The Soul of A New Microsoft

BusinessWeek Online is running a front page story today about the new future of Microsoft. By 'looking beyond Windows', the company is utilizing fresh blood to come up with new products like the Zune, the Xbox 360, and various online sites. While the Zune probably isn't getting off to as successful a start as they might have liked, the article argues it's a positive sign that they're at least making the attempt. From the article: "The point is that Microsoft needs to find its un-Vista. Several of them, in fact. The software giant is entering perhaps the greatest upheaval in its 30-year history. New business models are emerging--from low-cost "open-source" software to advertising-supported Web services--that threaten Microsoft's core business like never before. For investors to care about the company, it needs to find new growth markets. Its $44.3 billion in annual sales are puttering along at an 11% growth pace. Its shares, which soared 9,560% throughout the 1990s, sunk 63% in 2000 when the Internet bubble burst, and they have yet to fully recover."

need to find their heart

[yagu]

The thesis is Microsoft needs to find their un-Vista? Hardly! Microsoft needs to find their heart. Or grow one.

Their 30-year path is strewn with castoff competitors, and wannabe partners. Microsoft has sown nothing but ill-will for the duration of their tenure. I would welcome the change that shows Microsoft wants to be a good-citizen member of the IT community and market but the evidence isn't there, in fact there isn't even a glimmer of evidence, contrary to the article's these that things like "Zune" and "X-box" are starts in the right direction.

Consider only the most recent step to re-invent, the Novell/Linux debacle. What many considered worth waiting for on good faith to be a positive step took only days to be revealed for what it was, more steps to stamp out any competition. As long as executives with the hubris of a Steve Ballmer control the direction of Microsoft, nothing positive will happen, period.

And, what of the collaboration with Samsung, Creative and others? To what end other than wasted time and money for Microsoft's "partners"? Bah!

An interesting quote from the article (Allard's response to bad words from Apple re: their Zune, and how Microsoft doesn't "get it"):

Allard was using one of the oldest motivational tricks in the book--his version of a football coach posting an opponent's quote on the locker room wall. "I for one...want to see this guy eat his words," Allard wrote. "Those are fighting words. He is speaking to every one of us and saying that we don't get it."

This only demonstrates how much Microsoft doesn't "get it". Microsoft benchmarks everything it does against perceived outside competition -- it'd be nice to see them invent their own cool stuff. Interestingly (to me), they had a chance to do just that with Zune, and completely blew it by trying to measure themselves against the ipod.

I'm not saying Microsoft doesn't have the right to be a good tough business to make good products and good profits, but Microsoft has mostly been about making products barely clearing the bar while making usurious profits with (what eventually was ruled by DOJ, and the EU) illegal monopolistic leveraging.

I know it's an old saw, but I've been waiting more than 20 years for market forces to take hold and allow technology to evolve in a marketplace that encourages competition, i.e., one that diminishes the Microsoft effect (how many company's do you know of whose business model included a goal or contingency to be bought out by Microsoft?). Microsoft may now reap what they've sown.

The market is crazy..

[LilWolf]

Its $44.3 billion in annual sales are puttering along at an 11% growth pace.

Really, 11% growth is considered bad? That's 4,8 billion growth annually!

Stories like this are perennial.

[dpbsmith]

"The software giant is entering perhaps the greatest upheaval in its 30-year history."

Yeah, right. Like the upheaval when they announced a top-to-bottom-all-new-strategy named .NET, and the upheaval when they decided this Internet thing was really important and reorganized themselves top-to-bottom to take advantage of it, and the upheaval in 1995 when Bill Gates said that the "social interface" was the future of computing and introduced the all-new revolutionary Microsoft BOB.

(Social interface? Come to think of it, where have I heard something like that out of Microsoft just recently...)

Microsoft is always talking about upheavals, but meanwhile what they actually do is keep cranking out big bloated monolithic versions of Windows with badly-copied slightly-distorted features in other operating systems, and strong-arming PC vendors into preloading them.

Re:need to find their heart

[flyingsquid]

Microsoft didn't become a 300 billion dollar company by playing nice and innovating. They did it by figuring out where they needed to be after the innovators had already gotten there and done it first. They did this with operating systems, office software, and the world wide web. They got there second with a tolerable product and then marketed the hell out of it. Microsoft was rarely first, rarely best, and never nice, but they got the market share, and that's what made them a success. The Microsoft of old could sell snow to Alaskans (as an integral part of the Windows operating system, of course).

