Why Microsoft is being left behind

Paul Budde recently questioned, "Will Microsoft be able to make the jump?"
[04-Apr-2010] For other comments see my pieces "Death by Success" and "Death by Success II".

He quotes the marketing "S-curve" and Summer Players by Carol Velthuis describing company performance and market maturity in seasons of the year.


This is a response to Budde's query: "I have always found it difficult to understand why Microsoft has left it so late to fully embrace the new environment - in relation to both the Internet in general and mobile broadband."

It's because they are trapped by their success.
They are not alone nor the first, as definitively documented in Why Smart Executives Fail, by Sydney Finkelstei, a Professor of Management at Dartmouth's Tuck School of Business.

Specifically:

• Lack of vision and competence in Management, 
• Rigid and bureaucratic heirarchy,
• Dysfunctional culture, and
• Incompetence in their technical speciality: writing software.

Many of the problems with Microsoft's culture and bureaucracy are in my response to the Joe Wilcox piece, "Microsoft Office is obsolete, or soon will be".
17+ levels of 'management' and viscous internecine wars

On 'vision' and management competence, contrast Microsoft to the companies it sees as it major competitors: Apple and Google.

Google is actively contributing back to the community in many ways and expanding directly and indirectly into other businesses: Power, gigabit networks, community wireless networks.

Not to mention 'Android' and their phone.

Google's "Summer of Code" actively seeks new and talented people and pays them to contribute to Open Source projects in many ways.

"Google Ventures"  and "Google Foundation" are some of the indirect means Google is experimenting and expanding.


Definitive evidence of the failure of Microsoft management was the money mountain (~ $65Bn) it sat on for many years. Other commentators have addressed this much better than I, so I'll be brief...

It comes down to Internal Rate of Return (IRR) - successful companies can always get a much better ROI on capital by investing in their own business than lending at market rates. How could an entire senior management team and board not think of strong new investments for even 10% of their cash reserves?  That's my evidence of "lack of vision" and "poor management".

An aside: Paul Allen had the vision of "a computer on every desk". Gates and Ballmer eased him out around 1983 after Paul contracted Hodgkin's Disease.  Microsoft has gone on to fulfil that vision, but has been unable to create another strong and profitable line of business.

Microsoft has very poor Software Engineering skills, going back a long way.
How it gained market dominance was boldness and great marketing.

Here's my evidence:

• abandonment of multi-platform support of Windows NT,
• the 2004 abandonment of "Longhorn" (the 'reset'),
• the 2002 "Trustworthy Computing" initiative, and
• 3 yearly update cycle, not yearly.

The Longhorn 'Reset' threw away 3 years work by a team of 10,000.  That was an extraordinary business action. It was also an admission that the work, the direct result of poor practice, was not salvageable. How was it ever allowed to get to that??

Apple took a big gamble in the late 1990's to abandon it's in-house developed Operating System and embrace another platform from NeXT - now called 'Darwin'. In 2001, it ran both desktops and servers.

That one codebase now supports four platforms: PowerPC, ARM, Intel IA32 and IA64.
And many product lines: desktop, server, iPhone/iPad, Apple TV and more to come.

Microsoft has different code bases for everything. The only commonality is their "Windows" branding.
They have even struggled with producing a server without a GUI. Currently, they still haven't released a fully functional server that is command-line only.

The Xbox may be a success, but the division has not regularly returned profits. Is that a line of business, or a charity?

Microsoft had a public "embracing" of Security, and continues to trumpet it success and commitment therein. But for critical code, reliability and security are fundamentals. Security to Operating Systems is like Safe Operation is to Passenger Aircraft (or ships). It's not optional.

Since the late 1980's, every vendor of Unix systems has run on a yearly update cycle, with possibly a three yearly 'major release', including those times they've changed platform.
That's been the industry standard and should be known to any competent Software Engineer and Manager.

SUN, IBM, HP and Apple have all quietly shipped new releases each and every year for the past 15 years.

So why can't Microsoft? Because they are poor at Software Engineering, as opposed to mere programming.

A final word:
Steve Ballmer has been at the helm for the last 10 years, and sole leader since 2006 (?).


Gone are the days when Bill Gates could issue a memo and have the company 'spin on a dime' - the famous Internet reversal.