How Google became Microsoft: A decade of hits, misses and gaffes
The Noughties weren't always nice
For the tech industry, The Noughties were very nice indeed. Except when they weren't.
During the first decade of the millennium, it goes without saying that computing has changed in a big way, becoming cheaper, easier to use, more mobile, and - in the words of the Mountain View Chocolate Factory - more "webby." But it should also go without saying that the decade included its fair share of spectacular snafus.
In an industry where eyes are focused permanently on the horizon, it's easy to forget the big moments and trends of even the recent past. But at The Reg, we don't forget. Here, we rounded up the most significant thingamabobs of the decade, including not only the technologies that had the biggest and most unexpected impact, but also the tactical blunders and the stunning missed opportunities that defined a decade that we so enjoy calling The Noughties.
Most disruptive device of the decade: the iPhone
Sure, the iPod came first. And yes, it changed how we listened to music on the go. It shook up the previously humdrum world of MP3 digital music players and turned portable music into a must-have. It became a de facto standard, with more than 70 per cent market share and 225 million devices sold.
But the competitors in the MP3 player market weren't some of the world's largest software and telco brands. And they didn't feel threatened enough - or hold big-enough resources - to respond in a meaningful way. Mighty Microsoft eventually responded with the Zune, but the company has never been as invested in the fight as it was when it came to dislodging market leaders in other markets during the 1990s.
The iPhone's impact has been far more pronounced - in a far shorter period of time. In just two years, the iPhone has nabbed 50 per cent of worldwide smartphone usage, according to the latest figures. A sleek look and feel - combined with that stylus- and keyboard-free touchscreen - has put the iPhone in classrooms, barrooms, and boardrooms.
Such has been the rapid pace of adoption by consumers and men in suits that the world's largest software company, Microsoft, actually lost market share in the last 12 months and was forced to reassess its mobile roadmap. This after Redmond had laughed off the iPhone as something ill-suited for serious use and refused to bring touch to Windows Mobile.
Nokia, the world's largest cell-phone maker, responded by buying up, spinning out and then open-sourcifying the Symbian Consortium in an effort to out-flank the iPhone's popularity as a development platform (there are now 100,000 apps in the App Store). Meanwhile, business-class favorite RIM and even Palm finally discovered finger input, and now Google is on the verge of selling its very own Googlephone.
Biggest makeover of the decade: Amazon does EC2
During the last ten years, Amazon transformed itself from a mere etailer that opened the occasional API to a kind of virtual data center where developers can host and run almost anything, becoming the first big name to embrace what the world insists on calling "cloud computing". Such was the perceived brilliance of the move - capturing developers and charging them too - that others followed, from software giant Microsoft with Azure to hardware provider Dell and services provider Rackspace.
Such was the lure of the cloud that former web darling Salesforce.com dropped the once trendy Software-as-a-Service moniker it pioneered to reinvent its hosted customer-relationship-management service as a "cloud" platform. From selling toasters to becoming the envy of tech veterans and giants - whodathunkit?
Security shock of the decade: worms
Five months into the new decade and the new millennium, Windows PC users quickly learned not to open Outlook emails on the subject of love. May 2000 saw the global attack of the ILOVEYOU virus, a malicious piece of code called a worm that - when activated - propagated itself by working its way through your address book and emailing itself to everybody you knew. Some 50 million systems were reported hit.
Worms had been in the wild before the 2000s. The difference was the timing and the scale. ILOVEYOU rapidly infected millions of PCs worldwide, hitting everything from home machines to national systems, as virus writers seized on this new-found attack vector in Microsoft's code.
As the world recovered from ILOVEYOU, Code Red caused denial of services on websites running Microsoft's IIS in July 2001, which was followed by Code Red II in August and Nimda in September. Then, over a mere ten minutes in January 2003, Slammer hit more than 75,000 systems running Microsoft's SQL Server database and desktop engine, causing buffer overflows in infected systems. Among those reportedly hit was a nuclear power station.
Having just ushered in the new millennium with the supposedly more-secure-than-ever-before Windows 2000, Windows XP, Office 2000, and Internet Explorer 6, it was a major disaster for Microsoft, especially when outlets such as CNN offered the tip "buy a Mac" as part of its considered security advice in September 2003.
