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Microsoft's Lost Decade
Kurt Eichenwald has written a lengthy article about Microsoft's slow decline over the past 10 years, cataloging their missteps and showing how consistent, poor decision-making from management crippled the tech titan in several important industries.
"By the dawn of the millennium, the hallways at Microsoft were no longer home to barefoot programmers in Hawaiian shirts working through nights and weekends toward a common goal of excellence; instead, life behind the thick corporate walls had become staid and brutish. Fiefdoms had taken root, and a mastery of internal politics emerged as key to career success. In those years Microsoft had stepped up its efforts to cripple competitors, but—because of a series of astonishingly foolish management decisions—the competitors being crippled were often co-workers at Microsoft, instead of other companies. Staffers were rewarded not just for doing well but for making sure that their colleagues failed. As a result, the company was consumed by an endless series of internal knife fights. Potential market-busting businesses—such as e-book and smartphone technology—were killed, derailed, or delayed amid bickering and power plays. That is the portrait of Microsoft depicted in interviews with dozens of current and former executives, as well as in thousands of pages of internal documents and legal records."
We discussed a teaser for this piece earlier in the month — the full article has all the unpleasant details.
The problem is Ballmer. Always has been.
It did a pretty good job of laying out why MS has failed to keep up with the leading edge of the industry, and why they will need radical cultural change to ever catch up. In particular, the article avoided overblown hystrionics, for example not claiming MS is dead, but pointing out that MS has become like IBM in how it operates.
-- Two men say they're Jesus. One of them must be wrong. - Dire Straits
MBAs can't run businesses. It's that simple. When Bill ran it, everything was great. When Steve took over, everything went downhill. The same happened in Apple: When Steve was in charge, Apple grew. When Steve was fired, downhill. When Steve was brought back, more growth. The same with HP. Moral: don't let MBAs run your company, it'll tank.
Don't stop where the ink does.
So doubling your revenues and net income is now considered a "lost decade"?
In any organization I've ever seen or worked for.
Please do not read this sig. Thank you.
Microsoft failed to conquer a number of new markets over that past decade. Social networking, tablets/smart phones, etc. -- Microsoft is just not winning, and their old strategies of monopoly abuse are not going to help them.
Palm trees and 8
Among others a reply from Frank Shaw (MSFT):
http://www.neowin.net/news/what-the-hell-is-microsofts-lost-decade
It did a pretty good job of laying out why MS has failed to keep up with the leading edge of the industry, and why they will need radical cultural change to ever catch up. In particular, the article avoided overblown hystrionics, for example not claiming MS is dead, but pointing out that MS has become like IBM in how it operates.
I haven't had time to read the whole article yet. However, if the summary is accurate (ha ha), it's certainly not the first time that MS's internal politicking and entrenched interests since the late 90s have been pinpointed as a major obstacle to innovation and their continued success in a changing market.
Some time back I commented on (and cherry-picked) a similar article, which wasn't new even then- it dated back to early 2010. Still very informative though.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
You cant seriously call Xbox a success without using a fair bit of progressive counting. To date XBOX still a bit to go before all the investments are returned. And its still not anywhere near a market leader position. This while it has eaten up much of the PC gaming space, cannibalizing another MS business end.
Windows 7 is by no means a success since total share of Windows has fallen since its introduction, not risen. Only reason its a success is because of the monopoly. Without it, W7 would have failed utterly. Just look at how "well" WP7 is doing for reference of how things work out for MS without their monopoly benefits.
Sharepoint a success? Where? And Lync a success, in what reality? Outside the "Microsoft or nothing" sphere nobody knows about it even. And therein lies the real problem, the "MS or nothing" sphere is shrinking fast.
Microsofts only products they manage to make money off of is Office and Windows thanks to their monopoly. Everything else is complete and utter failure.
Windows and office are just the extensions of successes that date back to the 90s and before.
Sharepoint? Not much to write home about.
XBox is more interesting but still mainly something that leverages Microsoft's platform dominance with MS-DOS and derivatives.
So all in all you've basically got what boils down to MS-DOS and friends. Microsoft can only coast on that so long.
