McCracken’s 15 Ways Microsoft Can Reinvent Itself for the Post-Gates Era

Friday, June 27, 2008

PC World’s Harry McCracken gives his 15 ways Microsoft can reinvent itself.

It’s easy and even sometimes fun to play the role of the armchair quarterback. It’s easy to say what should be done when you have no personal stake involved with the outcome either way. Likewise, my opinions on the matter are certainly no more relevant than McCracken’s. However, when I read his article, I found myself agreeing on some issues and strongly disagreeing on others.

“Today, as Gates prepares to step down from day-to-day management of the company, another fact is clear: The modern Microsoft remains a company in search of a second act. True, it remains one of the world’s most profitable enterprises, raking in more dough in its 2007 fiscal year than Apple, Google, Yahoo, Oracle, and Adobe combined. But the cracks in the Microsoft hegemony aren’t just showing, they’re growing.”

McCracken does make a good point in that even though Microsoft is still making tons of money, they seem to have peaked and are showing signs of weakness from multiple fronts. Worse, there seems to be a consensus that Ballmer’s leadership isn’t enough to keep Microsoft on top. Here’s my two cents on each of the items listed.

1. Stop trying to be everything to everybody.

When things start to fall apart, it can make sense to simplify your product line and focus on your core competencies. However, it wouldn’t make sense to do that for a profitable product line. It’s unclear whether Microsoft is making a profit on the Zune product line. Over the past year and half, Microsoft hasn’t managed to establish itself as anything more than an also-ran competitor. While a portable music player might have the ability to make some companies appear to have a cool image, that’s anything but the case with the Zune. When I think of the Zune, I can’t help but think of this. I don’t see that image changing anytime soon. In cases like this, Microsoft does need to re-examine their strategy.

2. Upgrade continuously, not once every few years.

The example McCracken uses is Google’s web based products. This is sort of a ridiculous comparison. Rolling out updates to hosted server based applications is very different from rolling out desktop software based upgrades. With SAAS (software as a service), you don’t have to work about incompatibilities with other programs or worry about IT departments trying to figure out when they can test and push updates to all of their end users, etc. It’s one thing if your user base is primarily consumers. For corporate customers, that sort of upgrade cycle represents a logistical nightmare.

On the other hand, the point McCracken makes is actually valid. Waiting 5 – 6 years for an OS upgrade is too long. Less expensive, but more frequent upgrades along the way is a much better approach. The same goes for application software. I prefer Apple’s model here. Every year, they upgrade their iWork software. I’d prefer a lower cost of entry ($80) but pay the same price each year (if I choose to upgrade) as opposed to waiting 3 years for new features then get socked with a $240 upgrade. This is a valid point. However, I didn’t agree with the Google web based software as a valid comparison.

3. Be innovative–no, seriously.

“The marketing message from Redmond would have you believe that Microsoft and innovation are practically synonymous. In fact, the company is more mimic than innovator: When Apple put a tiny “Designed in California” on the backside of every iPod, it was inevitable that the Zune would sport an equally microscopic “Hello from Seattle.” It might do wonders for the company’s reputation if it appointed a Chief Innovation Officer whose duties would include ruthlessly killing everything that smacks of pointless imitation.”

Ha! That sort of thing comes from having the right corporate culture. Microsoft has never had an innovative corporate culture and history has proven Microsoft to be anything but innovative practice. I see that I’m not the only one that recognizes Microsoft’s blatant misuse/abuse of the word “innovation” with their marketing programs. Microsoft’s business model is based on some other entity defining a viable market, and then Microsoft comes in with 10x the resources and tries to take over. This has been successful in the past. Why should they change?

4. Treat customers like kings, not peons.

This advice is true for any company. However, things like WGA (Windows Genuine Advantage) are just the kind of things that send customers screaming into the arms of the competition. I firmly believe there is nothing good that comes from copy protection schemes like this.

5. Make Windows a seamless desktop-Web experience.

McCracken refers to Microsoft’s upcoming Live Mesh here. Microsoft is headed in the right direction, but they really need to execute on this one. Microsoft is known for having very ambitious plans and not being able to deliver. They should start small and evolve the experience over time… sort of like what Apple is doing with Mobile Me.

6. Reboot Windows.

McCracken looks at what Apple did by going from Mac OS 9 to an entirely new foundation with Mac OS X. This is bad advice. I say this, if for no other reason than because no justification is given for such a drastic change. For starters, yes, Apple did a major platform change with OS X, but really, so did Microsoft. The XP OS is based on the NT OS which is pretty buzzword compliant. The Windows 9x / me OS was the legacy garbage Microsoft left behind, just as Apple did with the “classic” Mac OS. Further, the Windows NT kernel may not be better than Unix, but it’s generally on par. Before we demand the plumbing to be replaced, we should at least define the fault with the current technology. McCracken has not done that.