On the back foot, Microsoft introduced service packs whose focus was to close back doors. In January 2002, Bill Gates tried to regain the initiative with his now famous Trustworthy Computing memo. The memo changed the way Windows is built and coded, ensuring greater security, reliability, and privacy for customers.
The immediate effect was to delay shipment of Windows Server 2003 as Microsoft retrained thousands of its engineers in the principles of writing secure software. While worms have remained a feature of the decade, we haven't witnessed a return to the scale and the intensity of the problem that marked the opening of The Noughties.
Biggest folly of the decade: SCO's prosecution of Linux
In 2003, Darl McBride was named as CEO at SCO, daddy to the UNIX world. Over the next six years, he would destroy the company's revered name - not to mention the Linux goodwill engendered by Caldera, the Linux outfit that had morphed into SCO. McBride turned both into something so despised that the Western showman claimed he had to carry a gun for his own protection.
McBride - apparently irked by IBM's withdrawal from the completely pointless build-another-Unix effort known as Project Monterey - claimed SCO owned the copyright on Unix and took IBM to court, alleging the giant had contributed SCO's intellectual property to the increasingly popular Linux without its authorization.
SCO also demanded payments from users of Linux. To fight his case, McBride hired the law firm of David Boies, who had just dragged Microsoft through court on behalf of the US Department of Justice - and who SCO would pay at least $9m in cash and stock.
Claims and counterclaims followed, with Red Hat, Novell and customers sucked in. Far from being a swift fight leading to victory, the case got lost in legal procedures, with only the lawyers getting fat.
Along the way, SCO lost its claim to be the owner of Unix. It was forced to restructure, and in 2007, it filed for US Chapter 11 bankruptcy protection. As a result, it was delisted from Nasdaq, and McBride was eventually ejected, his CEO position "eliminated" in late 2009.
Eight years after McBride initiated the Linux prosecution, Linux is more successful than ever, and IBM had built a multibillion-dollar server, software, and services business around the open-source OS. Meanwhile, SCO languishes in Chapter 11 looking for money, a pariah of the Linux world.
Biggest tactical blunder of the decade: Microsoft halts Internet Explorer work
Fresh from crushing Netscape and building a 90-plus per cent market share, Microsoft decided there was nothing to be gained from developing IE as a standalone browser. So it said it was stopping. Never mind that it had just been found guilty of breaking US antitrust law by bundling IE with Windows. Also snuffed was IE on Mac, but hey, who cared about that minute market segment?
This was just before RSS and tabs hit the computing mainstream, and the decision - had it stood - would have left people saddled with the standards basket case that is IE 6. As far as Microsoft was concerned, it didn't get more advanced than firing up a completely new instance of IE for each site you wanted to visit, even though that slowly killed your machine.
Microsoft didn't know it, but its decision had just opened the door to a little known open-source browser called Firefox from Mozilla, which has grown consistently during The Noughties while IE has slipped. Firefox now stands at nearly 25 per cent market share, while IE's share has slid to 63.5 per cent - an all-time low, even in the wake of the recent launch of IE 8. Now IE faces the uncertainty of dealing with a brand new rival: Google Chrome and its accompanying "operating system".
Microsoft reversed its browser decision in February 2005, saying customers and partners had been asking the company "with increasing urgency" what its plans were. That produced IE 7, which introduced - among other things - tabbed browsing. IE 8 followed this year, and now even Microsoft is pleading with users to uninstall IE 6 and upgrade.
Longest suicide note of the decade: Sun Microsystems
Sun, like most tech companies, entered The Noughties boisterously. The decade ended with management hawking the 27-year-old systems giant around Silicon Valley until founder and former CEO Scott McNealy's chum at Oracle, CEO Larry Ellison, did everybody a favor and said he'd buy Sun.
How did it come to this? In 2000 and 2001, Sun was the "dot-in-dot-com". It was acquiring smaller companies. And it stewarded Java 2 Enterprise Edition 1.3 at the head of an expectant enterprise-Java industry.
But Sun spent the next decade treading water, crippled by that dot-com past, frittering away the value of acquisitions, resisting and then embracing Linux and open source. Its management preferred to play with pretty theories on growth rather than take hard cost-cutting decisions.
