Lost in the Cloud

How did we get here?

Many years ago, before there was yet a new millenium—much less a generation to be named after it—Steve Ballmer and Bill Gates had clearly dominated the desktop computer marketplace with their super-successful Windows operating system and Microsoft Office combination. They had done very well, but not everyone was using Windows. That pesky Steve Jobs was still chipping away with his “non-business” Apple products. Especially in the Education market – that is: schools. Bill kind of enjoyed watching Jobs to see what he’d come up with next, but not Ballmer. He wanted to crush Apple. Period.

Turning their attention to the education market, Bill and Steve opted for the best and fastest way to compete. Philanthropy. They gave away Windows and Office to schools. This polished Microsoft’s image in the press. And at low cost. Microsoft’s many corporate clients had already financed Windows and Office, and with little competition, were locked into complex licensing agreements for years to come. This was great; Bill and Steve could write off the education donations at their full retail value—hundreds of dollars per unit. But, this wasn’t good enough for Ballmer. The problem was, it still cost Microsoft to ship boxes with disks, and manuals, and marketing materials to schools. “There’s got to be a better way!” He told Bill.

Bill thought about this. And then, he brought up a new idea with Ballmer: “What if we just gave them the ‘software license’? They can download and distribute it themselves. No disks, no manuals. We just send them a fancy postcard with a number on it. They’re responsible for the electrons. We just host the stuff on our servers. What do you think?”

“Brilliant!!” Ballmer beamed. “Full retail price tax write off for the cost of a post card!!”

And so began Microsoft’s ventures into electronic software distribution, to be rapidly followed by the “subscription model”.

To be continued…

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