7. Split Windows in two.

Split Windows in two – Why? This suggestion is based on consumer’s desire to continue using XP in favor of Vista. But, what happens when Windows 7 is released? Split Windows in 3? Exactly what message should Microsoft send to Windows based developers? This is something you do when you make a MAJOR transition – sort of like going from OS 9 to OS X. When OS X was first shipped, the platform wasn’t very viable in terms of third party support. Vista had some incompatibility issues, but it wasn’t nearly that significant of a difference. This is a last resort sort of strategy and one that should not be suggested lightly.

“Long-term, the world needs a fundamentally new version of Windows.”

I’m not sure how someone can throw out a sentence like that without providing the justification or at least describing what they would be looking for in this “fundamentally new version of Windows”. Vista is what Microsoft believes to be the future direction. If something is fundamentally wrong, describe what it is and what would lead you to believe Microsoft is even capable of pulling it off.

8. Make Windows more boring.

“MS-DOS was a simple, unglamorous piece of software that focused on being a solid platform for applications from Microsoft and other companies. “

Really, was MS-DOS the good old days? Was it really that good? By what standard is it measured? I used MS-DOS in the early days and seem to recall it being a half-assed CPM clone. It wasn’t even in the same league as Unix based systems of the day. Really, the MS-DOS product came from a hacker who created a product called QDOS (Quick and Dirty Operating System). Microsoft never had a cutting edge operating system, even back then. It’s nice to look back at yester year and imagine things were better than they really were. That’s what McCracken is doing here.

“Microsoft should concentrate on making the OS more reliable, secure, and easy to use rather than adding features to a paint program.”

Agreed. That’s what Apple is doing with the upcoming Snow Leopard release. Though this may be a good thing, I’m not sure the masses or even mainstream media will appreciate it. Consumers and most mainstream media who review operating systems only seem to recognize the shiny new features that can be seen from the surface. But, McCracken makes a good point, the OS should be transparent.

“As Windows has added tools for digital photography, entertainment, and communications, it’s become more complex and less satisfying.”

The problem for Microsoft is that many (like McCracken) don’t seem to distinguish the difference between the OS and the OS distribution. Is support for digital photography really such a bad thing? If you thought Vista was a disappointment, then imagine trying to sell a boring OS. Apple is going to face this challenge with Snow Leopard. There is major work going on under the hood (as should be for any new OS release), but it’s going to lack the shiny new features that sell to end users. Maybe we should see how successful Apple is before suggesting Microsoft does the same thing.

9. Make Windows Mobile the flagship.

This is a good point. Windows mobile has been available for years and is at best, just another “me too” product. This should be seen as an embarrassment for Microsoft. Granted, there wasn’t much competition prior to Apple entering the market. Apple has set the bar for what everyone should expect from a mobile device. Worse, pressure will be coming from Google with their Android platform. If Google is able to execute on Android, this may become the new standard. Microsoft can no longer rely on their desktop monopoly to ensure success in the mobile market. Microsoft is not the big fish in this pond.

10. Leapfrog Google Docs.

The problem here is that Office is a cash cow for Microsoft. On one hand, Microsoft is challenged to figure out how to compete and still be profitable. On the other hand, Microsoft cannot just bury its head in the sand and pretend the problem will go away. This is similar to the telecommunication companies that relied on analog switches before VOIP. They were greedy and didn’t want to disrupt their revenue stream while their competition was mounting attacks based on new technology.

“Then Microsoft earned much of its dominance of the office market the old-fashioned way: By building better software. “

After several generations, Office may have eventually evolved into a better product. However, let’s be honest and not say that Microsoft “earned” the top spot. Microsoft beat the competition by bundling their products and often making deals that essentially gave their product away when purchased with another. For example, in the mid 90’s, I consulted for a large company that “switched” to both MS Office on the desktop and Exchange server for mail. As I understood the deal at the time, the company essentially was given a free license for 85,000+ copies of Office for switching to Exchange as their e-mail server. No, Microsoft was guilty of unfair business practices whereby nobody could compete with them. How could Lotus 123 or Word Perfect possibly compete with that kind of deal? Where does McCracken think the accusations of unfair business practices came from? This would seem to be another case where McCracken looks back at history with a distorted view.

11. Bundle Office with an online suite.

That seems reasonable to me. In this way, Microsoft gets to keep its current business model while countering initiatives from the likes of Google, etc. Good suggestion Harry!