As to whether Microsoft can get back in stride, hard to say. F. Scott Fitzgerald said that "There are no second acts in American lives", but as someone quipped, he was probably drunk when he said that. Steve Jobs managing to retake Apple and turn the company around shows that, but it also shows how important it is to have good leadership, and since Bill Gates has left, the company just hasn't been the ruthless, unstoppable, Borg-like entity it once was.

Tip to Microsoft, Sony and the media industry

[Midnight Thunder]

Tip to Microsoft, Sony and the media industry: Stop trying to control things absolutely and bullying anyone who doesn't play ball. These are actions of spoiled children and do everything to alienate the customer. The fact you still have customers is a testiment that many people don't realise how badly you are screwing them. The companies that end up getting the most support are those who have good balance of trying to be successful and appealing to the customers interests. Respect is earned not inforced.

What The?!?

[MickyTheIdiot]

I would think the Zune, which requires the use of its own piss poor (and proprietary) music format, it's crapload of DRM, and it's incompatability with EVERYTHING that came before it would indicate they are going in the exact same direction as always. The major problem with Ipod is DRM which doesn't allow me to do stuff I should legally have the right to do. Is Microsoft getting rusty and not even able to know WHAT to copy anymore. Anyway, I guess Zune is bed with the so-called "Music Industry" anyway, automatically meaning it is a product that faces backward and not forward.

Open source isn't a business model

[Ant P.]

It's a concept someone found a way to profit off of. It can exist just fine without business, so MS are pretty much screwed if they try competing with it.

Re:Open source isn't a business model

[MickyTheIdiot]

That's because the people that write these articles are just like Microsoft... they see computers as money making machines and only the computer's ability to improve people's lives secondarily or if all.

Everything related to computers has to be "business" to these people... it has nothing to do with providing good products or changing the world in any sort of good way.

And, and it's a common theme around here, the population is too dumb to know any difference...

Re:I have an idea for Microsoft...

[bogaboga]

No thanks. I'm sick of Microsoft assuming they own my bloody computer! It's mine, not theirs! The way IE7 is foisted on us whether we like it or not - that's just plain arrogant. Microsoft doesn't get this either - it's MY BLOODY COMPUTER!

But it's Microsoft's Operating System. You are just a licensee! And Microsoft could choose to withdraw its license at anytime. Microsoft could argue that it has a right to to the "necessary" with its software. After all you agreed to its licensing terms when you installed it.

Re:What The?!?

[ericdano]

"The major problem with Ipod is DRM which doesn't allow me to do stuff I should legally have the right to do."

Such as? Lets see, you can burn your purchases to CD. You can have them on multiple computers and iPods. What do you, legally, have the right to do with the songs that you cannot do?

Am I the only one getting mixed messages?

[MMaestro]

Its shares, which soared 9,560% throughout the 1990s, sunk 63% in 2000 when the Internet bubble burst, and they have yet to fully recover.

So Microsoft's stock flies to Mars in the 90's and then comes back to the moon in 2000 after the .com bubble? Someone wanna tell me why Microsoft should take its eyes off the OS market? Sounds like they're not the uber juggernaut they once were, but they're not exactly going to declare bankruptcy anytime soon.

Re:Stories like this are perennial.

[Kyokugenryu]

I know I'm going to get modded down for this, but I don't care. Why do people (in particular, *nix/Mac enthusiasts) love to simply rag on Microsoft SO much? There's a huge, huge, huge percentage of the computing world who's happy with Microsoft and would never DREAM of trying something else. I mean, I've run a myriad of OSes, like any good enthusiast, but aside from keeping BSD on my home server, I've always gone back to Windows. Why? They make the most intuitive products in the world. The Windows 95 GUI was amazing, which is why every major *nix distro worth its own weight uses a knockoff. In fact, the biggest thing I ever hear Mac/*nix guys say about the actual Windows GUI is that you have to press the "Start" button to shut down, which is the biggest nitpick I've ever seen. Microsoft does a lot, for a lot of consumers. Linux is clunky and extremely less intuitive than Windows, which is why I doubt this magical "Linux vs. Windows Desktop War" I always see being predicted here on /. will ever happen, let alone be won by Linux. Macs are very user friendly, I'll hand them that, and it now has the edge of running any software a PC can, but it still requires Windows (Another sale by MS) to do it, so it's a moot point. I think MS's target demo is Gamers and Newbies now, and they're doing a pretty good job pleasing the hell out of them.

