Climbing out of the Ooze, or is that GNUze?

I've written on Microsoft heading for financial trouble and mounting internet security problems - but they have an underlying cause.

Both ignore the hard-won Unix principle: Less is More.
[the joke behind the pager, 'less']

This isn't just some arbitrary style choice, it's rooted deep in Computer Science and Software Engineering:

• smaller, cleaner interfaces - many fewer bugs if bugs/LOC is static (errors = LOC squared)
  
• smaller code - potentially better understandability
• the Einstein principle: As simple as possible, but no simpler.
• Controlling system entropy - smaller code, less entropy to grow.
  
• Learning curve for new maintainers is lower - "cognitive span" of individuals not exceeded
• Learning curve for programmers lower and risk of errors of misunderstanding lower.

More is Worse in Software Engineering - in every technical dimension. Microsoft has gone on to demonstrate that it is possible to have excessive 'customer features'.

But this isn't Microsoft-bashing - they are the definitive example of poor Software Development choices - why else would they have thrown away ~25,000 man-years of effort in the Windows Longhorn 'reset'? Didn't please customers or shareholders.

GNU, the self-styled leaders of Free Software (vs Open Source), subscribe to the Microsoft model of More is Better & Excessive is Best - sometimes called bloatware.

Proof is in the Software... Huge, slow, complex.

Why this Matters

There's a simple statement I keep hearing from long-term PC users:

My old 386/486 used to boot and run a word-processor faster than what I have to use at work these days.

Not just a little, but enough for ordinary users to feel pain.

If the base hardware has increased in speed/size by a factor of 25-100 in the last 15 years, why don't the same basic tasks run like the wind? I.e. When you do an Apples and Apples comparison, why are current systems slower - as Hal Linco did when comparing a 1986 Mac-plus and a 2007 AMD dual-core (for most used functions, Mac Plus beats the 2007 AMD Athlon 64 X2 4800+: 9 tests to 8!)

This isn't just whining or mis-remembering the Good Ol' Days - it's basic Physics and Computer Science.

Power Matters

Looking at Yawarra low-power systems and remembering the US$200 Everex gPC (first released Xmas 2007) put me onto this thought-train.

The fanless AMD geocode processors @0.5Ghz consume 5W (Yawarra)
Not sure what the fan-cooled 1.5Ghz VIA processor/board on the Everex consumes - but likely 10-20W.

Intel 3Ghz processors consume 50-60W (TDP), IIRC.

There's a simple figure of merit - MIPS/Watt. It seems forgotten by system builders and coders alike...

The More is Better philosophy has relied on the increasing power of common user hardware to fuel it's excesses.

Herb Sutter's seminal 2005 piece in DDJ "The Free Lunch is Over", shows a number of things - not the least that the assumption of free performance increases fueled by Moore's Law ended in 2002.

There should be no reason we don't have fast, functional systems running on 500Mhz (0.5Ghz) CPU's. That's so much more power than available just 15 years ago, it's not funny. Even just before 2000, these systems would've been Y2K capable and competitive.

As a collective, programmers and Software Engineerings need to climb out of the Complexity Ooze - promoted and encouraged by Microsoft and GNU. If not, they will find themselves bypassed.

There's no reason for most users (email, web-surfing, word-processing) can't get by with 5W desktops or laptops.

Proof:

iPhone and Android.

Then those 3Ghz fire-breathers might actually be used on tasks needed real speed - such as games.

If the PC systems manufacturers, O/S constructors and application developers don't embrace this change, they will simply become irrelevant as ultra-low-end systems and small appliances replace the behemoths...

Read the Three Dimensions of the changing PC market I've already outlined.

Mircosoft Troubles - IV

Previously I've posted on my conjecture that Microsoft will hit turbulent financial times in 2010: Microsoft Troubles III, Microsfot Troubles II and Microsoft Financial woes in 2010

This article in CNN Money/Dow Jones Newswire cites data on some of the early effects becoming apparent.

Sales of Windows grew just 2% in the first quarter of fiscal 2009, which ended Sept. 30, 2008. In most years, Windows posts double-digit revenue growth, according to company data.

There are three dimensions on which Microsoft profits will be squeezed.
Partly on volume, but mostly on margin.
[Update 1-Mar-09: Another dimension - Moore's Law CPU-speed]

Note: I'm not predicting Mircosoft will go away - I expect their brand (or descendants) to still be available in 25-50 years. I'm only saying that MSFT (the 'stock ticker' symbol of Microsoft) will hit a financial pot-hole around 2010.

The economic fundamental is their 90+% gross margin - it is much too high to sustain. Manufacturers can only sustain 25-30% long-term.

Note 2: I'm only discussing Desktop O/S. 'Office' is more exposed.
All the other products don't have huge market share.
X-box is still loss making, as far as I know.



The Dimensions of Challenge:

Desktop O/S Substitutes:

• OS/X is the fastest way to run Windows [on high-end Macs]
• there are viable desktop alternatives - Linux & OS/X [others?]
  

