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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