important news about Microsoft the other day -- and, no, I don't mean the verdict declaring it a monopolistic bully. With a bit less fanfare, the company announced that it would be offering users of its Office group of applications online access to the software, anytime, on demand. Between the lines, you might read portents of something bigger: Microsoft morphing from mere seller of software into a sort of global utility, hoping to receive from each of us a monthly check.
Practically speaking, online software means no more messy disks to install or lose. But it also means that instead of buying, computer users would rent what Microsoft calls "the Windows experience and application functionality."
Call it the Microsoft bill. You don't mind paying the phone bill or the electric bill or the Times home-delivery bill. At least you don't mind too much. Maybe you won't mind paying your Microsoft bill.
Or maybe you will mind and that will be just tough. Even after the stern findings of fact by Judge Thomas Penfield Jackson, few analysts expect remedies that will transform the economic landscape as profoundly as Microsoft has managed to do already. It's a new century.
In fact, we may already be kidding ourselves if we think we pay for a piece of software, own it and keep on owning it. For one thing, it came with a license agreement that said something different, in fine print: we merely license the software, on terms designed by company lawyers. For another, we are bound to need tech support, and increasingly that comes with a charge. And then we tend to buy "upgrades" -- because we want new features, or we hope some bugs have been eliminated, or just because everyone else has and we can't read our colleagues' documents anymore.
Having achieved market shares of more than 90 percent, they know that their ongoing profits won't come from converting the last few WordPerfect users. So for several years Microsoft's strategists have focused on pushing upgrades instead. But now the company is worrying that its products have matured: most people using Office applications have reached a plateau, where a bigger and more powerful and more complex version of the same software doesn't seem so desirable. What if everyone suddenly said, I have Windows, I have Office, really like them, thank you and goodbye? It's not as if our existing copies of the software are going to wear out.
This is the genius of the Microsoft bill: instead of one-time payments, the new model depends on a monthly charge joining the rest of our utility payments -- tethering us to the company and creating a revenue stream as steady as Niagara. The founder and former C.E.O. of Autodesk, John Walker, saw this coming years ago -- a transformation in the relationship between software vendors and their customers," he wrote in a 1993 paper, "fully as significant as the emergence of computer retailing." He predicted that companies making the leap -- meaning Microsoft and, he hoped, Autodesk -- could "find themselves in as unassailable a market position as any company in this century: the 'natural monopolies' of the next."
He even talked it over with the other Microsoft Bill, and published an "enlightening" excerpt of their March 20, 1992, conversation:
WALKER: So let me see if I understand where you're going with this, Bill. What you'd really like is if in, say, five years, everybody with a computer gets a Microsoft bill every month, just like a telephone bill, for each product they use.
GATES: Precisely.
Gates himself is not available for comment at the moment; Microsoft's spokesman, Greg Shaw, says he doesn't think the dialogue "adequately captures today's thinking." Times have changed. "In the interim, the Internet has come along," he notes dryly.
He has a point. Huge categories of information and software that people used to buy -- dictionaries, maps, manuals, date books, calculators and games of all kinds -- now flow across the wires to anyone with a Web browser. And the price is usually zero.
But it's safe to say that isn't what Microsoft has in mind for Office, competition for which has systematically fallen by the wayside. Nearly half of the company's revenues now come from selling core programs. Whether Microsoft can convert these revenues to an ongoing monthly stipend, while converting us into permanent subscribers, may be a question outside Judge Jackson's realm.
Walker, now living in Switzerland, agrees that he failed to predict at least one feature of the future into which we are now plunging. "At the time, I lacked the imagination to envision the next step," he says, "transitioning the Microsoft bill into a Microsoft tax."
Copyright 1999 The New York Times Company
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