In the end, shareholders at Southeastern Asset Management had had enough. They increased their stake, expanded the board and got an agreement to sell Sun out from under the management in order get some kind of return on their investment.
Most wanted of the decade: MySQL and JBoss
Imagine the world without MySQL and JBoss. That world existed just last decade, when you handed over tens of thousands of dollars per CPU for a database or application server from IBM, Oracle, or BEA Systems. And you had no rights to the code.
MySQL and JBoss paved the way for an enterprise and web development boom during The Noughties because their small footprints and free code let developers get up and running in no time - and at little cost. JBoss with its colorful and outspoken chief executive Marc Fleury, and MySQL with its ever likable Finn CEO Marten Mickos, built and delivered stuff people wanted, liked, and actually felt good about using. Of course, neither made money. That was why they succeeded. But it was also their curse.
Such was their charm, their growing presence among developers and their disruptive influence that they soon caught the eye of, yes, corporate interests. JBoss became the subject of an intense courtship between Oracle and Red Hat, while MySQL fell into the arms of Sun, hoping a little of the open-source magic would rub off. Now, MySQL looks like it's headed to Oracle too.
Survivor of the decade: Windows XP
Windows XP shipped in October 2001, and according to the standard Microsoft roadmap, the plan was to replace it with Longhorn (eventually known as Windows Vista) in 2004. But only now - 2009 - is the end in sight for Windows XP, as Microsoft heavily discounts the new Windows 7 to persuade people to finally upgrade and move on.
How did it happen that a company that liked to deliver a new version of its core product every three years got stuck with something for eight? A combination of hubris, bad planning and fate.
First, there were the worms that slammed Windows XP and Internet Explored 6 out of the gate and crippled millions of PCs worldwide between 2000 and 2003. Microsoft responded with a service pack that rewrote Windows XP around security, thereby diverting from the work of Longhorn and delaying it while helping to perpetuate Windows XP.
Then, the Longhorn that Microsoft had started building in 2001 was dumped in 2004 after two years' work. Microsoft realized it couldn't deliver on the ambitious vision that Bill Gates had outlined without incurring further delays. When Longhorn shipped as Windows Vista, it broke compatibility with too many partner applications and hardware, and killed the performance of the average PC.
Naturally, customers and partners stayed on Windows XP. Then came the surprise arrival of netbooks. With their small form factors, they needed an operating system that wasn't a performance hog. Netbook OEMs opted for Windows XP too.
Throughout, Microsoft has had to extend the ability of PC makers and retailers to sell XP. Some, like Dell, publicly thumbed their nose at Microsoft by continuing to offer the aging OS. This, in turn, forced Microsoft to extend its own official support for the operating system.
Some might argue that IE 6 is the decade's great survivor, given that eight years after it shipped, it still has around 20 per cent market share. Many large corporations, like Orange, still standardize on the thing.
But IE is free, and it's Windows where Microsoft makes its money. Despite Microsoft's best efforts to replace XP and move on with a new wave of upgrades, Microsoft spent The Noughties stuck with a major product it was reluctantly forced to keep breathing new life into - a move that only further enhanced Windows XP's survivor status while keeping Microsoft tied to its past.
Linux distro of the decade: Ubuntu
Linux was the maverick operating system of the late 1990s, with Red Hat and SuSE emerging as the leaders and everyone else falling in between.
By the early to mid Noughties, things had settled down into a tired cycle of predictability: Red Hat was trying much too hard to be a responsible "platform company" along the lines of IBM. SuSE had the excitement and love squeezed out of it when it was bought by Novell. Then Novell entered a controversial interoperability pact with Microsoft - the Anti-Linux.
Enter Ubuntu, a distro that has recaptured the energy of the 1990s. It started as a grassroots geek movement, but soon its polish and relative simplicity was grabbing "regular" users. Plus, it was captained by the awfully charming Mark Shuttleworth, who knows that to make Linux a success you need to break with the polemics of the past, the tired messages that Windows is bad, that this is the year of the Linux desktop.
For added geek cool: Shuttleworth has been to space. That's something Red Hat's ex-Delta airlines chief executive Jim Whitehurst and Novell's resident ex-IBMer CEO Ron Hovsepian can't claim.
