Softer Microsoft leaves rivals short of challenge

Wired on Friday: Not gone but quieter: two figures stepped down from their high-publicity roles at Microsoft in the past few days.

The first you may have heard of: Bill Gates resigned his full-time role of chief software architect at the company to spend more time with his money. Or, to be more charitable, Gates is planning to be more charitable; he has chosen to work full time at spending his wealth on good causes.

The other figure is almost as well known within Microsoft, if not outside. At the start of June, "Mini-Microsoft" announced that he was taking a break from blogging his criticism of the company. Mini-Microsoft is one of Gates's anonymous employees, who has spent the past two years advocating online that Microsoft be cut down to size - strip away some of its 70,000 employees and return to its old days as an agile, flexible brawler in the home software market. He's one of an increasing number of critical voices from within the Redmond campus dissatisfied with the company's recent pace of innovation and also, no doubt, its current pale stock price growth.

Now that Bill has gone, will Mini-Microsoft's dream come true? Will the knives come out at Microsoft now that the fabled leader, and the confidence the market placed in him, fades? It seems unlikely. For many years, its direction has been a sashay into gentle stability.

While its employees fret over their stock options and inspiration, the company is under no serious risk, and continues to maintain its key products, albeit in a less than revolutionary way. Over the past five years, the meat and potatoes work has been new versions of Office and the update to Windows, Vista. Both will not, and weren't expected to, change the world.

Is Microsoft showing its age by becoming so conservative? Perhaps it doesn't need to be as agile as in earlier times. It's significant that the company's work that has come closest to being innovative has been from its Xbox unit, now on its second generation product. In the console market, Microsoft faces real competition. Elsewhere, the competition threatens nothing more than its reputation.

When Microsoft last responded in a sprightly fashion to competition, it was because these two core businesses were seen to be under direct threat from the internet, back in 1995. The company triumphed in protecting both markets, although it was obliged to face a monopoly investigation to do so.

The internet, if it ever was, is no longer a direct menace. The company has now settled into a sometimes uneasy relationship with the wider, open network.

Its products speak the language of the internet, but with an accent- and often prefer to talk among themselves rather than integrate into the world of the web and e-mail. Meanwhile, companies like Google have moved to fill in the ecological niches left by Microsoft's institutional reticence to wander far from its core products.

Like a later Roman emperor, Gates's successor's work may involve guarding the borders more than marching on new enemies. Last week, Google announced a spreadsheet product - not more than a toy compared to Excel - but clearly, a shot across the bows. Dell announced that it would be pre-installing a suite of Google programs on its PCs, a move that would have caused panic attacks at Microsoft just five years ago.

Gates's successor, Ray Ozzie, has already thrown his work into setting up competitor projects aimed at Google's prime markets, search and web advertising, and made it clear that he intends to move the company toward, if not directly at the heart of Google.

But there will be no fight to the death on either side. Ozzie has the engineering brains of Gates, but he is a gentler, more diplomatic, business leader. Ironically, his business lessons comes from facing Gates, rather than standing with him. That teaches you to avoid confrontation in the marketplace rather than seek it out.

Now Google and Microsoft seem almost happy to divide the tech world between them, or at least refuse to become ruffled by the other's actions.

Google has grown too large to be smothered by Microsoft, but too canny (or too self-involved) to directly take on the giant. It's hard to even imagine the hyperactive, super-competitive Steve Ballmer, still the company's chief executive, throwing chairs over Google's distance ascendancy.

Gates has said that his move doesn't represent a "retirement, more a changing of priorities". Its effect on the company seems to be the reverse. Like IBM before it, Microsoft's edge has been softened by its battles with regulators, the aging of its executives, and the declining need for precipitous growth.

That may not be as good news for the rest of the tech market as it sounds. Without a healthy terror of Microsoft, new companies seem to be settling into an accelerated senescence of their own.

But perhaps that merely opens the possibility of a lateral attack from a new entrant. Microsoft and the giants of computing slumber, but the barriers to entry remain low. A resurgent Apple, working with Hollywood and the music industry, could shake things up.

Or perhaps it's time that this generation - Jobs and Ballmer, Ozzie and Gates, all in their fifties, stepped aside for ruder youngsters. And perhaps then the over-eager Mini-Microsoft will get his dream of a real fight after all.

Danny O'Brien is activism co-ordinator, the Electronic Frontier Foundation