Why Microsoft Will Never Win (Again) 13 comments
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There are many great moments in the Wall Street Journal’s retrospective about the changing of the guard at Microsoft (MSFT) which describes how former CEO Bill Gates fought with — and, in classic Gates fashion, sarcastically undermined — new CEO and friend Steve Ballmer in front of the troops. But one of the things that jumped out at me (as it did at Zoli Erdos) was the part where the article describes the fate of NetDocs, an attempt by Microsoft to grapple with the freight train that was rushing headlong towards the company (and continues to do so): namely, the advent of Web-enabled Office-style applications.
In one case, two vice presidents clashed over the future of NetDocs, a promising effort to offer software programs such as word processing over the Internet. The issue: Because NetDocs risked cannibalizing sales of Microsoft’s cash-cow Office programs, some executives wanted NetDocs killed.
Messrs. Gates and Ballmer were unable to settle on a plan. First, NetDocs ballooned to a 400-person staff, then it got folded into the Office group in early 2001, where it died.
In other words, Microsoft geared up to deal with the potential threat posed by Web apps, and then at some point decided not to. Obviously, the potential for Office-style Web services was mostly that — potential — rather than reality in the late 1990s. So you could argue that Microsoft didn’t really need to deal with it at the time. But just think about how much further along that understanding curve the company would be now, instead of letting the fear of cannibalization push it away. At some point, the company will have to grab that nettle firmly, and it’s not going to get any easier — if anything, it’s only going to get harder.
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This article has 13 comments:
A good analogy of Office business would be how Dial-up computing was for AOL. AOL was reluctant to make any content available that would jeopardize dialup business which led to proliferation of Yahoo!, Excite and likes. MSFT is in the similar shoes. If they want to preserve MS-Office, it would make the competition stronger.
Another area of dominance in the future would be in mobile computing. Because of iPhone, Apple will certainly have a huge advantage. Blackberry would be a formidable player in the arena and so is Nokia. Msft - windows for mobile has been more as also ran. MSFT needs to capture this market at any cost and would make sense to look start from scratch. There is no need to worry about windows platform which makes it too cumbersome. What is needed is a simple, nimble system that offers advantage.
But understanding the technology of "web-based" personal-productivity software will NOT be one of the reasons. The technology is coming up on 35 years old. One of Ray Ozzie's first jobs in the industry (if not his first) involved working in the one of the first software labs that "perfected" the idea in the late 1970s. (See www.ebizq.net/hot_topi...)
The idea is now so quaint: write/draw/spreadhshee... something at your desktop and store the result in a centralized location (your company's computer). That gave you and your fellow employees easy access to it whether you were at work or at one of your company's branch offices or at home with the ASCII terminal and Hayes modem you begged them to give you.
[Little did you realize that you had started the ball rolling on the idea that you were available to worry about their widgets 24x7 :)]
Why sacrifice dominance in a highly profitable market now, for a larger share of a possibly equally profitable market in the future? Which would have the greater NPV?
First, with such high market penetration in the OS and Office market there really is nowhere to go but down in market share. The only question is how far and how fast they will go down. IBM and GM are good studies in this respect. All three have had dominating market postions, then a Justice Department decree, then the struggle to hold on to market share.
No one mentions the fact that Obama has declared that he will strengthen anti-trust enforcement. Any question who is on his target short list? That will have a bigger impact than technology shifts or Google.
All of the "religious" discussions, such as OpenOffice.org, discount Microsoft's impeccable P&L and balance sheet. In the end the one with the most cash and best management to put that cash to good use will win. Unless there are government interventions.
There's very little to conclude about Microsoft's current prospects from its actions 10 years ago. It is a different company.
But still, after working there 1993-2000, I don't own a single share :)
Yes, 3M, the "Post-It Note" folks are known to have to produce new products every few years -- and those new products will be their cash cow. I think there is a saying something along the lines that "80% of 3M's revenue will be from new products!"
So, look as Microsoft's business. Their cash cow dates back from DOS and Office. That's pretty much what the company was founded on and has been doing for over 25 years. Seems to me that the Internet is STILL not on their radar! All the while, if you look at Apple, the Macintosh is what their baby has always been, but now the iPod and its iTunes music sales have been the biggest part of their growth. They are looking to do it again with the iPhone.
When I lived in Seattle, most people focused far too much on marketshare. The thing is that while Apple had 3% marketshare, they could double to 6% and still have plenty room to go. However, people fail to think about a 30+ year old business that can easily double and still have plenty of room to grow! On the flipside, Microsoft has 93% or so marketshare today -- and let me tell you -- you can't double that! So, marketshare can help show you the OPPORTUNITY for growth. Microsoft has been holding on far too long to its baby. Speaking of which, MS asked Apple to "knife the baby" and get rid of QuickTime. Can you imagine the world w/o QuickTime? Its only the basis for MPEG4 and what the iPod / iTunes is built upon.
Say something new. Thats been the byline for 10 years running, and its getting old. AOL was going to kill Microsoft. So was netscape, sun, oracle, sap, open source, google, apple, linux, open office, php, mysql, ibm, novell, gpl, real, adobe, symantec, quicken, and the list goes on and on.
Yet, profits at msft have never been better. Wishful thinking on your part, is just that - WISHFUL. Doesn't make it true or happen any faster. And in the years between your blind prognostication... and any measureable loss by msft: only proves your inaccuracy.
perhaps you forgot sql server and exchange. Both highly profitable and growing.
Oh yeah, that's right. Gates wants to reduce spam by charging a penny for each email sent. Yeah, that'll fix the problem of spam! Come on...
Microsoft is a very successful business. Their approach to everything is "all business." I recall having Entourage (mail client for Mac), but in order to have spell checking, you need to have the Office Suite.
Microsoft has this same approach to most everything else. He's one piece of software, but if you want this feature, you'll need to purchase another product, ... and so on.
I recall Windows Server having an "add-on" for managing memory! Hello? The most basic function on an operating system is to manage memory! However, if you want it to do an ever better job, purchase this add-on, etc.
MS does not want to license anything from anyone, ... which is understandable, ... but at the same time they rush to reinvent the wheel each type a new technology comes out so they can be the "me to" of the tech industry. Well, a lot of the time their competing product just doesn't stack up against the others due to their resources being used to always rush to stomp out any particular competitor.
Google is better for search; Oracle is better for databases, iPod is better than Zune, etc.
"MS does not want to license anything from anyone"
You're entitled to your opinions, but this statement is factual inaccurate. There is perhaps no other company in the software industry who licenses more software from other companies.
"Oracle is better for databases". Now come on. Don't let your hatred of microsoft cause you to say wholly ignorant things. Don't lose focus that your can personally not like a group of people (Microsoft) without making every action/product and word out of their mouth... pure evil. Stop trying to draw a characture of a company for the sole purpose of making it easier for you to spew venom on them. Thats childish.