A Pirate and a Puritan look the same on a balance sheet.
It's not a hit piece. It's just that Microsoft is not 'leader of the pack' anymore.
Microsoft is the new IBM.
And IBM is still profitable isn't it?
Btw, were are those 'outrageous' claims made in the article? It states that Microsoft is still making a reasonable profit, doesn't it?
XP and 7 exploited the same OEM channels that forced MS-DOS down everyone's throats.
"Continuing to coast" is not quite the standard the author was looking for.
A Pirate and a Puritan look the same on a balance sheet.
Group think has set in such that slowly politics has created an environment where the top management do not hear dissenting voices, so somehow they can do no wrong.
It is natures great recycler.
Sharepoint? Not much to write home about.
I wouldn't say that. It *does* have that traditional Microsoft "catastrophically bad and yet my boss bought it" feel. Their OS and even things like Exchange kind of work nowadays.
They got what they deserved from that asinine move.
Hah, indeed. Microsoft has lots of problems now, but it had a lot of problems before too! It's kind of funny that in 2012 the "old Microsoft" has become some kind of utopia looked back on as if it were driven by technologists in pursuit of technical excellence. In the 1990s, Slashdotters would surely not have thought that. Microsoft in, say, 1997 was not working towards "a common goal of excellence", but some very corporate-strategy driven ideas about where the PC market should go. Arguably that's true of much of what they did in the 1980s, as well.
10 PRINT CHR$(205.5+RND(1)); : GOTO 10
>"Fiefdoms had taken root, and a mastery of internal politics emerged as key to career success. In those years Microsoft had stepped up its efforts to cripple competitors"
Welcome to life at a huge, fat monopoly. At least it seems like they hit an ace with UEFI, further stifling competition and removing consumer freedom and choice.
Looks like Apple is falling into the same trap in their niche markets where they were also a near monopoly (tablets/phones).... instead of opening up, offering product choices, lowering prices, they are spending all their effort trying to sue everyone into submission.
Microsoft's server revenue was $4.5b last quarter growing at 14% year over year. Yes sharepoint, SQL Server, Dynamics... are something to write home about.
We are very sorry about this and will fix it with the upcoming Windows 8.
Regards,
Microsoft
This while it has eaten up much of the PC gaming space, cannibalizing another MS business end.
Aside from the OS a machine runs, MS has precious little at stake when it comes to PC gaming. And I don't know of a single Xbox user who isn't using Windows and every one of them own PCs. MS lost nothing to the gaming crowd with the Xbox.
The Xbox lost $4 billion and came in a distant seccond.
The Xbox 360 has lost $3 billion, after a few quarters in the black the division is now in the red again, and the 360 is currently tied for second.
That's not what any rational person would call success.
What idiot modded this troll? It was right on point.
Windows and Office are cash cows, yes, but other than Ballmer's incompetence they're the biggest part of the problem-- everyone at Microsoft is afraid of doing something that might threaten Windows or Office. That's why Microsoft spent years trying to stuff bloated desktop Windows into tablets and phones-- and why they were made to like complete asses by Apple.
And XBox? Pfft. They bought their way into the video game market, plain and simple. IIRC they haven't yet reached the break-even point because of the billions they pissed away at the start. XBox is the last time you'll ever see them be able to pull that move, too. No more showing up late with a mediocre product and coming out on top only because they can outspend their competitors.
And Sharepoint is just another product designed to increase corporate IT inertia and maintain Windows' dominance on enterprise desktops.
~Philly
I RTFA the whole article... but IMO, it has forgot one or two things....
M$ vs DOJ: If you have read daily technology news back in 90s, you might remember how narrowly M$ escaped from a major anti-trust case. Since then, M$ had to play nice with DOJ to avoid getting the worm can re-opened. So it is somewhat obvious M$ didn't work aggressively in taking over other markets in last decade. All the new players, they do not have to answer DOJ for any anti-trust violations. So... new players are very lucky when it comes to approaching new markets.. be it search, consumer media, social networking etc.
