Mixed Signals
Any sufficiently advanced information is indistinguishable from noise
Friday 29 February 2008, 4:34 PM
"We are caving to Intel"
Intel is in a particularly complex position: neither company is a major customer of the other, both also deal with the other's competition, yet it takes both to set the controls for the near-term future of a great deal of the IT market. I can't off-hand think of an analogy elsewhere in business.
But what is the precise nature of the companies' relationship? Both are extremely large public companies, to the point that both are regularly investigated by regulators for anti-trust reasons. Both must conform to the strictest of financial reporting requirements. But the relationship isn't commercial - no money's involved, or at least nothing of significance. There is no competition between the companies - they don't share a market - so there's no question of price fixing or other cartel behaviour.
Unless there's court-mandated disclosure as a result one or the other of the parties doing something wrong, there's no reason for anything that passes between MS and Intel to be public. Given the paranoia hard-wired into both companies, that's just the way they like it. You certainly won't get anywhere by asking people on either side, except for the most general candyfloss platitudes.
There are plenty of commercial relationships involving Microsoft that have more questions than answers: Citrix, Novell, the BBC, the NHS. But none has so many far-reaching implications, nor is so hard to examine, as the mysterious Ballmer-Otellini axis.
But whatever it is, it's strong. It made Microsoft knowingly compromise its entire Vista launch strategy, to the extent that Vista now has a terrible reputation and MS is in court. That's some compromise.
PreviousComments on this post
Very interesting, Rupert. I was just discussing your article with my partner, who has an MBA, but has very little to do with computers (other than asking me why hers isn't working). Her first observation was that she would call it a "symbiotic relationship", they each need the other to thrive. But her second comment is the one that is interesting - she says this all comes down to a question of ethics and self-preservation. MS needed to consider the ethical aspects of misleading consumers by changing their Vista-sticker requirements, but as we all know, ethics does not often get top consideration in business decisions. They also needed to consider the implications for their own business and reputation, but perhaps they simply believe that they are so large, and so powerful, that it would not be significant. They may yet prove to be right about that last part.
Indeed - it is a symbiotic relationship, and such things necessarily involve a degree of compromise on both sides (a flower has to expend energy and put up with opportunistic non-symbionts to get a bee to act as a pollinator; the bee ends up with a predictable food gathering strategy that predators can exploit). Furthermore, a disease or environmental change that directly affects only one of the symbionts will also harm the other. Nevertheless, it can be an extremely successful strategy - don't know where we'd be without our mitochondria!
The thing that concerns and interests me most is the regulatory aspect of such things in business. As your partner says, in the absence of effective oversight such things quickly boil down to business ethics - and those are frequently indistinguishable from self-preservation. My favourite quote, which I don't believe capable of overuse, is that of the first Lord Thurlow (Lord Chancellor, reactionary Tory and son of the manse), who said "Corporations have neither bodies to be punished, nor souls to be condemned; they therefore do as they like".
I think it's wrong to condemn companies for behaving ruthlessly: it's like complaining that wolves shouldn't eat lambs. However, when they behave like wolves while pretending to be lambs - then they're fair game. And when they behave like wolves, they have no complaint when the populace take up arms against them. When Microsoft (and others) behave rapaciously, then it's up to us to say so - and to expect the state to redress the imbalance of power and preserve the market. Microsoft has a policy of accepting legal decisions against it as part of the price of doing business when it can't head them off by settling out of court, and that works very well, but it does leave the company vulnerable to skeletons escaping from the closet.
And it's also notable that behaving badly does have other repercussions. Qualcomm, for example, has always had a very aggressive approach to the mobile market and there's a very great deal of resentment towards it. Which might not matter when you're in a position of power, but when you have to act like everyone else in an area where your writ doesn't run, you'll be hard pressed to find friends.
I'm still working my way through the released email - if only I could read as fast as I type! It is, indeed, fascinating stuff, though.
One thing that just jumped off the page at me. Someone at Microsoft, writing after the Vista release, saying "I cannot understand with a product this long in creation why there is such a shortage of drivers". Perhaps there is some comfort in seeing this, for those of us who have been left without Vista drivers for our printers, scanners, network cards, or whatever.
That's a very telling comment. Other companies just didn't see it to be in their interests to put significant resources into making their existing products Vista-compatible - and why should they think otherwise? You don't get any revenue when an existing customer takes their old scanner and plugs it into a new Vista system. You get revenue when they buy a new scanner. Much better to force a wave of obsolescence, especially when driver writing and testing is such a complicated, expensive and fraught business. Your driver writers are always going to have more than enough work to be getting on with having to support Vista and XP on your new models, without getting them to go back and revive old stuff.
Also, they had good reason to adopt a wait-and-see attitude to Microsoft's predictions and promises concerning Vista.
Thing is, none of this is surprising or unknown to anyone who's seen a new operating system appear on the scene. What's surprising is that Microsoft was surprised, and that says a lot about its perceptions of the market.
Undoubtedly correct about direct revenue from forcing new equipment purchases. But how much benefit, and "indirect revenue" do you get from customer loyalty - or lose from customer anger? That's the hard part to judge, from both sides.
I just (finally) finished reading ALL of the released emails. Amazing. Intriguing. Hair-raising. Stunning. My favorite quote, from the debate about lowering Vista Capable standards:
Based on the objective criteria that exist today even a piece of junk will qualify
That really sums up the position that Microsoft had maneuvered themselves into.
I ended up wondering how much these problems were exacerbated by Microsoft slipping the schedule for Vista (i.e. they wouldn't have had to wait so long, or at all, for reasonable quantities of complying graphic chips if they had known in 2005 that the actual release wouldn't be until 2007).
Hmm. On the other hand, looking purely at the graphic requirements, was there ever any realistic chance that Vista was going to ship before 2007, and have a reasonable number of Vista-Ready systems available? Is it possible that 2007 was the real target date all along, or that the slips were driven more by hardware availability than software?
