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A worm in the Apple?
QuickTime 4.0 is like nothing you've ever seen on a Mac. Has Apple broken its intuitive user interface?
By Daniel Drew Turner
[09/30/99]

Forbidden romance?
Why are electronically published romance novels not receiving the blessings of the traditional steamy-fiction industry?
By Janelle Brown
[09/29/99]

Silicon Follies
Silicon Follies
Chapter 57: Laurel moves out, Paul moves in and a CEO goes UFO
By Thomas Scoville
[09/29/99]

Do penguins eat apples?
Once upon a time, Apple dreamed of killing giants. Today, that hope belongs to a new, open-source generation.
By Andrew Leonard
[09/28/99]

Circus roboticus
A troupe of robots forces audiences to confront the terrors of late 20th century life.
By Mark Gimein
[09/27/99]

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It sounds good, but it doesn't really tell the full story. It is true that all of Microsoft's divisions are now focused on Internet services -- that's true of every software company. But that doesn't mean that all of Microsoft is focused on competing with the new breed of "pure" Net companies like Yahoo and Amazon. In fact, in a 1998 reorganization, Microsoft created something that sounds very much like an Internet division, just not called that by name. Instead, it's called the Consumer and Commerce Group, and it includes all of Microsoft's consumer Internet services, from MSN, the online service provider, to Carpoint, an auto shopping site.

"Microsoft," says Greg Blatnick an analyst at the market research firm Zona Research, "is a bit of a platypus. Parts of a duck and parts of a mammal and parts of something else. Amazingly, they all kind of work together."

The platypus notion is a useful idea to keep in mind when thinking about how Microsoft works. Controlling the Net, and Net commerce with it, is only one of the objectives of a big and fairly unwieldy technology conglomerate.

Here are some numbers: In the period from June 30, 1998, to June 30, 1999, the company's total revenue was about $19.7 billion, according to Microsoft's financial statements. Of that, operating systems accounted for $8.5 billion. Productivity applications -- primarily the expensive and ubiquitous Microsoft Office -- got Microsoft another $8.8 billion. In other words, while Microsoft is clearly interested in developing new lines of business like Net commerce and Net appliances, right now it's the operating system and its shrink-wrapped software that is buttering Microsoft's bread. It's an obvious point, but it's worthwhile to take careful note of it.

When Bill Gates talks about extending Microsoft's franchise to the Net, he doesn't mean what a lot of analysts seem to expect him to mean. They think of new Net businesses -- he thinks at least as much of making Microsoft's software Netcentric. In this, his strategy has been a tremendous success. MSN might not have taken over the Net, but the software business is growing at least as fast as ever.

This leads in to the second reason why Microsoft has failed to dominate the Net: Microsoft, with its huge size, can afford to have many plans, while the most successful players on the Net have one.

Next page | How is Microsoft different from, say, Amazon?