Decades ago - Microsoft arrived - using a novel yet
familiar business model.
They rushed into new, immature markets with poorly
designed products & aggressive marketing ? and
cornered us into accepting their design philosophies
before we (or even they) could sufficiently think
them through - or develop alternatives.
Like General Motors in the '50s, Microsoft played
hardball.
When GM bought the land out from under Los Angeles?
train system in the 1940?s ? they ripped up the
tracks just to prevent rail-based competition ?
resulting in traffic jams that haunt LA to this day.
Microsoft did the same with Netscape and scores of
others ? with similar results.
And like GM - Microsoft ran into difficulty when
other - more determined - firms started marketing
cleaner, simpler and more reliable alternatives to
their products.
As Honda did to GM ? Mac did to Microsoft ? shaming
them into costly redesigns.
But other history provides even more insight to
Microsoft's products and behavior.
Every generation has its fascinations. Back in the
'30s it was shortwave radio, with kids huddled
around glowing tube sets. In the '50s it was hot-rod
cars. In the 60?s it was TV. In the '70s it was
Japanese electronics with ludicrous quantities of
tiny buttons and bloated user-manuals that only a
shut-in would ever read.
The very same ?70s that spawned Bill Gates.
And so the '80s begat the computer age - with the
same attendant adolescent overkill.
Interestingly ? as programmers spend less time
inside their pc?s ? and more time on the web -
they?ll probably migrate to integrated PC/TV sets ?
eventually morphing into simple TV addicts once
again - completing the virtuous cycle.
Notice how PC magazines today cover more cameras,
Ipods and TVs than programming languages ? the more
things change, the more they stay the same. But I
digress.
Back at Microsoft - what was "feature-rich" to
hobbyists became tiresome "bloat-ware" to the rest
of us.
Even Bill Gates got caught on an Email cursing a
developer over how difficult it was to run their new
applications. It wasn?t the developer?s fault he had
to work under Microsoft?s bloated methodologies - it
was Bill?s fault.
Gates built his business on simple paranoia ? he had
to be everything to everybody ? so no one ?
absolutely no one ? would ever go elsewhere for
solutions.
This paranoia resulted in the endless introduction
of ?features? into an already shaky Windows
architecture and across their product range ?
driving them to the point of being unstable and un-
maintainable.
Microsoft?s penchant for writing bloated, slow
operating systems, then embedding every possible
feature into every possible product-offering, and
cross-referencing them so you can?t even type a web
address in a Word document without the damn thing
trying to logon to the Internet ? is ? well, a
formula for disaster.
Recent Internet Explorer security fiascos allowing
Word doc?s to transmit harmful Active-X code is just
another example.
I mean - a BROWSER brought down by a WORD document ?
OH STOP IT !
Today?s computer and Internet vulnerabilities,
system outages and poor performance are all
incestuously related to Microsoft?s marketing every
conceivable option to keep you from going elsewhere
? for the tiniest thing.
In Oliver Stone?s film Wall Street - Gordon Gekko?s
claim that ?Greed is good, greed clarifies? ? should
be restated as ?Greed is bad, greed complicates and
stupefies?.
There?s striking similarities here to when the
Japanese decided to offer only limited ?feature
packages? on their cars ? just as Detroit found they
just couldn?t build quality cars with endless
combinations of options.
No two cars went off the assembly line the same way
? and your mechanic just couldn?t keep them
running.
Now even Microsoft is suffering under this bloated
house-of-cards. The latest Windows service-pack
advertised download time is more than 5 hours!
Imagine if you will ? millions of Microsoft
customers at home across the world ? in every
continent ? every country ? every time zone ? each
spending 5 hours downloading bloat-ware patches.
It staggers the mind. The strain on the
communications lines alone must have been enormous.
It?s like teaching an elephant to tap-dance ? but
with Billy Boy & The Bloatware Factory finally
getting the message - hopefully - a cleaner Windows
7 will evolve. We?ll see.
Today?s generation is rediscovering simplicity.
That's why Google is attracting joyful adherents
with cleaner, faster and more sensible products ?
like Chrome - with millions more enjoying Macs.
Microsoft hasn't learned from history - because it
was too busy trying to write it.
Personally - as an IT manager - I'd love to dump
every Microsoft product from my datacenter and
start-over with something simpler and cleaner. But
that won?t happen in my lifetime.
Maybe someday Google, or someone else, will get us
there.
