Dark Bilious Vapors

A day or two ago John Paczkowski at Good Morning, Silicon Valley posted an interesting interview with Linus Torvalds, where Linus weighed in on the future of Microsoft vis a vis the rise of open source software. [Boldface indicates the interviewer's questions.]

Open source programs have clearly made some great advances in the past few years. We've seen it with Linux and Mozilla. What sort of future do you foresee for open source? What do you foresee happening to software vendors tied to proprietary software models?

The power of open source really lies in various groups improving and building on an increasingly bigger existing base and slowly turning that base into commodity. One of the keywords here is "slowly" - it's by its very nature pretty evolutionary, i.e. it takes time. It's, in my opinion, also pretty unstoppable, but the process definitely makes it possible for proprietary vendors to generally take advantage of the open source commodity base, and continue to be proprietary "on top" of that base.

So I don't think the proprietary vendors go away per se, I think they just end up moving higher up in the food chain.

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Microsoft has spent so much time protecting the desktop that a myriad of other opportunities passed it by -- search, for example. Open source software is cutting into Microsoft's virtual monopoly of desktop software as governments and corporations become attracted to the cost savings they offer. Meanwhile, innovators like Apple and Google are becoming more prominent in the technology universe. What do you see happening to Microsoft in the years ahead?

This is exactly the kind of question I have a very hard time answering.

Microsoft really is a fairly interesting vendor in this space. Unlike most proprietary vendors, it's one of the very few ones whose bread and butter comes directly from its commodity market, and even its specialized offerings often sell because of its near dominance of a market that certainly looks to be commoditized over the next decade or so.

So it's no wonder that Microsoft is one of the very few players who really don't seem to like open source. Most other vendors seem to see open source as a platform that they can ride on, while to MS it's a threat to how they do business.

That said, I don't see the MS market going away very fast, and I don't see why MS couldn't continue to function as a software company even if they don't control the commodity market any more. In many ways I think MS is in the same situation that IBM was in two decades ago, losing control of the basic market -- and thus the dominance of the market -- but not necessarily going away or even necessarily shrinking.

I think the really interesting question is what happens to their profit margins. It's almost all profit for them right now. I don't think that's sustainable in any market, and yes, I believe that open source is one of the things that will "correct" the software market.

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What will happen to the PC world if Microsoft’s market share should decline? What will the technology landscape look like?

If Microsoft loses its dominance, that's likely a good thing for the market in general. Again, see the IBM connection from a few decades back: More open competition tends to make the market not only more lively, but also tends to grow it.

So the notion that many people seem to have that the PC market lives and dies by MS dominance would seem to have no basis in reality. If anything, near-monopolies tend to stifle things.

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What will happen if Microsoft’s market share doesn't decline? What will the tech business landscape look like in a world in which Microsoft not only retains its current position, but extends it to other realms -- the living room, financial services, etc.? What does the "Microsoft forever" world look like to you?

I just don't believe in dynasties. Things erode over time. Successes start to take themselves for granted, and the successful companies aren't nimble and hungry enough any more.

In the tech market in particular, companies just don't tend to stay on top forever -- they become irrelevant either because of their own missteps or because their market just isn't the "happening thing" any more. You can only skate the cutting edge for so long.

So the question is how the decline happens, and in what timeframe. Will open source be a factor? Almost certainly. Will it be the factor? I don't know.

Len on 06.22.05 @ 06:24 AM CST