Lesson worth repeating until you get it through your thick head of the decade: big media won't let you run an illegal file-sharing site
Before Pirate Bay, there was Napster. One was forced to go legit. The other is still wriggling.
Napster let people share music files online in the early Noughties, when most corporate suits still saw the internet as a quaint irrelevance. That changed when music giants realized their precious content was being shared without them getting paid.
The result was that A&M Records and others filed actions under the US Digital Millennium Copyright Act to stop Napster - or at least get paid their due. Napster finally closed down and declared itself bankrupt when it decided it was unable to block the swapping of content that might infringe copyright, as had been ordered by a US court.
The incident proved that copyright holders would seek closure and/or restitution for copyright violations on file-sharing and download sites, and that courts are willing to hold such sites accountable for their actions.
That paved the way for today's generation of legit music download sites, with Napster finally becoming a subscription service.
Pirate Bay has tried the same giving-it-away act and spent three years going through flips and twists to stay alive. This summer US studios demanded the site's closure in the inevitable legal action that found Pirate Bay's four founders guilty of copyright violations. The founders are now set to appeal.
Pirate Bay, meanwhile, almost went legit with its near sale to Global Game Factory until the money couldn't be raised. Also, one enterprising user helpfully upload the site's entire 900,000 file database into a single 21GB torrent file, making the act of actually owning Pirate Bay pointless.
Mixed blessing of the decade: free
It came in many forms - free code, free information, free money. Free empowered a generation of startups during The Noughties. The streets were paved with gold. You just had to figure out how to make money from "free".
Value-added services were touted as one answer - especially when it came to free code. As the decade progressed, though, it became clear that customers were making the bits and bytes work for themselves and only reluctantly paying open-source companies for their technical support or enhancements.
Free code birthed plenty of startups that were successful in terms of customer numbers and downloads, but many struggled to make the conversion into paying customers. Exhausted executives began looking for buyout as their way out or started doing new things, especially as venture capital lifelines ran dry and the early dreams of VC patrons like Ray Lane and companies like SpikeSource never materialized.
In the Web 2.0 world, consumer startups and websites proliferated on a mission to build whole businesses based on the elixir of Google ad revenue and "traffic". Meanwhile, blogs proliferated thanks to new tools and RSS, with authors offering free opinions on news freely available in the "traditional" media.
Social networks gave away free space online to post video and to chat and communicate with your friends, but none nailed a successful business model. The likes of Facebook hoped somehow to pay for that using ads. Now they are caught between attracting ever-growing numbers of users posting more video, photos and chat while managing their growing costs as traffic increases server and bandwidth costs with no clear or sustainable way of paying for it.
As in open source, it turned out there's no easy way to build a successful business, and as The Noughties progressed, it became clear that just one company was really making any cash from Google ads: Google. The giant made $5.94bn in revenue in its most recent quarter, up seven per cent, while profits climbed to $1.64bn, a 27 per cent year-on-year leap. All that during a traditionally slow quarter for ad spending, and during a recession.
Technology with the most utility of the decade: USB
Before the 2000s, PCs and devices such as scanners and printers plugged and played with each other via serial and parallel ports. Problem was, there were different ports for different devices, and different ports from different vendors with different devices, which made things pretty complicated and - worse - expensive for the industry. They also set limits on PC-peripheral interoperability.
IBM, Microsoft, Intel and others decided to end this, and in 1996 began work on a standard data-transfer interface that became the Universal Serial Bus; a version 1.0 spec passed that year. It was USB 2.0 in 2000, though, that really changed things with faster 480 Mbit/s throughput compared to USB 1.0's 12 Mbit/s.
Suddenly, PCs, scanners and keyboards weren't the only ones plugging and playing nicely. USB's compact size, speed and openness meant hubs, videos, microphones, cameras, cell phones, chargers and increasingly smaller, high-capacity devices were also starting to plug and play.
Then USB took an evolutionary step. It became a device in and of itself: from thumbnail storage that started at 256Mb and grew quickly to gigabytes, to wireless adapters from Orange and Verizon that killed the clunky, vendor-specific PCMCIA cards and made portable computing more lightweight and affordable.