12. Make the Office file formats indispensable on the Web.

Agreed, but only if Microsoft truly opens the format up such that others could easily build viewers, etc. Similarly, the universal file viewer should be a Javascript based app so that any browser can view it without the need of a proprietary plug-in. Microsoft could still control the format going forward, but they would have to be more open with the specifications.

13. Take a studio approach to software.

Agreed, this might be the only way they could build cool products. The main benefit here would be for Microsoft to establish a non-Microsoft based culture where innovation and creativity are first and foremost. That would be interesting.

14. Build Internet Explorer on top of Firefox.

Well, a Gecko based browser is better than a Trident based browser. Then again, a Webkit based browser would seem to be even better yet.

We all saw this coming. Microsoft dominated the market and then basically let their product rot on the vine. There was a time where IE was my preferred browser. That was around the IE 4 to IE 5 timeline. The IE browser has been a joke ever since. Worse, the masses still use IE most often to the detriment of all web developers. Microsoft’s support for web standards has been abysmal. IE is by far the worst performing browser as well. Microsoft should again follow Apple and open source their Trident engine. Let the open source community help ensure web standards, etc. are all part of the engine going forward. Since IE doesn’t currently enjoy any technical advantage over the competition, Microsoft has nothing to lose here. This should be a no brainer.

15. Be a leading iPhone developer.

Agreed. Ballmer would have to swallow some pride to make that happen, but they should embrace emerging new markets like the iPhone. Microsoft seems more interested in promoting the Windows platform than are interested in supporting their software products. That’s their call to make. I can see why a company like Apple takes that position, because Apple’s software is really just a means of selling Apple hardware. Is Microsoft an application company or an operating system company? One side is clearly holding back the other.

What are my thoughts on re-inventing Microsoft?

I don’t know, that’s not an easy task. It’s certainly easier to talk about what won’t work than what will work. For example, Microsoft is apparently about to spend $300 million on an advertising campaign to try to make it appear as “cool” as Apple.

While I’m sure that will help somewhat, I can’t help but think of the analogy of putting lipstick on a pig when I read about these plans. Is Microsoft “un-cool” because of their advertising campaigns? Is Apple “cool” because of theirs? No, in the end, it all comes down to the products you sell.

When I think about Microsoft, I think respect them for their ability to broker business deals, leverage their influence over competitors, etc. Everyone has to respect Microsoft’s massive resources and ability to compete in a market for a long time, even if they are losing money along the way. As a business competitor they should be both admired and feared. On the other hand, I don’t consider Microsoft to be creative or innovative in the least. I also don’t like they way they continue to push proprietary solutions where they aren’t needed. For example, does the industry really need a proprietary Microsoft answer to the PDF format? No. Do we need a Microsoft proprietary competitor for Flash? Apple used to be just as guilty of the “not invented here syndrome”. In Apple’s case, it was more about pride (foolish pride, but pride none the less). In Microsoft’s case, it’s all about control. It’s one thing to come up with a proprietary solution if you’re truly breaking new ground. It’s another thing to do it when there are perfectly suitable existing solutions that the industry has already accepted.

With that said, here are a few suggestions I have for Microsoft. I don’t have 15 steps, I have just three.

1. Embrace Open Source.

Start with the Trident engine of the Internet Explorer product. This would be the quickest way for them to get the product to a more competitive level. It would also help Microsoft better support open standards. Lots of good will comes from “opportunities” like this. Further, doing this would allow Microsoft to focus on making their product better rather than reinventing the wheel and not even doing that as good as free alternatives can. For example, the IE browser could still have cool features unique to Microsoft while supporting an open sourced Trident engine.

2. Embrace Open Standards.

One of the things people hate about Microsoft is that they always have to come late to the party with a “me too” solution that offers nothing for the industry except the possibility of more “lock down” from Microsoft.

3. Be an innovative leader instead of a follower.

Really, consumers yawn when they see Microsoft product announcements. When you look at practically every product they sell, it’s all been done before. Microsoft shouldn’t enter a market just to get a piece of the pie. If they can’t create a better product, they shouldn’t bother. Take Apple for example. The iPod wasn’t the first portable music player. The iPhone wasn’t the first smart phone on the market. But, Apple entered the market because they knew they could put together a much better product than others have. In the case of the iPod, it’s a combination of the cool hardware and the great iTunes software and Music store. The iPhone isn’t perfect (yet), but it was a revolutionary step forward in terms of usability in this class of a product. Advertising was essentially free because everyone was talking about it months before it was even available for sale. That’s the dividend of innovation.

If Microsoft remains a follower, they will never be cool. It won’t matter how much revenue they make in a fiscal quarter.



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