Why does Microsoft keep messing up?


So after reading about Microsoft’s latest failings with Windows 7 Phone, where they had massive problems with a minor update and have had to push back some pretty basic functionality I found myself prepared to write a blog post about their continuing struggles “getting it right”.  IE’s market share is barely more than half what it was ten years ago, they completely missed the boat on tablets, Ballmer is known more for missteps and wild antics than great business strategy.  Their share price really does reflect some of the struggles they’ve had, and it seems like a lot of folks think the company is performing worse than in the past.

However, the more I think about it the more I realize that this probably isn’t the right opinion.  Yes, they are falling behind in mobile.  But let’s look at that for a moment.  They had ten years or so (including the Windows CE PDA days) of developing for mobile devices where their main competition was Palm – a company that just couldn’t figure out what to do with itself, RIM (Blackberry) – a glorified two way pager company, and Nokia (Symbian) – who never figured out that phones need good software.  After years of fumbling around and listening to analysts bad advice and letting its lead in smartphones go to RIM and Microsoft, Jon Rubenstein managed to get an excellent product out in barely a year and a half after joining – unfortunately it was about a year too late for Palm but it showed just how badly the company had let itself go after leading the PDA revolution (post Apple Newton – a brilliant product in its own right – yes I owned one).  The fact that RIM was doing great in the market showed that a special purpose device that works well has a place.  However, they were still struggling to improve their phones with fairly basic functionality such as *color* and actual web browsing.  Sure, the batteries lasted forever, they were very reliable, and very secure, but clearly there was a spot in the market that they weren’t filling.  Symbian, well … I don’t know much about Symbian.  I’ve heard rumors of this mythical platform that is now being abandoned by Nokia for Windows 7 Phone (perhaps I’ll post on how bad of an idea this is another day), but I’m not sure I’ve ever used one.  All I know is that developers complained about it a lot, so considering they had years to fix the problem I’m going to lump them in with Palm under “bad management”.

So then what happened?  Microsoft was happily filling a niche between the two way pager company and the dysfunctional smartphone brothers when Apple came around and dropped a completely disruptive product in the market.  Google, to their credit, recognized that all they needed to do was switch courses (they had a sharp team working for them as a result of an acquisition and were already focused on mobile) and by using available open source technology (not too far away from what Apple had done to bootstrap the development of their OS a few years earlier) as a basis to essentially make a passable copy of the iPhone and focus on some of the things Google is good at (maps, for example, or translation, etc).  As a result, a few years later, we end up where we are today.  RIM and Symbian are fading, Palm was acquired by HP (Oh Nokia you really messed up by not grabbing WebOS), and Windows Phone 7 isn’t really going anywhere while the iPhone and Android phones take over the market.  So what is my point?  Microsoft isn’t doing worse, in fact I’d argue they are doing better than before – they’ve just never had to complete against companies like Google and Apple.  Even in the 80s and 90s, they were mostly faced with clueless start-ups like Netscape, tech oriented companies like Digital, and slow moving and almost dead IBM.  In short, the competition got better while they, like other large companies in the past, were slow to react.

So what now?  Is Microsoft doomed to die a slow death?  Pretty unlikely.  The latest versions of Office and Windows, their biggest products and the source of most of their revenue, have received rave reviews and solid sales.  Although the XBox has been a money loser over its lifetime, its making money now and Kinect is a huge hit.  Their enterprise products such as Windows Server, Exchange, etc. are fighting against weaker competitors (anyone who has used Lotus Notes knows what I’m talking about).  On the other hand, and their lack of movement in stock price over the past ten years agrees – Microsoft is probably done growing very quickly unless they can find another major revenue stream (apparently big tables don’t quite sell as well as iPads).  If Apple wasn’t doing it with such ease there probably wouldn’t be such pressure, but Ballmer probably doesn’t even have as long as Elop at Nokia if things don’t pick up for Microsoft and I think he knows it.

So, I’d continue but its getting late .. hopefully this post made sense.

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8 Comments on “Why does Microsoft keep messing up?”

  1. Guerson Says:

    things are changing fast, even Google is now threaten by Facebook… Microsoft? sure, they will be there but very unlikely leading the way…

  2. jacobomolins Says:

    Even though I have suffered system crashes and seen many times (one is too many) the blue screen, I think Windows gets too much beating just because it is that big. Really, Jobs pulls off nastier tricks plenty of times and his fundamentalist followers still adore the guy. I use Mac, Windows and Linux so am not too biased. Indeed I prefer Mac for daily stuff, but well, with all its shortcomings, Windows has done really good stuff for professional environments. With all its macros and security issues, Excel is by far my preferred spreadsheet, for instance.

