One force that could disrupt this self-reinforcing ecosystem strategy is the Web. The combination of browser-based thin clients and ubiquitous connectivity are conspiring to usurp some of Microsoft's control over the industry. But Microsoft, as much as it appears to be a lumbering monster, has seen this threat and is using its tried-and-true strategy of embrace and extend here, too. Like the plodding creatures of horror flicks, it may in fact catch the seemingly faster victim.
First, the embrace: Microsoft is aggressively responding to inroads made by the likes of Google and startup Zoho, launching some Office Live thin client services for small businesses, such as a contact manager and Web site designer, in addition to its consumer-oriented Windows Live offerings, such as photo-sharing and blogging tools.
Now the extend: True to form, Microsoft is extending these Office Live and Windows Live services by tying each new offering into its traditional desktop OS and application platforms. Windows Live Mail, Office Live Workspaces, and Windows Live Writer are all targeted at the rapidly expanding market for applications that live within the cloud. All are very much Windows-specific, with hybrid architectures that tightly integrate Web and desktop in a decidedly Microsoft fashion.
Still, Office Live is at best just a placeholder for an even more ambitious endgame. Through application virtualization ( SoftGrid, et al.), Microsoft could very well leverage the very same forces of ubiquitous connectivity that are enabling thin client Web apps to deliver the "real" versions of Word, Excel, PowerPoint, and the rest in their full, feature-rich, fat client glory through a massive, distributed network of streaming servers.
Gauging Google's chances
Even if Microsoft never delivers Office as thin client services a la Google Apps, Google is not home-free. It still needs to professionalize its applications quickly and jumpstart its own thin client ecosystem and partnerships. And those necessary efforts notwithstanding, Google's success or failure may ultimately have more to do with Microsoft's own gaffes and fumbles.
One Microsoft error is clear: the unenthusiastic reception for Vista and Office 2007. Both make IT work harder, suffer from design and stability drawbacks, and deliver less than originally promised. Only by virtue of a gargantuan installed base can Microsoft weather that grudging transition.
A more critical Microsoft mistake, perhaps, is the company's paranoid campaign to stamp out piracy. Microsoft has made the prospect of living with Windows increasingly difficult to stomach. Case in point: WGA (Windows Genuine Advantage). With WGA, Microsoft has made the process of activating and maintaining the activated status of its products so cumbersome and error-prone that it's becoming an obstacle to future adoption. Horror stories abound of users whose systems became disabled because WGA was triggered erroneously, resulting in reduced functionality or, as in my own case, a complete lockout from my desktop.
Another potential chink in the Windows armor involves virtualization. Microsoft could leverage its SoftGrid application virtualization and streaming technology to deliver fully functional versions of its most popular applications via a monthly or quarterly subscription model. If it actually delivers on this approach, Microsoft would validate the cloud approach to application delivery, helping make the case for thin client competitors such as Google. Then Microsoft has to win by being better and/or cheaper than Google. Its history argues against either outcome, at least at first.