IO: ‘WATCH OUT FOR MICROSOFT,’ SAYS CD-ROM VENDOR

Microsoft’s recent acquisition of exclusive rights to Dorling Kindersley’s inventory of literary properties has put the community of electronic publishers on notice — it is clear we will be competing directly with a Microsoft intent upon dominating electronic publishing. Recent history has shown there is no way to win competing with Microsoft on its own turf.

Min Yee, the president of Microsoft Press, has been quoted as saying, “I don’t think other publishers like Random House are scared of us.” They ought to be terrified. The Dorling Kindersley library includes over 400 titles in print, including the AMA Family Medical Guide (7.5 million books sold, 6 million by the aforementioned Random House) and The Way Things Work (1.5 million sold). DK has more than text. There are reportedly over 300,000 images in DK’s archives. Factor in Microsoft’s rumored development of the Columbia Desktop Encyclopedia on CD, and it is clear that Microsoft has picked off the sweetest publishing opportunities in the realm of home reference.

Dust in the wind. Electronic publishing is as yet a tiny portion of the traditional publishing business, and many big publishers have not taken note of this turn of events. The threat Microsoft poses to their future should be noted immediately. In the words of the Software Industry Bulletin, “Traditional publishers should be scared of Microsoft — They should be evaluating multimedia technologies and opportunities now to avoid a scenario five or ten years from now where they are only minor players in a new publishing dimension.” And we small publishers are merely dust in the wind.

If Microsoft can accomplish one simple goal, then the game is indeed over before it has really begun. That goal is the exclusive licenses, Microsoft can play out a strategy not unlike the one contemplated by Sony in its acquisition of CBS Records and Columbia Pictures. With the acquisition of DK, Microsoft is strides ahead already, and it has a great deal of money left in the coffers.

Microsoft is preparing for a contest that will pit it against an array of world-class electronics companies (Sony, Philips, Commodore, Apple, IBM and others). The prize to be won is the American Home. The competitors will be selling low-cost CD-ROM-equipped computers, much like Commodore’s CDTV product. With the right properties exclusively held, Microsoft can make life miserable for anyone interested in electronic publishing.

No exclusivity. The prescription for big publishers is simple: don’t sell Microsoft or anyone else exclusive rights. They could uses such rights to withdraw key properties from exploitation on platforms competitive to the Multimedia PC. Or they might just decide to compete on those platforms, as well. Note well what Microsoft has accomplished on the Mac — a platform directly competitive to DOS.

The prescription for fledgling electronic publishers is equally clear. Before they spend the $200,000 to $400,000 it will likely take to develop a shippable multimedia title on CD-ROM under Multimedia Windows, they should calculate how long they will have access to shelf space before Microsoft picks them off. They should be equally careful about carrying on open discussion with Microsoft personnel about product plans.

Bill Gates is reported in a major computer trade magazine to have warned a friend not to tell him anything that he might use to competitive advantage, as he would not hesitate to use it for just that purpose.

That is precisely the kind of strategic partner one can expect to have in Microsoft. Ask IBM.

Peter Black
Xiphias
Helms Hall
8758 Venice Blvd.
Los Angeles, CA 90034