft's only effective way to compete now is through its XBox—but I don't think it has the smarts to work out how. It has lost its edge.

The Internet Media Game: Apple v Alternatives

What Apple is in the process of doing is controlling the media purchase market. The problem for every other entrant into this market is the same as the problem that confronts every new web site that decides to compete with Amazon. The Internet buying habit is driven by consumer confidence and habit. Most people who install iTunes buy something eventually. They quickly learn that buying is pretty much effortless and eventually it becomes a habit.

Taking myself as an example, I've bought about 100 items from iTunes, including about 8 videos—all music videos which cost no more than TV programs. I will probably buy movies from the same source. If I was into games, I'd probably do games too. What is so convenient about iTunes? The same program which provides me access to a media store also manages my media. How do you break this grip? The only answer is do the same thing much better. That's a tough nut to crack.

But there is an alternative. The alternative is to give the content away and make money from inserting ads in the content. This is the strategy that is being pursued by NBC (owned 80 percent by GE, 20 percent by Vivendi Universal). NBC has set up a syndicated operation called NBBC (in the hope of confusing everyone in the UK)—NBBC stands for National BroadBand Company. The idea is that web sites, content creators and NBBC team up to place videos and share the ad revenue. Other broadcasters, ABC, Bravo, USA, Comedy Central, even the BBC and Channel 4 could make their content available (Fox and CBS have already signed up). So think like this; US TV ad revenue is about $60 billion. If you get even a small piece of that, you have a business.

All that needs to happen is for people to start playing TV programs (or other content) from the web. Not much of this happens now, aside from Apple's success, because it's not easy to go from web page to TV screen. Most people only play shorts on their PCs/Macs. If they want to watch a whole movie they cut a DVD and put it in the DVD player. If the NBBC model works it will have established a kind of Google AdSense operation. Google, Yahoo and YouTube may be inclined to do something similar.

So how would this stack up against the Apple Juggernaut? Hard to say until it gets going, but there's a potential fly in the ointment. Surely some software will eventually appear which strips the ads from the video. If so you'll never be able to know for sure that an advert played.

AVID: Savant Protection

Anti-Virus In Demise is this week's AVID focus. You know when a technology sector is beginning to thrive when there are new entrants. There is a new entrant into the Software Authentication/Anti-Malware market which (as I keep saying) is destined to utterly destroy the AntiVirus market.

For 18 years the AV market grew and thrived until it became a $4 billion industry accounting for about 52 percent of the spend on IT security. It is awesome that products that repeatedly failed to protect their customers from malware have thrived so mightily—more so that all other IT security products, most of which actually do stop threats.

Anyway the game is up. Alternative technology is available that does the job properly, and now there are four companies providing it. Not as many as the 30 or more AV companies but hey, sit back and watch the AV market contract while this one replaces it.

The way that Software Authentication products work is; well, they check executables to see if they are “authentic” as they queue up to execute and they stop them if they are not. How do they know what is authentic? When these products are loaded for the first time onto a clean machine they finger-print all the (valid) executables or import a whitelist from elsewhere in the network, or both. After that, anything that is new and unknown is only allowed to run if it is given permission by the user. Even if given such permission to run, it runs in “quarantine”. It will not be allowed to run elsewhere in the network unless it is given a clean bill of health by the central IT Security team.

This is the way that the Software Authentication products (from AppSense, Secure-Wave, Bit9 and now Savant Protection) work. Outside of the fact that these products automatically stop all malware (whereas AV products don't even stop viruses very well) they work in slightly different ways. Savant Protection has the nuance that it uses cryptographic techniques to validate users and generate software fingerprints. User validation works by strong authentication—based on a randomly selected file. The fingerprints that Savant Protection generates are not just unique to the executable they apply to, they are unique for every computer/executable pair. Thus even if a user makes a mistake and permits some malware to run, it will never run anywhere else in the network.

These products don't just stop viruses and worms; they stop spyware, adware, user loaded software like P2P file sharing software, hacker exploits and associated hacking tools, web page based exploits, old versions of software accidentally invoked and anything whatever that you don't want to run on your computers,

So what does it mean that there is yet another AVID company? Well it means that there is more marketing budget and more sales people out there to spread the message that the age of malware is coming to an end and Anti-Virus Is Dead!

We're not done here, by the way. I keep acquiring new information to publish—more than I need to keep AVID going on a fortnightly basis.