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To: Reginald Middleton who wrote (577)	12/1/1999 2:47:00 PM
From: Jay Lowe	Read Replies (2) \| Respond to of 1782

Re: WAN apps >> Microsoft is constrained by the need to maintain a legacy stream of extant revenues Well, that's the question, isn't it? How will Microsoft respond to erosion of their PC-based applications as WAN-based applications mature? >> WANs incorporate Desktop functionality Agreed that WAN apps can cherry-pick desktop functionality, but Windows itself represents a LOT of functionality at many layers. WAN apps have a VERY long way to go if they propose to re-invent all this. >> Microsoft cannot afford to commoditize our business model Well, here we are again ... can they afford NOT to, if WAN apps are going to erode that revenue stream anyway? As I said, WAN apps have blind-sided MS strategy, just as it was blind-sided time and again in the past, most notably by the web and browsers. This time the threat is even more profound and more directly focused on MS core revenues ... the web shift did not threaten MS core revenues directly, only potentially lost incremental revenues. The question remains, what can Microsoft do? Saying that they can't commoditize is presumptuous ... they must somehow out compete the bar-bar-ians ... the question is: how? >> possible to buy a Wintel-free PC in Y2000 I think we are agreeing here. WAN desktop suites can offer the average consumer an out-of-box experience just as good as Office bloatware. Office becomes irrelevant for the typical consumer. The consumer is captured by the WAN app vendor, not Microsoft ... thus changing the entire field of play. I believe this is intolerable to Microsoft ... being inconsistent with their survival ... and hence they will commoditize. They simply must. Microsoft must move to maintain control of the consumer at the time of initial purchase ... their whole universe is based on this concept ... they have never been able to compete well without special leverage ... and they're always been great at creating such leverage. Certainly the rules are changing in a very profound way.