At the very heart of the DOJ case...M$ was accused of "locking-in" customers for their products. And now, fast forward to 2012... Apple is literally locking in consumers behind their gardened walls with a plethora of their own hardware and software, Google & FB literally collecting private details from its consumers. Playing the devil's advocate here, I wonder how come they are not scrutinised intensely ?
M$ massive hiring spree: Though I can't exactly remember the figures and fact, I believe M$'s staff count has gone up by few folds since the turn of the century. Though I am not sure what's the reason behind this; but I am pretty sure this is the real reason why wheels started getting off. More staff means more HR to handle them. My best guess for this 'staff head count inflation' is, having lot of cash in bank.
But my overall conclusion is... markets are wide open only for a brief period of time. One can concur that market only during that brief moment. Late comers will always have to play "do or die" battle before totally convert the market to their camp, or die an early shameful death. M$'s biggest issue it seems, not discovering wide open markets to concur like the rest.
Having said all that, during last decade, M$ consumer products have become more stable and secure than in 90s. That's something worth noting.
Also, I would like to see Steven Sinofsky to head the Redmond camp after Ballmer... looking at his track record, I believe he can stop this plunging boat from drowning.
p.s
I have to agree that 'management style' in M$ is somewhat deleterious. My software house has this ghastly 6-month review cycle despite being a SMB. In the most recent review, I was accused of not having any initiatives during work by the reviewing HR boss. My sad situation is, my technical boss disagrees with my initiatives. To avoid annoying him too much, and get the team working on one direction; I have learnt to suspend my ideas and just to be a "yes-boss" guy. But would the HR boss understand my situation fully? Personally, I put lot of hours in writing well-polished reliable code. In return, both my bosses are nit-picking on me. IMO, these reviews are good for "failing" employees.. but the rest, why bother.. just throw them free candy or coffee.
In times past Microsoft would find a nice add-in product for their software and then bundle a cloned version of it for free. Remember Stac Electronics? The disk compression Microsoft put in the next version of MSDOS was not better than Stac's, but it was free. Stac only won some money in a lawsuit, but was essentially destroyed. I think to this day developers are still mindful of this predilection. Now this same thing is happening to the cash cows of Microsoft: Windows and Office. Linux and LibreOffice are the nemesis of Microsoft's flagship products. Another product for the server world is Exchange. Exchange virtually forces the use of Outlook. No other Windows or Linux client can properly work with it. This is a strategy MS uses to delay the inevitable. Don't you think /. is read by MS employees? They can read the signs of the times. They just can't show their strategy to carry them through this. This lost decade is the decade of dealing with free alternatives. Microsoft is reaping what they have sown. You can't perpetuate the monopoly on Windows and Office alone anymore. I'll say it again:
It's hard to argue with free.
Oh, yeah! Wise guy, huh? Woob woob woob woob! Nyuk! Nyuk!
Until you look at how much Microsoft has spent.
The world's burning. Moped Jesus spotted on I50. Details at 11.
While xbox is a household name, profit wise it isn't stellar. It also has had an interesting effect of moving the attention of Windows game developers onto consoles. The problem being this actually seems to weaken MS lockin, migrating userbase from a mindset where microsoft unquestionably dominates the market to one where MS is just one of three big names. While this in the short term has boosted MS offering in the market, it also has made these studios get over their desktop fixation and get accustomed to supporting Sony and to some extent nintendo.
So far, not critical, but it does potentially pave the way for the big game companies to completely torpedo the desktop and xbox gaming market. At the same time as getting developers in the mindset of multi-platform support, it starts pushing it's first-party app store as well as a bizarre model for desktop usage. Between the improved view on multiplatform development and threatening digital distribution channels that particularly valve has become accustomed to it, they are paving the way for a company like Valve to completely undermine MS' desktop and console gaming market.
There are a large number of factors external to MS facilitating this scenario, but MS strategy has done it's part to explicitly fuel thisto some extent.
