posted Dec 28, 2006

After a bit more thought about my previous post, I'm pretty sure this is going to be a disaster for Microsoft.

Microsoft has two goals here:

  1. Become the dominant distributor of video content, and probably eventually leverage that into dethroning iTunes and becoming the dominant distributor of content, period. By that I mean they will own the platform, not necessarily the stores themselves.
  2. Destroy open source by making it borderline illegal, if not actually illegal, to have drivers that open source software can use.

I wouldn't even care to guess which is more important to them. I'm sure they really, really want #1, but if they had to choose only one I wouldn't be surprised they'd rather have #2.

But this entire plan is predicated on two very strong assumptions:

If either of these fail, Microsoft loses, and both are highly questionable.

First, I see no compelling reason over the next few years for people to put a full general-purpose computer in the middle of their home theater setup.

The open source people have shown what a full computer can do. You can rip your DVDs and CDs and move them to a central media server and stream audio and video all around the house, and even out of the house if you have enough upstream bandwidth. You can download videos off the Internet and watch them on your TV. Whatever outputs you have hardware will work fine. The extra space in your media server can probably be hooked up to a DVR through something like MythTV. DVRs are way more fun than VCRs, and this can be another level of fun over DVRs, with all your DVDs as easy to watch as a TiVo recording, anywhere in the house, without restriction.

Much of that won't work in Vista. What will work, will be encrusted with DRM and at the very least much harder. And it will be more expensive. CD ripping seems to have been begrudgingly accepted by the industry, but if I had to guess, it won't be possible to rip a DVD on Vista, let alone an HD-DVD or BluRay. We can already see from the Zune that even previously free content will restrictive DRM slathered on top of it.

The net result will be that your computer will basically do no more than a dedicated set-top box will be able to do for much less. What little a computer can do better, I fully expect the set-top players to eventually match. A BluRay player already requires a Java VM (a full programming environment), so making a BluRay player able to download video directly from the Internet itself is just some programming, a bit of extra hardware, a networking connection, and a hard drive. HD-DVD might be a bit more, but not much. So even if there is a brief window where Windows is the best platform for viewing downloaded video, I expect that window to rapidly close.

Why should I make all these sacrifices on my computer for something I can just do on my dedicated box? Why should my computer be so thoroughly hobbled like that?

The second assumption is also highly questionable. Right now, hardware is released for Windows not merely because it is the dominant platform, but because it costs less to just develop for Windows and nothing else than to develop for Linux and Mac and everything else. Just write a driver for Windows and let the hippies take care of themselves.

Vista's pervasive content protection flips the economics around. It will be much, much more expensive to add all of the Windows-specific content protection into the hardware, and the resulting device will inevitably be less capable, slower, and perhaps most importantly later to market due to this extra design, than versions of the product that could be sold into the Linux/Mac market without the Windows stuff.

The Mac+Linux market may not be large, but unless the hardware manufacturers get locked into airtight contracts that says they must design Windows Vista hardware only, someone is eventually going to notice that as long as it's going to take some more months to produce, say, a high quality graphics card and as long as they're going to have to sacrifice some of the power of the card to pervasive DRM, they might as well release a Linux/Mac graphics card earlier and start recouping some of the design cost sooner.

One market that could rapidly shift away from Microsoft would be one of the ones they really want: Games. If Mac and Linux start getting better graphics cards, sooner, the hard core gamers will demand Mac and/or Linux versions of games. For that matter, the game developers, who need all the power they can get during development, are going to start demanding to develop on Mac and/or Linux for the same reason. That would destroy the last great argument against Linux on the desktop, and certainly wouldn't hurt the Mac either.

Once this starts happening, how long can Microsoft Vista survive being the computer that requires more expensive but less capable hardware, gets it later, and most likely gets it buggier due to the DRM? (Heck, DRM acting correctly is almost indistinguishable from buggy behavior. DRM is almost "buggy by design"!) And this is even before Microsoft gets forced to permanently revoke the drivers to some motherboard that Dell put into millions of their computers. And all of this so your computer can do what your set-top box can already do, only more poorly, and while degrading every other thing that computer does.

Microsoft is creating a really unstable position here. It only requires one defector to put out an earlier, better graphics card (as that's the hardware I'd expect this to happen with first, based on the market), and that will start a cascade that Microsoft may not be able to escape from in time, because they have bet the company on this DRM stuff and have entered into contracts based on that.

It's risky no matter how you slice it, but the optimal Apple strategy is probably to at least ignore this stuff and continue building great products that people want to use while minimizing the DRM in them, and perhaps even ally with the Linux folks to pressure hardware manufacturers to release hardware without the Vista lockdown stuff in it, because that's the path to eliminating Microsoft.

Cheaper computers that can do more (even if they can't play "BluRay", they can do all of the other useful stuff that computers already do), more reliably, that won't be destroyed without notice because some hacker in Russia found a flaw in your motherboard. If that's not enough to dethrone Microsoft... then I think that would constitute absolute proof that they are a harmful monopoly in the full legal sense of the term.


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