Re:Instead of luck, they'd need to compete

[Anonymous Coward]

Microsoft always was, is and always will be about mediocrity forced down people's throats. They never innovated a single thing.

Injecting them with fresh blood doesn't help anything. All it does is taint the fresh blood.

Re:You can draw comparisons with another company..

[Reality Master 101]

Them boom! Jobs is back, the iMac appears, OS X appears, the iPod appears, switches to Intel, Apple reinvents itself again - successfully. You could argue that Jobs is pretty much the heart and soul of Apple.

Which goes to show how good Apple's marketing really is. Apple has exactly one undebatably successful product: the iPod. The Mac's marketshare is (still) microscopic and irrelevent, and not even growing significantly (in fact, I think marketshare may have fallen, but I'm not up on recent stats). You could possibly argue iTunes is a success, but again, their marketshare of music in general is nothing.

Jobs' real genius is in -- I hate to say it -- lying. He can twist facts around to convince people of nearly the opposite (this is infamously called the "reality distortion field" by the employees, though to be fair, his salesmanship can also be inspiring as well). He's basically a high-level slick used-car salesman.

Re:need to find their heart

[QuietLagoon]

They got there second with a tolerable product and then marketed the hell out of it.

Microsoft rose to the top by illegal business practices, from per-processor pricing to the illegal leveraging of their monopoly in order to get the marketshare. Read the trial transcripts where Microsoft execs admitted that they had to bundle second rate products with Windows in order to grab the marketshare.

Re:need to find their heart

[NeoNastyNerd]

I guess I would argue that the only reason the iPod has taken of is not because it is allowed to run on "other" operating systems but specifically because it will run on THE operating system: Windows. If you look at the MacOS market share vs iPod market share you will see that there just aren't enough Macs out there to match the 85% iPod market share. Microsoft does not have to make their music player run on other operating systems any more than Apple does; They just have to run on the dominant OS. I don't see Apple supporting the iPod on Linux...

I strongly dislike the Zune but that is not what my posting was about. Microsoft is finally catching on that the OS of the future is going to be a web platform, and if they don't position themselves now they will very quickly be left behind as Google launches app after app that runs on any modern web browser. As far as the new blood not knowing how to make money, that is an unfair analysis of upcoming MBA students and youth in the workforce in general. I think there is a lot of hidden talent at Microsoft right now (business and technical), but the flowers are hidden behind an ugly rock (Ballmer), for the time being. Just wait for Ballmer to finally exit and the momentum will really take off. Just look at IBM of the 70's and 80's vs the IBM of today; corporations are made of people and people change. I believe Microsoft is in the process of transitioning from a "we do things our way or else," (see old IBM), to "we have no choice but to play fair," (see new IBM).

Re:The Name is "Gary Kildall".

[Sinbios]

If Kildall couldn't have made the business decision that Gates made with that first transaction, then he really doesn't deserve any of the fame or wealth of Microsoft today. If Gates hadn't done what he did, I really doubt Kildall could have taken the opportunity to go as far as Microsoft did, anyway.

Zune exposes the true heart of Microsoft

[hmbcarol]

While the Zune hardware is not bad, the execution of the whole package lays bare the heart of Microsoft.

Having DRM I can deal with because I can choose to not purchase music from their store. I can obtain it elsewhere. But the fact they send money to Universal Music just from selling the hardware exposes whose side they are on. Even if I never buy from the RIAA they get their pound of flesh. Buyers are forced to pay the "music thief" tax.

Buy a Zune and send money to the people who will sue you or some old lady next year.

I also find it astounding people fall for their "point" scheme. Buy points now and leave a few dozen on the table each time you buy music. They make interest from all those points and mock you with it. It's anti-consumer like 10 hotdogs in a package versus 8 buns in a pack. It forces you to buy more than you want.

The faux-cool of the "it's got wifi and it's not an iPod" crowd astounds me. They are so eager to be "so cool they can't sell out by owning an iPod" are the very same people causing money to go to the RIAA and buying into the very vender who will enslave their music and hardware later.

Make no mistake. The reason MS sends money to Universal Music is to make it harder for all of the other hardware venders to avoid it. It sets up MS as the only people who will be able to do this. To borrow a bad line, "in the future all MP3 players are Microsoft".