A very real scenario seems to be:
MS effectively forfeits the desktop market due to lack of interest on their part. It's a boring market where they cannot grow and today's business philosophy seems to dismiss sustainability without exponential growth (growth is always indicated as a percentage, the raw dollar values are de-emphasized). Companies are still using XP by and large, which might have been ok except MS is simultaneously pushing the market to develop software that doesn't work with XP, so XP usage might be characeterized as 'limping along' with increased difficulty over time. Between OSX and Linux (though the 'front and center' Linux DEs have also lost their way), some enterprises are seeing viable MS alternatives. On the homefront, erosion comes more easily, mostly at the hands of IOS, Android, and to a lesser extent OSX and Linux, share-wise (consumer desktop/laptop market is increasingly driven by 'enthusiasts' as the casual user base moves on to tablets and phones).
Casual game development on Android paves the way to support Ouya on the low end (XBLA competitor) and on the high end, Valve makes a go of it with a game console, a stronger, diverse name in gaming and digital distribution of games than MS. I see this as highly disruptive to Sony, Nintendo, and MS, but I don't think Valve would've had such an easy time of it if MS hadn't paved the way with xBox.
Phone/tablet is easy enough to see. MS has no appreciable share. To those saying 'but WP7 users always rave about it', that would be a natural consequence of a small user base. The only people there are naturally going to be fanboys. Just like WebOS had exceedingly high satisfaction among its very small userbase (I liked WebOS, but it really lacked a lot). IOS and Android seem to be carving up the market handily.
Basically, MS is screwed. They are trying to compete with google using Bing to dubious result. They are pushing Azure to comete with EC2 and are diluting their vision because it just isn't working. They are throwing their desktop market (the only market they securely held) under the bus to try to prop up metro which has been a market failure on phones today.
XML is like violence. If it doesn't solve the problem, use more.
The article's author seems to think that Microsoft should have conquered those new markets. But what about the opposite approach: don't even try to enter those markets. Why should a company always try to become bigger even in areas that are not its strength?
In particular, why should Microsoft be in the smart phone business? It's not like smart phones will replace PCs. They are behind Apple and Google in terms of features, mind share and available 3rd party applications; to succeed they must either do the same thing much better (like Apple with the iPod) or do something different to make their platform stand out. If they don't have the ideas for that, it's better in my opinion to stay out of the market altogether rather than make a "me too" product.
I believe the main reason for the popularity of X-Box is the insanity at Sony. Once Sega dropped out of the market it's like Sony forgot how to compete.
According to Wikipedia (http://en.wikipedia.org/wiki/List_of_best-selling_game_consoles), Nintendo Wii sold more units than both Xbox and Xbox 360. While Xbox 360 outsold Sony Playstation 3 by a few million units, combined sales of all Playstation models are several times higher than sales of both Xbox models. So what makes you say that Microsoft is the number one console manufacturer?
Moreover, unlike sales of smartphones and tablets, sales of game consoles are stagnating already. So it's pointless to argue whether Microsoft, Nintendo or Sony is the No. 1 or coolest console manufacturer.
Actually a lot of people used to run Windows just to play games. A huge number. Most of those are now using consoles instead. Many of these now use no computer at all but a tablet or phone for what internet usage they have. I've had little problem moving people to Linux since when I ask them if they use the computer for gaming they almost always reply that they have a Wii or X-Box or Playstation for that (in some cases all three!)
Its like saying IBM did well selling a mainframe, sure once upon a time they did that and made huge fortunes, today, they don't.
Well, actually, IBM does make a large amount around new mainframe sells. While various pieces of enterprisey software are their meat and potatoes now, While System Z isn't particularly glamorous, it is *solid* and IBM doesn't screw with it. Would some things in a brand-new System Z configuration seem downright *archaic* by many technical people? Of course. Is IBM's dedication to the platform largely as-is incredibly valuable to the market they do retain? You better believe it. Contrast this treatment to MS. If run like MS, mainframe probably would have been changed to be more like competitors that were eating away market share rather than staying the course to retain a very profitable core market. Kind of like what Sun did with the Ultra 5 and Ultra 10 back in the day.
