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Chronicles

The story behind the story

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Microsoft's big nightmare: free online apps

A new generation of browsers is about to make Web applications better than downloadable desktop software.  —  (Business 2.0 Magazine) — The browser is the new OS.  Yes, we've heard this before, and if you're quietly groaning right about now, I can understand why.

Business 2.0

Context & Ripple Effects

Microsoft had already been reported to be considering making desktop applications free, an early sign that the company was confronting pressure on the paid-software model. The release of Internet Explorer 7 adds a concrete browser-platform element to the article's argument: richer Web applications would compete for work traditionally done by installed Windows software.

First-order effects

  • Microsoft faces pressure to defend the value of desktop software as browser-delivered applications reduce the advantage of locally installed programs.
  • Windows users gain a more credible alternative application environment in the browser, shifting attention from the operating system to the applications and services available through it.

Second-order effects

  • Microsoft's application pricing and distribution strategy becomes harder to separate from its browser strategy: free desktop software and improved browser capability both address the same Web-based competitive threat.
  • Enterprise software-management offerings such as Microsoft's Desktop Optimization Pack must compete with the appeal of applications that require less local deployment and maintenance.

Third-order effects

  • If browser applications continue to match desktop capabilities, control over the application platform shifts from the operating system toward browser standards, online services, and the providers operating them.
  • The commercial center of software would move from one-time desktop licenses toward service delivery and the recurring relationships that accompany it.

The trend: The browser is becoming an application platform, forcing desktop-software vendors to rethink both distribution and how they capture value.