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The decline and fall of the Wintel empire

CNET's Michael Kanellos explains why recent missteps by Microsoft and Intel are not simply happenstance.

Waking up rich and confused.

That's how one analyst explained the recurring product delays at Microsoft, and the principle can describe similar problems at chip giant Intel. Instead of waking up sick and washed out, employees at these companies are seemingly dawdling a bit because of past successes and a hazy outlook.

You can imagine the scene: You're a product manager for Windows. You wake up one day and hear analysts and competitors saying that Linux will begin to creep onto desktops. At the same time, the Linux desktop may not happen for several years. Your financial outlook is better than you ever expected back in college. At the same time, you also see few great opportunities for rapid internal advancement or lateral placement.

Like ancient Rome, Microsoft and Intel both seem bogged down with pesky problems on the horizon.

Tackle a daunting project? Nah. I'll just stay at home, eat a box of Frosted Mini-Wheats and watch the Wacky Races marathon.

The creeping sense of privileged paralysis is one of the dominant themes of Edward Gibbon's "The Decline and Fall of the Roman Empire," perhaps the ultimate book about big organizations gone bad. (Todd Nemet, an engineer at Google, sends this sometimes-active link that allows people to test what kind of an emperor they would be.)

In over six volumes, Gibbon describes how the political and military leaders of Rome shifted from concentrating on governance to personal enrichment. The quest for continual growth outstripped their ability to control a sprawling land mass covering contrasting climates and various tribes. Augustus, the first emperor, clearly saw the problems with expansion, but his vision was discarded.

"The seven first centuries were filled with a rapid succession of triumphs; but it was reserved for Augustus to relinquish the ambitious design of subduing the whole earth, and to introduce a spirit of moderation into the public councils," Gibbon wrote. "Inclined to peace by his temper and situation, it was easy for him to discover that Rome, in her present exalted situation, had much less to hope than to fear from the chance of arms; and that, in the prosecution of remote wars, the undertaking became every day more difficult, the event more doubtful, and the possession more precarious, and less beneficial."

Like ancient Rome, Microsoft and Intel both seem bogged down with pesky problems on the horizon. Microsoft is trying to incorporate fairly elegant search technology and a dynamic interface into Longhorn. It also wants to expand Windows to accommodate 64-bit software. In addition, teams of engineers are working on game consoles, cell phone software and enhancements for television.

Meanwhile, Linux and Google are becoming more prominent in the technology universe. Direct, cutthroat competition is now frowned upon, so new ways of undermining these companies need to be developed.

For its part, Intel has delayed a number of server, desktop and notebook projects. Its communications division, meanwhile, continues to lose money, and an effort hatched in 2000 to take on Texas Instruments in cell phones has moved slowly. Last year, Intel tried to milk its flash memory division for more money, but it lost customers instead.

The frontiers appear to be doing better than headquarters. The underlying architecture of Intel's Pentium 4, designed in the United States, exudes too much heat; a version that was supposed to come out next year was canceled. Conversely, an Israeli design group created the successful Pentium M for notebooks. Around 2006 and 2007, the concepts from this lab will become the basis for the desktop chips.

Even with a well-coordinated, hypervigilant work force, Microsoft and Intel face the reality of dealing with three- and four-front wars.
Naturally, both Intel and Microsoft offer alternate views of the situation. Longhorn is a far more ornate update than the last three versions of Windows. In some ways, it will likely be closer to Windows 95, which was postponed a number of times but radically changed the desktop experience.

Microsoft, moreover, has established a foreign relations effort over the last 18 months that will potentially let it establish a bulwark against Linux in emerging markets. The company now has around 600 employees with titles such as "national technical officer" and "public sector director" that provide government officials in countries like Brazil with information on software educational issues, trade and intellectual-property regulations.

The company's outreach often raises eyebrows in the United States and Europe, but the help is likely welcomed in nations like Jordan and Poland, which are trying to participate more fully in globalism.

"We show them how to develop a local software industry," said Maggie Wilderotter, senior vice president of Microsoft's public-sector division.

For its part, Intel's recent problems pale in comparison with the recalls and Rambus-related glitches in 2000. It's also hard to slight the intelligence level or overall competitiveness of employees at both companies.

Still, the problem of size remains. Even with a well-coordinated, hypervigilant work force, Microsoft and Intel face the reality of dealing with three- and four-front wars.

"Intel shows every sign of trying to speed up its progress by assigning more people to each new project," Ashok Kumar, an analyst at Raymond James, wrote earlier this week. "This strategy has appeared to have reached the point of negative incremental improvements."

In Rome, circumstances eventually overwhelmed talent. The death of the last great emperor, Theodosius, in 395 A.D., led to a division of the empire between his sons Arcadius and Honorius.

"Honorius was without passions and consequently without talents," Gibbon noted. "He soon relinquished (official) occupations, and the amusement of feeding poultry became the serious and daily care of the monarch of the West, who resigned the reigns of the empire to the firm and skillful hand of its guardian Stilicho."

Both companies are strong, but if you see Steve Ballmer feeding chickens, the end could be quick at hand.