26 July 2006

Microsoft's Unhealthy Move

For all its corporate rapaciousness, Microsoft has always been scrupulous in keeping its partners happy: it knows that much of its immense strength derives from the huge Windows ecosystem it has created around itself. Indeed, whatever its manifest misdeeds in terms of abusing its monopoly position, it is arguable - and the company itself has made the argument - that through this vast network it has created far more wealth than any harm it is accused of.

Against this background, two recent moves are pretty astonishing. First, there is Zune, which as many commentators have observed, is unlikely to damage Apple so much as all those who signed up to the horribly-named "PlaysForSure" initiative to provide online music services based around Microsoft technologies.

And now, even more surprising, we have Microsoft's move into offering healthcare software. The actual figures involved are minuscule, but the signal it sends is immense. For it seems to suggest that in its growing desperation at the loss of market share in its traditional sectors - and with the threat of ever-greater losses in the future - the company has decided to break its golden rule to leave to third-parties vertical markets, while it supplies (at a handsome profit) all the infrastructural stuff.

I can't help seeing the hand of Ballmer in this, eager to make his own mark on what is still Bill Gates's company. It would be an obvious thing for a hard-nosed salesman to do - to carve up former partners in an attempt to grab slices of new pies. But I predict that the move will go down very badly with Microsoft's erstwhile supporters, already unnerved by the sword of Zune hanging over them, as they begin to wonder which sector will be next on the Microsoft hitlist.

In fact, I expect they're starting to feel as sick as a parrot.

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