Certainly there is no one in computerdom that does not know already that Microsoft (MSFT) will be supplying its OEMs and retailers versions of Windows without a browser when it formally launches Windows 7 in October 2009.
But I have yet to see anything about what I believe to be the stories behind the story.
First, this strategic move by Microsoft has been couched by the leading software provider as a reaction to continued European Union (EU) investigations of Microsoft bundling practices. In fact, the news came out officially via an obscure blog post by a Microsoft Deputy General Counsel after the PC press heard about it from PC manufacturers. (I think a Deputy General in legal circles is like a Lieutenant General in the Army.)
The EU angle is a smokescreen. In reality I believe the real story is that Microsoft is abandoning the browser market all together and worldwide. Microsoft spends more just in browser development than all other browser providers achieve in revenue. Yet it does not receive a dime for its efforts. Microsoft shareholders have always been troubled by this neglect of their rights by Microsoft.
It is not coincidental that there is nothing in the Deputy General Counsel’s blog post that says Microsoft OEMs and retailers cannot order and ship the “E” versions of Windows anywhere in the world they want. Key partners may quietly be urged to do so. In a few years, this abandonment of the minor Windows operating software feature known as Internet Explorer will eliminate Microsoft browser development and manufacturing costs and boost profits.
Similar steps may eventually be taken by Microsoft for such bundled features and functions as Windows Update, Folder Management (also called Explorer but not to be confused with Internet Explorer) and Help. To speed decision making within Microsoft, which can only be described as glacial, perhaps the EU could investigate the bundling of these functions as well. Clearly there must be some other EU nations like Norway (which also can only be described as glacial) that has thousands of young people sitting around idle and that therefore needs the EU to prop up a nativist software development group.
In the meantime, this move by Microsoft relative to browsers will be accelerated by tying it to the second part of the strategy, a super-secret Microsoft project called NGUI (for next-generation user interface). NGUI has been in development since Ray Ozzie replaced Bill Gates a few years ago as chief technologist.
The simplicity of the approach is being described by analysts who have seen it as beyond belief. When you power up a device running Windows 7 a very attractive solid blue screen will appear (it's black in some prototypes already shipping with Windows). The screen has only four characters and a blinking underscore. With the NGUI technology, two of the characters on the screen indicate the server, anywhere in the cloud, to which you are attached. Currently there is a limit of only 26 possible servers and ‘C:’ is the default choice. The meaning of the ‘\’ and ‘>’ after the 'C:' is in a category called 'reserved' by Microsoft engineers. Potentially it is believed that users will be able to type cryptic characters after the ‘>’ as a way to launch other software.
Besides the 'C:\>_', NGUI’s solid blue screen is devoid of distracting graphics and especially devoid of annoying pointers to Microsoft competitor web sites. Pointers to competitors’ products were the approach the EU had hoped Microsoft would take in response to the complaint filed by Opera. (OPERA is traded on the Oslo exchange, with shares also traded as ADRs although the company does not seem to have filed a 20-F with the U.S. Securities and Exchange Commission).
But when Microsoft considered the costs it sinks into browser functionality for which it receives no revenue Microsoft clearly made the right decision from an investor perspective. The only thing I would like to see Microsoft do in addition is to abandon marketing in the EU altogether.
-- Dennis Byron
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