I have never paid for an operating system on any computer I own. There. I said it. I am a dirty pirate. I’ve owned computers with Windows 95, 98, 2000, XP, and I didn’t pay for any of them. And there isn’t an ice cube’s chance in hell that I’ll ever pay money for Vista.

However over the course of my career I have contributed (in a very insignificant way) to Microsoft’s bottom line. See, I used to build and sell computers for a living, and whenever I did so, a copy of Windows was sold with it. Does this right the wrongs of my pirate past? Not at all, however people like me were part of the ecosystem that gave Microsoft its monopoly. If we were forced to pay for it back then, there would definitely have been a few more of us dabbling in open source.

Software is not like a traditional good or service, as after development costs are accounted for the cost of supplying it to the customer is virtually zero. If the customer pirates it, the cost actually is zero as the company was not part of the distribution chain. So by pirating Windows, you actually have no effect on Microsoft other than increasing their market share (which in the 90’s was dangerously close to 100%). Usage breeds adoption, market share and sales.

So here are the ways in which I believe Microsoft has shot itself in the foot:

1. Killing development of Internet Explorer
   When XP was released, IE6 had over 90% of the web browser market. So what does a monopolist do in the absence of competition? It ceased development, and we got the security farce that was 2002 – 2004. Around this time, Firefox appeared, and gained market share that IE will probably never get back. 
2. The long wait for Vista
   It was too long, everyone knows it. If we’d had a more gradual migration path from XP, and if the upgrades were cheaper, the blow would have been softened significantly. In my view Apple has it right. Each new release of OSX brings some changes, but it isn’t all that different from the previous release, is often faster, and upgrades are generally painless.
3. Windows Genuine Advantage
   Despite the fact that Vista can be pirated, it is complicated and inconvenient to do so, and you will probably have to wipe you hard drive and reinstall it every 6 months as WGA can only be reset so many times.So quite a few tech enthusiasts such as myself don’t bother with Vista – they install Linux. Some of these tech enthusiasts build and sell computers as a hobby, so when Aunty Jane comes along asking for a cheap computer for Internet and Email, what do they recommend?
4. Steep hardware requirements for Vista.
   Microsoft has been caught with its pants down. It completely failed to anticipate the market for small, highly portable, low power computers. This includes the Asus Eee, Intel Classmate, and the OLPC project. It planned to kill off XP next year despite significant demand, and the fact that Vista will not run on low power devices.

There are several things Microsoft could do with the next release of Windows to slow the adoption of alternatives:

1. Get rid of WGA
   If Windows is easily pirated and practically free to those that don’t mind using unlicensed software there is less incentive to try free software. Only Microsoft accountants and executives are privy to the effect that WGA has had on Microsoft’s bottom line, but I dare say it will be less than the effect losing a significant chunk of market share would have. 
2. Release regular updates to Internet Explorer
   And make it a viable development platform for web developers.
3. Release regular service packs for Windows, at least one a year
   Microsoft already plans to release a new version of Windows every 3 years which I believe is a good move, but it remains to be seen if they can actually keep to this.
4. Make it scalable from low-power cheap laptops to high end servers
   This has traditionally been the weak point of Windows.

In the past few years we’ve come a long way towards a truly competitive software industry. I believe the industry is going to go more further towards true competition in the desktop space, as Microsoft has failed to anticipate a huge emerging market, and may not be able to react fast enough to get a modern version of Windows running on low power devices.

When XP was released, Microsoft completely owned the desktop operating system and web browser markets. While they still own around 90%, I am hopeful that things will look very different in 10 years time. Both OSX and Linux have made meaningful gains, but only time will tell if the traction alternative operating systems are getting will be enough to overcome the huge interia of the Windows world.