No wonder Intel chose to boast about the fact that USB co-inventor Ajay Bhatt is one of its employees during a campaign celebrating how far the industry has come using the chip giant's technologies and its brains.
The new Microsoft of the decade: Google
It took Microsoft 20 years to shift from technology David challenging tech giants to opaque corporate entity of dark and unclear motives that screwed partners and the competition. Google achieved that in half the time.
In the 1990s, Microsoft sullied the good name that it had started building in the 1970s by forcing OEMs to ship IE to kill Netscape and by closing down small rivals by launching its own versions of their software and then charging low or no price. And there were the apparent invasions of privacy, with Windows supposedly spying on users and reporting back to Redmond.
By the beginning of the Noughties, Microsoft had been put in its place. Judge Jackson's findings of fact came down in September 2000, and the settlement came in November 2001.
In 2000, Google was a two-year-old start-up that dug out information better than its bigger rivals, had a cheery "don't be evil" mantra, let employees devote time to pet projects, and rolled out one free application after another.
Now it's the internet's single largest search and advertising company. Google is the Goliath. As such, people are asking what such a massive company does with the information we surrender each day when we search, send emails, compile spreadsheets and upload videos.
Just this month, Google announced its own DNS service.
And with the company controlling 70 per cent of the search market, many are questioning whether an antitrust investigation is in order. Google will tell you that advertisers set the prices on its search ad system, but the reality is much more complicated, with Google-controlled algorithms deciding when and where ads are posted and how much is charged. The reality is that the AdWords is a black box knowable only by Google.
Much the same goes for the company's "organic" search algorithms. Google tweaks its algorithms with sweeping consequences that shape traffic flow and make Google a choke point for the majority of online ad dollars and traffic.
For open-source partner Mozilla, meanwhile, it delivered a solid slap in the face: Having put code into Mozilla for Firefox and provided more than 85 per cent of Mozilla's cash, Google decided to go its own way with Chrome, raising questions about the future of Firefox and Mozilla's funding.
Throughout it all, the company that's slowly creeping into more spheres of daily life and the web has been aloof and unaccountable. It has dismissed privacy concerns with the conviction of a committed Tory saying anyone who has a problem with intrusion online must have something to hide. And it sees no problem with laying claim to more of the world's data simply so it can sell us more ads.
Kleptomaniac of the decade: Oracle
Oracle bought eight companies between 1994 and 2004. During the last four years it gobbled up 56 - or their technologies. Targets ranged from mighty competitors that alpha-CEO Larry Ellison had toyed with - BEA, PeopleSoft and Siebel - to niche specialists as Oracle expanded its market share and rounded out its stack.
You can expect more M&A next decade: number 57 - Sun - is already hanging and acquisitions drive Oracle's growth in what's a stable and saturated market. Ellison in 2006 committed Oracle to achieving 20 per cent earnings annual growth until 2010. It claimed a number closer to 30 per cent at the end of its fiscal 2007.
Executives set out a new goal in October: to more than double revenue in the next five years and grow earnings per share by 20 per cent. Each deal followed an orderly and predictable process of interviews and Oracle cutting the fat. Oracle wasn't precious either, spiking its own technologies if it bought something better - as with BEA's WebLogic at the expense of its own application server. Price hikes accompanied purchases - 47 per cent in BEA's case. Ellison's eloquent defense: take it or leave it.
Having bought most of the competition, the question is: where does Oracle go next? Ever the risk-taker, and having nailed software deals, Oracle clearly felt it was up to the challenge of buying a hardware and software company, if only for the software. That company is Sun.
But Ellison likes his independence. One thing he hates more than being beholden to Microsoft and Windows is being beholden to IBM and its Global Services. Expect Ellison to look at buying into services: He's got the stack and the apps already. That is, if his company doesn't choke on the challenge of assimilating and turning around Sun's business.
Didn't see that coming moment of the decade: netbooks
Just when you thought PC form factors were done and innovation as far as US PC makers were concerned was a foreign country, Asus stepped up with its sub-laptop EEE PC in 2007.
The machine was smaller and lighter than the smallest notebook - measuring no more than 8.9 by 6.5 inches and weighing about two pounds, and dumped the idea of disk storage for solid-state drive to get there. It was also cheaper because it didn't license Windows and ran a custom version of Linux.
