Software giant Microsoft is a subject I’ve wanted to write about for some time, but since it seems like everyone is quick to voice an opinion about them, usually either harsh criticism or fawning adoration, I’ve been reluctant to do so. Nevertheless, it does seem like we may be reaching a turning point in public perception of the company, so maybe this is a good time to contribute to the discussion.

What’s been lacking is a balanced view of Microsoft. People outside the tech industry often hold them up as a paragon of American innovation and a poster child of capitalism. Most folks inside the industry seem to scowl at the incredible naivete of such a perception of Microsoft, maintaining that it is actually an 800-pound gorilla fast-follower and a monopolist. While I tend to agree more with the second view, these arguments have become well-worn and not very useful.

My perspective is that of a long-term Microsoft customer, but non-Windows user. I’ve been watching Microsoft ever since I bought Level II Basic for my TRS-80 Model I in 1980. Way back then, I noticed there was a certain professionalism about that product, and the assembler software I bought soon after, that impressed me. It was certainly untypical for the time.

Because of that professionalism, I was not at all surprised Microsoft thrived in following years; in those early years it seemed they were succeeding from having a superior product. In the mid 80s, it seems to me their success started to stem as much from taking advantage of other companies’ missteps, which were many as these grew and often went out of control, typically by trying to do a major rewrite of their software that seemed to never ship.

Microsoft has always been adept at acquiring good software from the outside, and its purchase of the Excel package in the mid 80s was probably one of their best moves. If I remember correctly, it was offered on the Mac by late 1985, long before it took over the DOS market (Lotus never did well on the Mac), and I have used it ever since.

Having made the jump to Mac in Spring 1984, I am well aware of how Apple squandered its early advantage in operating systems. Today, however, the situation is very different. Apple is executing well and has a coherent, forward-looking strategy, whereas Microsoft seems rooted in the past, unable to move beyond its Windows franchise and embrace change from the outside world.

Peter Drucker has often commented on how companies need to kill off the past before they have to, in order to preserve their position in the market for the future. I can’t help but wonder if this is the point Microsoft has reached regarding Windows. Apple spent years trying to build a great operating system from the ground up and finally threw in the towel, bought NeXT and moved to Unix.

I wonder if Microsoft is really not doing that much better. Maybe they should embrace Linux or Unix or something rather than fight it. In any case, Windows is their past, not their future, and their recent enhanced emphasis on MSN as a platform is a long-overdue step away from Windows and toward the internet.

By making everything revolve around Windows, they are stifling product development. They need to gradually wean themselves off their Windows monopoly and put more resources into Office, which despite new competition could have a bright future, Visio, and many of their other productivity packages, as well as MSN and various internet opportunities.

Perhaps one of the greatest threats long-term to Microsoft is the Eclipse tools platform, which continues to rapidly gain momentum. If the theory holds that whoever attracts developers ultimately gets users, then Eclipse’s growth relative to Microsoft’s Visual Studio toolset could have a long-term impact.

In general, while Microsoft prides itself on the billions it spends each year on research and development, I suspect years from now it will be regarded as a case study on how not to do R&D investment. It’s not at all obvious that they have gotten much for their billions. For years they have been touting natural language and usability testing, for example, but there seems to be little to show for it in the first area and still a lot of frustrations at times in the second.

One concept Microsoft needs to embrace is the realization that usability ultimately revolves around proper interoperation with other vendor’s tools, both on the device and the web. Microsoft’s strategy of relying on lock-in at the expense (often deliberate, it would seem) of interoperability has worn out its usefulness as more and more innovation comes from outside the Windows platform. As technology and life in general continues to get more complex, user expectations for interop, security, and other types of stability will continue to increase.

Ultimately, what Microsoft needs to do is to grow up. Gates and Ballmer have long touted the need to be “paranoid” in order to survive in the tech industry. This may have worked when Microsoft was small and IBM was the giant, but now that Microsoft is dominant, the idea of a paranoid 800-pound gorilla doesn’t bode well for the industry as a whole or for the users.

Like a teenager, Microsoft shows much promise in an industry that is entering a new era of innovation, but it must mature and come to grips with its own limitations. It can’t be everything to everyone and must learn to coexist with other independent players who aren’t chained to Windows, such as Google and Adobe/Macromedia. Microsoft must conscientiously incorporate standards from the outside and adjust its business model to one that acknowledges users may want to use its products in a mixed environment with those of other vendors.

The pace of change in the software business is speeding up again and Microsoft will be left behind unless it embraces the change, rather than trying to control it.