=> MS market share on desktop PC's can only drop.



Total PC Sales:

• At the low end: PC substitutes are eroding sales
• 'Appliances' like: iPhone, game consoles, SMS + phone browser, blackberry, ...
• PC sales in Japan had 5-Qtrs in decline to Mar-08. Leading indicator?
• PC sales growth in mature markets was almost stalled early 2008
• only gonna get worse in Current Financial Crisis
• PC market has changed - now >50% laptops

=> whilst the Total PC sales may increase for a time, the 'market mix' means the average PC value must be in rapid decline. At the low-end, Microsoft has to discount to retain market share.


Substitutes at Bottom-End & Top-End of PC market:

• Mac is disproportionately growing market share at the high-end
• Ulta Low Cost PC's - the low-end (eg ASUS Eee etc) is taking sales or causing MSFT to offer low-priced versions.
  

=> Both Market Share and Average Unit Price are dropping. Microsoft is being outsold at both the top-end and bottom-end of the 'classic' PC market.

CPU-speed Moore's Law change:

Around the start of 2004 , the speed of CPU's stopped doubling every 18-24 months.
After 5 years, per-CPU speeds have increased from around 2Ghz to a touch over 3Ghz.
Chip makers are compensating by creating more 'cores' per chip.
Throughput notionally increases, but not compute speed.

Businesses have extended their desktop 'refresh cycle' - they are extending the life of PC's and hence buying fewer.

Very often a hardware refresh was used to roll out major O/S changes, especially if it needed increased resources.
With corporate desktop hardware not being changed very often, vendors now need to be very aware of the need to restrain O/S resources required.

This dual effect accounts in large part for why Corporates have not embraced Vista.
Another reason - absence of convincing need or benefit.

Windows 2000 was a necessary upgrade for both Y2K issues and Active Directory solved the scalability problem.
Win-XP was useful - more functionality, integration of USB and maybe 64-bit.

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So here's how I think it plays out:

• Total PC sales drop - market saturation, 'recession' and appliances shrink global PC market,
  
• MSFT achieves lower average unit price - competition from ULCPC & appliances,
• and MSFT market share drops as profits fall.
  

Secondary effects will come into play:

• as sales & margins drop, corporate clients will squeeze MSFT for better deals.
  
• clients can threaten to 'defect' to Apple etc or even threaten to go low-end to get better deal.
  
• MSFT sales teams will scramble to make targets - 'lets do a deal' will be their mantra, especially just before End of Year.
  
• MSFT will (radically) increase prices where customers are locked in and it perceives they have no alternative.
  
• think IBM mainframes pre-1990 - IBM kept ratcheting up prices as customers fled.
  
• the more people that have MS-Office replacements on their not-a-PC, then the more people will use Office substitutes. Microsoft will feel pain on multiple fronts.
  
• Google docs effect - maybe. But only as yet another substitute.
• MSFT management will react & thrash around wildly/blindly
  • think Yahoo! merger
  • guaranteed to do 'more of the same'
  • deep discounts to buy market share, disregarding profit and cash flow (X-box)
• buy more products & attempt to take-over markets again.
  
• will throw huge teams into building ever-bigger and fancier products.
• lots of hyperbolic advertising - selling sizzle w/o steak
• The management team will be totally distracted with bizarre tactics and will lose focus on fundamentals. They will not form and execute a good strategic plan.

Tertiary Effects:

• MSFT share price will plummet on their first poor profit performance.
• MSFT will 'cut costs' - at the expense of employees, not Management bonuses.
• Staff will leave as pay & condition decrease and work pressure increases.
• Long term staffers will see the Stock Price tank and their (paper) wealth evaporate
  • become demotivated & unresponsive/unproductive.
  • massive turf wars and blame-fests will erupt and drive down output even more.
    
• Key staff will jump ship (Gates said in an interview he had 6-12 key software people)
• Multiple board & management coups will be repelled.
  
• Stock market and customers will recoil in horror, but MS-Mgt won't notice [not our fault, we're do what we know works, things will come good again as they have in the past]
• The new lemming rush of corporate clients will be finding another "we can't be fired for buying" vendor.
• Spending will peak, Revenues will tank, Massive red-ink will flow.
  
• One last gasp - give away product 'to make it up to loyal customers'?
• Senior Management changes too late, market inertia drives sales down.

The only variation I can think of - will Bill Gates come back?

I think it possible he would buy all outstanding MSFT stock when it's cheap enough and then run it again by himself for a while... But I don't know the man, I can't tell.

Gates is the world's most successful business man.
You have to admire him for that and not underestimate his abilities.

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In Microsoft, AntiTrust (Monopolies) and Patents, I wrote:

Why Smart Executives Fail
Sydney Finelstein wrote on the Causes of failure - the sorts of mistakes that really smart, successful people make. More at the Dartmouth Tuck Business School site.

This is a great resource on how Great Companies go bad - by doing exactly the things that made them top of the heap.