7 comments

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  Brent P. Newhall

  1 year ago

  Nice way of putting it -- Each part of MS is too afraid of impacting other parts.
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  mikepk

  1 year ago

  This is a very common story in big companies. I worked in the research dept for a couple of really big ones, and while we like to think that innovation isn't the domain of big companies, you'd be amazed at the things that get imagined, specified, and even prototyped in the basements of large corporations that never see the light of day. Reminded me of an old post on a long forgotten blog that I resurrected and re-posted. http://mikepk.com/?p=23
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  mathewi

  1 year ago

  Thanks for posting that, Mike, and for helping make my point for me
  :-) You are quite right that it makes eminent sense for large
  companies to focus on the predictable parts of their core business,
  rather than the disruptive -- which is why the odds are stacked
  against Microsoft, as Bill Gates knows full well.
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  mikepk

  1 year ago

  Although if you believe Christensen, Microsoft could still do well if it split off new "innovation business units" from the main corporate entity. I'm actually not sure what the history of the XBOX is, whether they actually did that for that business unit or not.
  
  As I mentioned on Zoli's blog, I also think SilverLight is a wildcard. It's got huge potential, is much more attractive for traditional developers (flash is a werid environment to program in) and if MS figures out a way to produce a compelling MS office experience for the web using silverlight, that could be a huge force to be reckoned with.
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  mathewi

  1 year ago

  I agree, Mike -- it is certainly possible for certain elements within
  Microsoft to do innovative things. And yet, NetDocs was relatively
  innovative (at least for the time) and look what happened to that. I
  wouldn't say it's impossible, but the odds are stacked against it.
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  michaelocc

  1 year ago

  A resounding "amen" to all of this, including mikepk's comments and excellent related post.
  
  I lived through a very, very similar nightmare a number of years ago, while working for what was, at the time, one of the biggest software firms in Canada, a darling of the TSE.
  
  We’d been blisteringly hot for a few years, have risen to the top of the market on the back of the corporate shift to Windows 95/98 and client-server networks. Our main competitor had got stuck supporting an old, DOS and Netware-based product and a big installed base. We were the nimbler, more innovative company that had its Windows-native product out first.
  
  Somewhere around about the middle of ’98, though, a few of us were starting to get really worried. Almost 40% of our annual revenue was coming from maintenance contracts at that stage. We were comfortable, in other words; too comfortable. The company had developed something of a bloated, complacent, bureaucratic feel.
  
  Our biggest concern, from a product perspective, was the rise of the Web. We had been trying to squooge our product into something vaguely Web-ready for a while, but it was basically a trainwreck. We learned the hard way: you just can’t slap a new coat of Web paint on a clunky old piece of client-server code. Remember when software firms used to describe their products as “Web-enabled”? What a crock that was.
  
  There was a big 2-day management off-site meeting that year. At one point, in the midst of a lengthy debate in which we were trying to come to consensus around precisely how screwed we really were, I floated the suggestion that the only solution to our problem was to take some of our best people, fund them, and cut them loose to hire a brand new team and grow their own thing.
  
  Get them to start up a completely new company, unencumbered by any of our problems but with the experience, knowledge, and collective expertise we had developed over 15+ years in the market. The core of my idea was: let’s create our own best Web-based competitor. Let’s cannibalize our market share, before someone else comes along and drinks our milkshake for us.
  
  Alas: much argument, no agreement, and – in truth – not enough corporate cojones to commit to such a madcap scheme.
  
  Meanwhile, one of our very best resellers – a company that had built their entire (very successful) business by developing add-on tools and custom solutions around our core product, was secretly developing a pure, Web-native competitor to our cash cow. They did precisely what I’d proposed – setting up a separate, arms-length company to launch this thing once it was built (keeping their hand in the whole thing well hidden from us).
  Then they took two years to slowly slim down (and ultimately close) their original business, with almost all of the people they “downsized” coincidentally getting hired by this new kid on the block.
  
  You can guess the rest. We slipped slowly into the doldrums, only to be put out of our misery a year or so later through an acquisition.
  
  The upstart competitor went on to greater and greater things, ultimately converting a sizeable chunk of our former client base to their much shinier new product. They were, in their turn, also acquired for an almost indecently large amount of money, and the founders all got very rich.
  
  Meh.
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• 

  Michael Camilleri

  1 year ago

  This is related more to the title of your post than the actual article itself so I hope you'll forgive the indulgence. It seems to me Microsoft has been beset by four major failures in the past ten years or so:
  
  1. The failure to establish a dominant OS in the consumer electronics market.
  
  2. The failure to capitalise on their OS position in the cellular market.
  
  3. The failure to capitalise on their OS position in the Internet market.
  
  4. The failure to develop a vision for their desktop OS.
  
  Whether they can ever win again will be determined by whether they can turn any of these mistakes around.
  
  Developing a successful consumer electronics OS is perhaps the easiest since no one has else has much of a foothold yet (Take 2 of the Apple TV doesn't seem to have set the world on fire any more than Take 1 did) so it's not as if Microsoft has to compete with a dominant player. Moreover, their experience with the Xbox should have taught them a great deal about this area. The move to allow Xboxes to easily playback codecs used for video on the Internet is a promising step but it does make one wonder why we even had to wait? Is Microsoft worried about how to make their products attractive to consumers or how to cosy up to the media industry?
  
  Apple's iPhone demonstrates things that Windows Mobile should have been doing years ago. Microsoft's failure in this area is disconcerting because it seems to indicate that even with all the money that was available to work in this area nothing even close was produced. My concern would be that this implies a systematic breakdown in the design, engineering and the business sides of this division and one that won't be easy to fix.
  
  Their failure in the Internet era seems to have been in part a lack of adequate planning. Banking solely on proprietary standards and overwhelming market share looks as if it were the beginning and end of how Microsoft planned to make money online. I'm not so sure the NetDocs failure is as big a deal as some of the others have suggested. Microsoft's problems with the Internet aren't that they lack popular products (MSN Messenger and Hotmail), it's that they haven't been able to turn any of them into major alternative revenue sources. NetDocs might have eventually made them a lot of money but it's 7 years later and despite the existence of plenty of other web-based word processors no one seems to have worked out how to turn much of a profit with them.
  
  Finally, their failure with the desktop OS is in part the result of having developed too good a product. There are problems with Windows XP, to be sure, but for many people it represents the end-point of the WIMP OS. It simply works well enough that Microsoft has been unable to present a compelling reason to upgrade. Perhaps what Microsoft needed with Vista wasn't a further honing but a radical departure. Perhaps a new paradigm was needed (eg. multitouch). Perhaps they needed to realise they have two separate customer bases (consumers and corporate IT departments) and focuses on one or the other of those groups. I'm not sure but then I'm not being paid to come up with a vision for where Windows needs to go.
  
  I don't think any of these problems are insurmountable, however, the concern must be if Microsoft has gone this long without being able to fix them are they simply incapable in their current incarnation of coming up with the necessary solutions?
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