Commodification and Operating Systems

I'll warn you in advance: this is going to start off topic and go way off topic. "Catching up" with the changes to Mac OS, Windows and Linux has me thinking about the nature of technology. I feel a little bit guilty about this post because it's going to turn into a rant about Vista, and ranting about Vista is like shooting fish in a barrel. On the other hand, having used Vista, well, I have a lot of rant to give.

One of the most important things to understand about technology (and computers are no exception) is that changes in the scale of the technology change the very nature of the technology. That is, as you make computers faster and cheaper, at some point the sum of all of those small improvements changes the fundamental nature of the beast. We've seen this as the computer transformed from main frame to desktop (which is really just a change in cost and size), finding an entirely new audience, and now again as the computer changes from what we know of now as a computer to cell phones, MP3 players, and other small, mobile devices.

"Commodification" is what happens when, as things get better, cheaper, faster, etc., consumers stop caring about the marginal improvement. Back in the days of Windows 95 and 386's, there were ways you could improve the operating system and hardware in substantial ways; a doubling in processor speed and a rewrite of the operating system got you protected memory, which meant less data loss.

A few years ago we reached the point where desktop hardware became commodified. For the average user, 1.8 vs 2.2 ghz makes no difference at all. It's a question of how quickly your computer can wait for keystrokes and data from the internet. (Answer: even a lowly Celleron is light-years faster than the I/O devices it typically has to talk to. Even if you're the last kid in your class at Harvard, you're going to be bored discussing politics with a bunch of four-year-olds.) At that point things became very difficult for major vendors like IBM (sold out), HP and Compaq (merged), Gateway (bought out of it's misery), etc. The price of a desktop plummeted from over $1000 to less than $400.

I believe we've reached the point where operating systems have become a commodity as well;

• Every major operating system has all of the features of a "real" operating system - that is, protected memory, virtual memory, plug & play driver support, etc.
• The performance for normal applications is just about the same; there are some specific variations that matter in the server market, but for all practical purposes the operating system is not in the way, and the machine is much faster than users need anyway.
• Every major operating system has a similarly designed GUI experience that, once you get used to the quirks of where the close box is, is just about the same, more or less. (Mac users - keep your pants on. :-)

And this is why life is not so good for Microsoft. In a non-commodified market, you can charge a premium for incremental improvements over the competition. That's a game Microsoft can play - they have a lot of capital to invest in changing their operating system, as long as they are rewarded with a lot of cash for doing it. (And normally they are - about six billion dollars for a major OS revision, I'm told.)

The problem is that operating systems are now a commodity. Simply put, users don't need a new operating system. There are no big ticket features missing from OS X 10.4, Windows XP, or Linux 2.6. This makes Microsoft's business model fundamentally vulnerable to Linux for the first time. If the name of the game is:

• Keep costs down, as low as possible.
• Incrementally improve quality very slowly without ever causing the pain of a major OS upgrade.

That's a game Linux, with their army of distributed bug fixers and free source code, is going to win.

When I looked at Windows XP and Ubuntu 6.06 I was afraid that Linux wouldn't make traction into the desktop market. I blamed the adoption of X11, the KDE/GNOME schism, and the Linux communities' being made up of Shell nerds for the tolerable desktop experience.

But look where we are now: Vista is a vehicle for bloat. Combine "we make money by shipping major features" and "there are no more major features to ship" and you get Vista...an attempt to change a lot of things when you should have left things alone.*

By comparison, Ubuntu pretty much just works - you put the live CD on your machine, it asks you some questions and installs...it knows about more hardware, has less bugs, more drivers, and a better user experience. In a commodified operating-system space, the only thing to do is try to avoid a bad user experience - if you can't offer a really juicy carrot to users, try to avoid hitting them with a stick.

And it is in this environment that the Mac is actually gaining market share. Apple's business model has always been at odds with the industry. Complete vertical integration meant higher costs, lack of market share, and out-of-date technology - back when having more for less meant something, that was a real weakness, and explains why the Mac never dominated in market share.

But what a difference a decade makes! Hardware is now commodified (and Apple is integrated at the system-building level, leveraging cheap third party parts like they always should have). Operating systems are commodified. But on the one frontier left, quality of user experience, Apple's vertical integration gives it an immense advantage.

The question is: why does an operating system "just work"?

• Vista: it doesn't. There are too many systems and not enough testers and engineers trying to solve the problem.
• Linux: massive distributed engineering. For any given hardware system, eventually a Linux nerd will integrate it. Anyone can solve the problem of poor user experience.
• Apple: they have it easy. With only half a dozen machines in production (and maybe another two dozen legacy configurations to support) they have a much smaller configuration space to worry about than anyone else.

I don't kow what Microsoft's future is, but it can't be very good. At some point they are going to have to transition from a "major revision for cash" to an "incremental tuning" approach to operating systems. As long as they have market share, they still get the "Windows tax" - that is, their OEM pricing from major vendors on every new computer that is built. It's going to be harder and harder to convince the entire world to make a major jump (see how well XP to Vista went). In this situation, they'd be better off with a more solid operating system. It's unfortunate that they're going to have to try to sustain market share with Vista.

Their best-case scenario is that they eventually get Vista back to an XP-quality experience, in which case all they've done is spend a huge amount of R&D money and pissed off a lot of customers to maintain the status quo.

* I have mixed opinions on Vista's video-driver-model change. But that's a different post.