The late and great management guru Peter Drucker said he wasn’t worried about Microsoft because no non-governmental monopoly had ever lasted more than 15 years. Well, Microsoft is proving him wrong. More than 16 years after the debut of its Office suite it still has nearly 95% of the world market for PC operating systems and around 95% for office software (Word, Excel, PowerPoint etc). It is astonishing, considering how easy it is to set up new web-based businesses these days. Even though Microsoft was found guilty of illegally maintaining a monopoly by the United States antitrust authorities it has made no impact on its monopoly position — and the enormous profits it generates. Is it impregnable?
I had breakfast last week with TJ Kang, who has been trying to dislodge Microsoft for years. In 1999 his company, ThinkFree, raised $24-million to launch a free alternative to Office. At one stage it employed well over 100 engineers but by 2003 was down to under 20 and struggling to survive. Last year it was taken over by Haansoft, which has 70% of the word-processing market in South Korea, the only country in the world to have resisted Microsoft domination even though the Seattle colossus, he claims, tried to pay absurdly over its market value in 1998 to buy a minority stake and stop further development.
Now, he says, the time is ripe to attack the company’s soft underbelly because of the switch towards hosting services on the internet rather than on computer hard disks. This, he believes, makes Microsoft vulnerable because it doesn’t want to put at risk the huge profits it makes from its computer-based Office suite by such a radical move (though it is planning to put the cut-down version, Works, online).
Kang admits it is a big task since Microsoft has 95% of the market with the rest shared between Corel (WordPerfect), with around 2.5% and OpenOffice (2.5%), leaving Google Documents, ThinkFree and others competing in the tiny space lost in the rounding up of the others’ statistics. It is going to be a hard task.
I have been a very contented user of Google’s free alternative to Office (called Google Docs and Spreadsheets) which has all I need for writing without getting into the labyrinthine complications of Word. But Kang claims Google, which announced a paid-for small-biz version last week, can’t cope with heavy-duty corporate spreadsheets. Since we are in the throes of a mass migration to the web, Kang thinks there is a great chance to eat into Microsoft’s market share. He claims the upcoming paid-for version of ThinkFree has full compatibility with Office and enables users to switch seamlessly from working on their hard disks (say, on an aeroplane) to the web.
The free version has some nice features — such as a link to Flickr, the photo-hosting site, enabling you to search for pictures — but it is much less easy to use than Google’s alternative. It can take 30 seconds or more when it accesses the web whereas Google backs up your work seamlessly in the background.
ThinkFree may be back on the radar, even though its 250 000 users are little more than a blip. But Microsoft will be very difficult to dislodge. It is also true that the migration of services to the web provides an unprecedented chance for an upstart company to seize the initiative. Google is best placed to do this despite its claim that it is not in competition with Microsoft. OpenOffice, the main free alternative at the moment (which is now more user friendly) is not web-based. It would be nice to think that the revival of web companies in the UK and the rest of Europe will throw up an alternative.
Competition would be good for Microsoft. Its Explorer browser improved when Firefox arrived and Xbox has done well against Sony’s PlayStation. The stakes are high, but this is a multibillion pound market where the rewards are formidable. – Guardian