    Recently Microsoft has tried new stuff. Despite the failure, I think both Zune and Kin were legitimate attempts, and probably would’ve been praised if launched by any other company. I do see a big miss-alignment between this new fresh image they’re trying to achieve and the traditional Windows perception. In this sense, Microsoft does need to do some good marketing and figure things out before trying to sell products to customers who would run away just at the moment they hear “Windows”.

    As of the Nokia alliance, I am also confused, but more from the Nokia’s side. I think it’s only potentially beneficial to Windows Mobile, but I have no idea why Nokia would like to turn into an OEM developer, in an age where the value is in the networks (iTunes, Android Market, etc.). We’ll see, but I think that turning into Finland’s HTC is not going to lead to a happy ending.

  3. Guerson Says:

    Jacobo. Stop this “crazy followers” argument and accept the leadership of Apple on the industry. All that people buying macs, iPads and iPhones are not the typical Apple fans but former PC guys (like you were) that are just tired of the same. Apple is not delivering necesarily better products but a different approach to interact with technology. True of this success is the “copy cat” of Google in the mobile landscape. Google has tried a more open approach and is definitively succeeding, but someone (Apple) showed them the new way.

    The mobile industry is not a winners takes all industry. There will be room for many. In my view Apple will conquer the high end and profitable area of the market (remember that Apple does makes money directly from every product they sell) and google will take the massive market. Windows will have a hard time surviving. Their market share continues to plumb despite windows 7,

    Microsoft of course is a great company and will always be there, like IBM. But fact is, that they won’t be leading the consumer industry for a while. And it is all about leading the way, and not just been there.

    Microsoft should find new areas where they can continue on the leadership position. At least for the consumer market, that battle is more than lost.

  4. jacobomolins Says:

    Not sure. With a 90% market share for Windows, and 5% for Mac OS, I don’t think Mac is quite the threat fanboys claim it to be.

    If Windows manages to capitalize on its uncontested presence in developing markets (for instance, China – i.e., markets that matter), with W7 already over 20% in Global Usage, and with the mobile version doing surprisingly well (I was traumatized by the past Windows Mobile so have not dared to try it yet) I think the Redmond guys are ok unless they mess up again with weird ideas like the Zune.

    Meaning, Windows is not going to steal users from iTunes or iPhone, but Mac is not really harming W7 either.

    If anything, they both should be concerned about Google.

    Finally some competition. Happy days.


  5. The key metric isn’t Apple’s Mac market share, but rather its market share growth. They sell in a quarter more than they sold in a year just a few years ago.

    Remember, market share numbers include markets where Apple doesn’t compete. They’ve gone from something like 3 percent to like 8 percent worldwide – that is definitely something Microsoft needs to look at. Especially when you consider they have no answer for the iPad, which really begins to skew numbers if you consider it a computer. Apple executed a flanking maneuver on Microsoft and while their Windows business isn’t going anywhere any time soon, there is definitely a competitive threat there.

  6. jacobomolins Says:

    Indeed Windows needs to look at it, especially the tablet situation, where its attempts have been disastrous so far. But I wouldn’t rule the guys out yet as many are doing. They still have a strong muscle and W7 Mobile is doing surprisingly well. If they manage to turn this into a decent mobile platform and implement it on tablets then the fun is there sure. The current market share is important because they do have a good customer base, and network effects are fundamental.

    Anyway let’s see what happens. I think 2011 is going to be a fun year.

    I personally prefer a market with Mac, Win and Google than with just 2 of them, regardless of which two. And hopefully WebOS can make it there as well.

  7. Guerson Says:

    Jacobo, you been out of the picture with your blog an twitter, but also with techcrunch and general news???
    The PC market has nothing to do with the mobile market. So the 90% share of windows is by far no threath to iOS or Android. Actually the opposite is happening.

    Windows 7 a success!?! Haven’t you read the news that microsft market share in the mobile industry continues decreasing despite Windows 7?

    Come on!
    Again. MS is a great companie but they won’t be leading te post-PC era. And thats not a rumor. That is fact!

    Welcome back Jacobo!!!! Time to start reading tech news again!


  8. Yea Windows 7 phone is a non starter right now, but the deal with Nokia has potential upside for MS.

    (even if Nokia is in big trouble 🙂 )


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