Hell ? if they?re smart - it might even be
Microsoft.
Rob
Could Google, Microsoft and Yahoo be the equivalent of Ford, GM and Chrysler more than 60 years ago?
That thought provoking question was raised by Bernstein analyst Jeffrey Lindsay, who cooks up weekend missives designed to make you go hmmm. The argument is an interesting one. Lindsay notes that the downturn of 2001 to 2003 in Web advertising–AOL imploded and Yahoo fumbled–allowed Google to emerge. Instead of buying Google, the future search giant went public and owned the sector.
Fast forward a bit and MySpace, YouTube and Facebook had no shot at going public. Facebook had its IPO shot, but blew it. Lindsay says:
Will the current downturn provide the condition for the next Google to emerge – and if so where will it come from? The problem today is that today’s internet players have formidable cash piles which they can use to buy up almost anything. The venture capital players that brought the internet sector into being have generally less cash to hand and are becoming increasingly interested in other sectors.
The parallel with the auto industry? Buick, Oldsmobile and Chevrolet were the high tech startups industry of the 1940s. They were gobbled up to become GM. I thought Lindsay was stretching a bit when I read through his research note. But then I pondered Yahoo, which has Flickr, Delicious, Rivals.com, Zimbra and a bunch of other properties in its collection. Are these properties really any different than the nameplates and brands that GM and Ford have?
Microsoft and Google are similar stories. Any company that may be a threat someday is gobbled up. In the last two years, Microsoft has made an acquisition every three weeks, according to a Wikipedia tally. Google has made an acquisition every five weeks over the last two years. And why are all of these acquisitions happening? Microsoft, Google and Yahoo all have too much dough that theoretically should be returned to shareholders.
Lindsay writes:
We think having massive cash reserves causes the internet companies to do the wrong thing. Microsoft has operated a loss-making online services division now for years. Current projections suggest that the company’s online activities may lose $1.5 billion in 2009 – just to keep the option open for Microsoft to expand its online activities in the future. The net effect of Microsoft subsidizing its lossmaking online activities is that it creates problems for the other players – such as Yahoo! and AOL. Having three Web 1.0 portals around in the current market ensures that there is overcapacity in display advertising. Nobody at the minute can get even halfway decent CPMs, because these three players are supporting three large sales forces, three ad serving platforms and are cutting each other’s throat on pricing. Add to that the fact that all three are supporting one or two network/exchanges each. Each of the large internet players owns an in-house ad exchange network now. This virtually ensures that nobody can get any pricing power in display and that the premium ad display business is constantly undermined by bargain basement pricing on the network/exchanges.
Lindsay says that Google is better than Microsoft and Yahoo but it’s blowing money at a rapid clip on inefficient product development. The point: Companies with a ton of cash can be stupid. Would the eBay have acquired Skype if it had to raise funding from Wall Street?
Lindsay’s argument continues:
While we would be among the first to agree with the general principles of Chandler’s “Coming of Managerial Capitalism” that consolidation is the inevitable corollary of increasing efficiency in almost all industries, we think the maturation of the internet sector is being accelerated by the large players with big cash piles. Quite simply the internet sector is getting old before its time because several large players are buying up just about anything that looks interesting and the venture capital sector is much less active. What makes things worse is that the large players are not doing much with these new technologies and innovative management teams once they take them inside. Nor is this necessarily a good situation for shareholders. We would further argue that today’s internet players are increasingly acting like yesterday’s media conglomerates. Arguably this has already been the downfall of AOL and has been a major factor in Yahoo!’s recent demise. The problem with the Web 1.0 portal model is that they all copy each other’s strategies.
Examples of copycat “innovation” abound. AOL launches a photo site, Yahoo copies and then buys Flickr. MSN follows with a copycat. Google gets Picasa. There are four finance portals–AOL Finance, Yahoo Finance, Google Finance and MSN Finance. It’s a similar situation for personals sites. Are these sites really necessary?
The bright side: A downturn is forcing these companies to cut back on spending. Google may not need those additional data centers. Microsoft and Yahoo still may become pals. AOL.com will eventually merge into another portal. However, there are no guarantees that these Internet giants won’t continue to be dumb with their dollars. If the likes of Google, Yahoo and Microsoft continue on their current path they could be on a fast track to a Detroit-like future, argues Lindsay. He concludes:
To our grandparent’s generation Detroit was the equivalent of Silicon Valley – we would rather the internet remained a source of innovation and wealth for future generations.