BTW, and who thought of the "squirting music" to a Brown Zune bit? Probably the same one who thought "Welcome to the Social" was as sophisticated as the Dr Scholls "I'm Gelli'n, are you Gelli'n" ads. Ecch.

The only one who deserves a Brown Zune for Christmas is Bill Gates.

It's a problem of large numbers

[gelfling]

In order for MS to grow and for its stock to grow it has to create the equivalent of a Fortune 200 company every year. This is simply not feasible via internal organic growth. So MS has to do both of the following: it has to acquire companies ASAP and it has to grow into new markets. The problem with acquisition is that MS is a victim of their own success. There aren't that many companies left to buy. With 90% of the market, who is there left to vanquish? The problem with new markets is that it places them in the same crap shoot as everyone else. They have to be willing to bet a lot of money on projects that have a high likelihood of failure.

Re:need to find their heart

[Anonymous Coward]

You can't get to the top by leveraging a monopoly, because when you have a monopoly you're already at the top.

There are so many valid criticisms it's a shame to make them up.

Re:The Name is "Gary Kildall".

[westlake]

Am I just wildly misinformed?

no. it's just that this bedtime tale of heroes and villains is easier to live with than the truth.

Re:Stories like this are perennial.

[Anonymous Coward]

I have four words for you: Learn how to count.

Re:Instead of luck, they'd need to compete

[Anonymous Coward]

XBox360? I don't know. Sales may be ok, but they pumped at least 8 billion into it in the first few years (money which has not come back). MSNBC? No. MSInternet-TV? No. As stated earlier Zune? No. The Zune is trying to be like an ipod knockoff (and a cheap one at that). Microsoft is getting killed (ok, not killed, but facing real, hard competition for the first time in the life of the company) on their operating system and office products. The truth is, the actions of the huberistic, wealthy men at the helm are showing signs of Fear, Uncertainty, and Doubt about the companies future. If shareholders sue, the accumulated billions could become evanescent pretty quickly. Its clear that many of their products are the work of others, and when the rewards do not match the efforts required (by developers), developers are no longer contributing to Microsofts founders billions (and receiving less than ten-thousandths of a penny on the dollar). Microsoft doesn't pay developers overtime either, nor are there as many perks as working at other companies. Worse, every so often the founders have some kind of a crisis, and everyone gets the blame. Is it any wonder that 4:30 PM in the parking lot on the Microsoft Campus turns into a major traffic jam? Some will wait in their vehicles for up to half an hour to get out. But look at the alternative. More work, no extra pay. Stock options from Microsoft after 1998 could be used to decorate the walls of the bathroom. Why? They are worth less now than when they were issued, M$ brass don't want employees cashing them out (and yell at people for doing so), and their value is expected to drop further (as stated earlier, the years of stellar gains and stock splits are long long over). The next decade is not going to be pretty over at microsoft. Will it die? Not likely. Will it continue to become less and less significant? OH HELL YEAH! Google will continue to grow. Anything associated with Linux will continue to grow. Microsoft will continue to blow money on idea after idea, but none will prove as lucky for them as the home computer market. As they themselves have stated: Vista is their last system (and in truth, XP might actually be their last system).

The way out is in your hands.

[slapys]

Recently we have seen many examples of unethical business behavior from Microsoft Corp. Readers of this website respond like they are surprised.

Microsoft is just another company with an obligation to its shareholders to continually increase profits. The tactics it has used to do so have hardly been ethical, but the company is financially successful. What would you do in an authoritative position in Microsoft? Open Office's document format? Issue a press release to all major PC manufacturers that they are freely allowed to install other operating systems? Of course you wouldn't. You would use your authoritative position to make decisions that maximize profits. Just because none of you would ever enter such a position due to your beliefs does not matter.

What did you expect? Stop sitting around hoping that Microsoft will behave ethically and change its ways. It will not. The only way out is for a competitive (powerful, robust, and cost-effective) alternative to exist. Slashdot enjoys an educated readership. If you want to see this company's market share shrink for the benefit of the computing world, make a contribution of time and effort to Microsoft Windows' most cost-effective competitor. Join the Ubuntu Linux community [ubuntu.com].

Your comment is a bit unfair to Bill Gates.

[master_p]

I think your comment is a little unfair towards Bill Gates. CP/M was a very limited operating system, compared to MS-DOS 2.0 and later versions...and Windows NT has nothing to do with CP/M!

Lots of people are bitter towards Bill Gates, but the fact is that he was the one that saw the business opportunities and therefore got a chance to shape the future...