There had been similar small-form-factor devices called sub-compacts before from Apple and Psion - who used the name "netBook" and who tried in 2009 to prosecute retailers and PC makers demanding payment for their use of the phrase "netbook". But such devices were often over-priced for what they offered and never caught on.
The EEE PC exploded with such force it caught slumbering US PC makers and Microsoft by surprise and added much-needed growth to a slow business. Gartner this year estimated that overall PC shipments for 2009 would grow by 2.8 per cent compared to 2008 to hit 299 million units. The number of netbooks shipped is expected to more than double to hit 35 million.
The ramifications of the netbook have been huge. Hewlett-Packard and Dell have been dragged into building machines while Microsoft has had to keep Windows XP alive, in part, as Windows Vista was too fat and slow to run on a netbook. Netbooks accounted for between 10 and 11 per cent of Microsoft's client revenue each quarter this year.
But with their low average selling prices, netbooks are hurting OEMs and Microsoft. Most units sell for around $200, meaning there's not much profit to be had. US PC makers would be happier if people bought more expensive laptops, and have been coy about their netbook plans. Microsoft would also prefer that its OEM and retail customers buy more expensive SKUs of Windows, rather than Windows XP.
Netbooks have given a boost to Linux in a market where it has always been challenged: the PC. Researcher ABI reported that Linux is on 32 per cent of those 35 million netbooks that will be shipped in 2009.
The normally visionary Apple, meanwhile, has been put both on the defensive and the wrong side of history by netbooks. The company killed its popular netbook-sized 12-inch PowerBook class of machine in May 2006 - before that ground-breaking Asus device - and pushed instead 13-, 15- and 17-inch laptops. This year Apple snootily dismissed netbooks as "junky and unusable".
Those who have embraced netbooks, particularly Acer, have done remarkably well. Such was the netbook's boost to Acer's business that the Taiwanese PC maker in 2009 beat Dell to become the world's second largest PC maker.
Much-needed correction of the decade: recession
To paraphrase Lady Bracknell in The Importance of Being Earnest - to have one recession in a decade may be regarded as a misfortune; to have two looks like carelessness. The decade closed as it opened: With Microsoft launching a new version of Windows just as business customers cut their spending and IT companies were forced to lay off thousands of workers.
The causes of both recessions were different, but both followed periods of IT-related excess - or as those in Silicon Valley kindly called it, "exuberance". In the early 2000s dot-com companies who had IPOed and lavished buckets of cash on expensive technology and flying first class finally had their legs cut out from under them when the stock market crashed. With them went telcos and hardware and software suppliers.
By the late Noughties, there was a new frugality: nobody was flying first class, while Linux and open source meant the technology had become cheaper, reducing start-up costs.
Still, many companies were going live minus sustainable business models and crazy deals were being done.
It made sense - Silicon Valley's talking heads said - for Google to buy video phenomenon YouTube, for Yahoo! to grab Zimbra even when it already had its own email, for eBay to snatch Skype with some vague idea of having buyers and sellers talk to each other, and for News International to strap teen sensation MySpace to its information empire for billions of dollars that they'd never see again.
In the dot-com boom, the exuberance had been "irrational". This time, the talking heads intoned, it was "rational". In a world of growing online destinations, it was all about the traffic. This would allow synergies and ad revenue to flow like honey. Exact details would follow later.
Funny, synergies were also what the dot-com flag wavers used to justify deals such as media giant Time Warner's purchase of bucket-shop ISP AOL in January 2000. As The Noughties closed, Time Warner was spinning out AOL, Yahoo! was reported to be hawking Zimbra, eBay sold Skype, MySpace was eclipsed by Facebook, and Google struggled to sell ads against YouTube.
Now, as at the start of the decade, when outside forces burst the tech bubble, it didn't matter whether the exuberance was rational or irrational - the effect was the same. People lost jobs and money, the hype was burned away, and cheerleaders were left polishing their resumes in quiet hibernation.
The response from tech companies was consistent then as now. Hucksters like Dell and Microsoft told businesses there was no better time to spend on technology, because it would leave them in a better position against the competition when the economy returned. No matter they were flogging wildly different things, like server hardware or business intelligence software. Just sign the check. Please. ®