Friday, 19 August 2005

Microsoft's dilemma

There was once a possibility that Microsoft would be split into two companies: operating system (Windows) and applications. If that had happened, Bill Gate’s would have gone with the Windows company. Windows is a valuable franchise but, more importantly, it’s Bill’s passion.

But what would happen if, to save Microsoft, Microsoft had to sacrifice Windows. How could that happen?

Up till now, games machines have been, well, just games machines. However, the next generation will have more potential. One space waiting to be grabbed is the home server/media centre market.

An affordable media centre that combined TV, DVD, programme recorder, music, browsing, and email would be very attractive. In order to combine these features, you’d need an operating system. Once you have an operating system, you might think, “Why don’t I also provide some other applications, such as a word processor, spreadsheet, video editor and drawing tool?” Very soon, you'd have quite a handy personal computer.

Soon, Playstation 3 (PS3) and Xbox 360 will be slugging it out. Rumour has it that PS3 will support multiple operating systems and might ship with Linux. If it also allows for peripherals to be added, PS3 could become an alternative to a Windows Media Center Edition (MCE) PC.

If PS3 makes a grab for the home server space, Xbox will have to follow. They will both become alternatives to Windows MCE. Microsoft could end up shipping a PC (Xbox) for the first time – a market they’ve always kept out of. With Xbox, Microsoft could also end up competing with all those PC manufacturers - like Dell.

At the moment, Microsoft are trying to have their cake and eat it. They want you to buy both a Windows MCE PC and Xbox - and connect them using Media Center Extender. But if you can do most of both with one device (PS3), why buy two computers?

Therefore, if PS3 makes a grab for the home server space, Xbox will have to follow, which will undermine the Windows franchise.

And that’s Microsoft’s dilemma.


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