Adios, Bill, Steve. We Hardly Knew Ye

(and probably wouldn't want to, anyway)


Francis Vale

Bill Gates may no longer be the world's richest man. That kudos now apparently belongs to Larry Ellison of Oracle, at least on some MS-generous NASDAQ days. What Bill doesn't get, however, is that it's no longer a question of whether or not his company is able to get back to its halcyon days of double-digit growth.

The simple fact is, people don't think of Microsoft as being exciting and sexy anymore. What happens now in Redmond WA is totally old news, no matter how spiffy and shiny new the latest MS technologies are. MS has become the US Steel of tech companies -- Old, been around forever, tiring to think about, boring to talk about -- except maybe for Judge Thomas Penfield Jackson -- and so, who cares?

Instead of Gates being on the cover of Time or Newsweek, we see a 19-year-old kid who spun an old idea - peer to peer file sharing - into a hot new audible phenomenon. The fact that Napster has never made any money, and probably never will, is totally beside the point. We are suffering from Windows ennui, and anything that looks even remotely innovative, Net-related and grabs big traffic numbers gets all the PR image glory. Gates stole the desktop fair and square, and now we reward his business larceny for its true value -- zippo. "Owning" the operating system no longer has any economic worth. The Linux/Open Source crowd has proven that negative OS value premise beyond all shadow of a doubt.

In fact, neither does owning the Internet have any value, as if anybody ever could own the Internet, although AOL certainly tries. The Internet is just a dumb pipe, no more, no less. As all the action moves out to the network edge (think Napster) and the communications pipes take on all the sexiness of big sewer pipes, the AT&T's and Worldcom's are stuck with a business with ever decreasing returns that will never return to profitability. The spectacular flameout of Iridium was merely a cosmic portent of bad things to come for anybody who believes that owning switches and pipes have big economic value.

The content that travels down this stupid pipe also has no value, because, again, as Napster has finally proven once and for all, information is just bits, and any bit is exchangeable with any other bit, i.e., peer to peer file sharing. Thus, why shouldn't Net music be free? Or Net video? The economic cat is finally out of the bag. The current tumble in stock prices simply reflects a realization (conscious or not) by shareholders that the techno-value chain locus has shifted, permanently.

If owning Net access has no value, and the content has no value, then where does that leave AOL/Time Warner? They are completely screwed, right along with Microsoft. It's only a matter of time before Time Warner realizes its been had by Steve Case, and angry shareholders demand a takeover recount. Time to short AOL.

But if the desktop has no value, and Internet companies have no value, and content has no value, then what's left? That's right, Bunky, the party is well and truly over. How then, does a technology/new content company prosper? Simple. It stops being a technology company and goes back to the old ways of adding true value to people's lives or their business. This is much easier said than done. Gates will naturally argue that Windows adds value, but that's total bullshit. If anything, Windows' ever-increasing complexity and its incessant demands for constant care and attention subtract value from a person's life.

We have thus reached the remarkable point in economic history where CPU cycles are free, bandwidth is free, memory is free, the operating system is free, and content in of itself has no value. But I already knew all that, and so did you, didn't you? So why, then, are you still feverishly clutching on to that sweat stained Microsoft/AT&T/AOL stock certificate?

Reality doesn't suck. It just bites the hand that feeds it -- very hard.

Copyright 2000, Francis Vale, All Rights Reserved

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