IBM is actually an interesting company in terms of financial success. They are rarely the leader of any particular wide market, yet so incredibly diverse that not a significant IT deal goes down without IBM getting something out of it. You buy HP blades but IBM might make money off their switch modules. You buy software from Oracle but oracle pays some licensing fee of some patents to IBM, and maybe some IBM hardware to run the software. IBM seems to always have *some* disappointing business units and some golden children in any given time period, but that changes over time. IBM used to have hardware as the golden child, software as nothing to write home about, and a fledgling service business. Times changed and suddenly their services business is the only one looking particularly good, software exceeding hardware to the point of the very immediate demise of mainframe a likely bet. Things change again and now software is the star, with Services and hardware both looking not particularly appealing, but within the hardware mainframe has actually made a comeback.
IBM is perhaps the most boring of the massively successful technology companies, but they don't seem to care that much given their understated, but very consistent positive financial results over time.
XML is like violence. If it doesn't solve the problem, use more.
There seems to be this mythology about Microsoft "used to be innovative". I think back and don't recall ANY time where that was the case.
The first computers to have music-quality sound were Atari (1979) and Commodore (1982) and Apple Lisa (1983). Not Microsoft which didn't get sound blaster ability until years later.
The first computers to have enough GPU power to playback fullscreen videos were Atari and Commodore (1985) and Apple (1988). Not Microsoft.
The first computers to have true preemptive multitasking were Commodore (1985). Not Microsoft which took ten years to get, and it didn't work with the then-standard 16-bit apps. Only new 32-bit programs. (Apple didn't get it until 2001 with OS 10.1.)
The MS business model started by selling software to larger companies (Atari, Apple, Commodore, IBM, and the PC clone makers). Those same large companies did the innovating while Microsoft just followed along and copied what others had already done 5-10 years earlier. They were never innovative. Never.
My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
Market cap is to company's real worth as photoshopped magazine covers are to original models' beauty: a somewhat good reference but not really that reliable.
That is very true, Apple's market cap remains substantially depressed compared to other companies.
In the decade that Microsoft simply continued to sell the same thing they always had, Apple herded the music market unwillingly to digital sales, totally took over portable music players, forced a massive shift in the smartphone market, and then to top it off proceeded to be the company that led the inevitable shift in the computing market to tablets despite Microsoft trying and failing to do sofor almost ten years.
I'd say the "lost decade" description for Microsoft is utterly apt, for all sorts of reasons... the way that Microsoft killed off better technologies as they rose against Microsoft for many years was a loss of around a decade of computer advancements for real people as Microsoft kept the status quo.
But just like keeping the lid shut on a pressure cooker, eventually something much blow - and Apple was the company that forced the issue.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
The problem is they care what Wall street thinks and IBM is a good example. IBM still makes a ton selling mainframes but according to Cringely they are literally slitting their own throats and gutting the company trying to get Wall street to treat the stock better which just won't happen. IBM like MSFT was once upon the time ruler of the planet but instead of accepting that time is past and continuing to make money on their core strengths they bow to Wall Street and end up shooting themselves in the face.
I mean on the first page of the article what do you see? A comparison of MSFT stock to Apple stock. Wall street is a popularity contest and we all know that certain stocks get massively overvalued and then one little thing happens and the stock dives. Look at how Apple stock would drop every time any news of Jobs health would hit for example. Did anybody think the company would collapse without Jobs? But the stock still took a hit every. single. time. something bad about his health came out.
MSFT simply needs to accept they are the new IBM, that PCs aren't going away but will never be the hip and cool thing like they were in the Win95 era and accept that while they'll keep making billions its not gonna be iMoney. All they have done by trying to chase Apple into markets where they have no real strengths is flush billions down the toilet while not gaining jack squat in terms of share. How many here think Win 8 will break double digits on phones and tablets? Thought so.
Just because it has a processor does not mean Windows needs to be running on it, and just because Apple can pull something off doesn't mean MSFT can, they sell to two totally different demographics.
ACs don't waste your time replying, your posts are never seen by me.
None of your examples have anything to do with Microsoft. They didn't design the hardware, so they could not control the sound and graphics of the PC. They may have had real multitasking prior to NT had it not been for IBM insisting that OS/2 ran in 286 mode. It was one of the reasons wh IBM and Microsoft went their separate ways in the OS market.
Microsoft have had plenty of innovation over the years, especially from the work done at Microsoft Research. Unfortunately, they are not always very good at commercializing the technologies that are invented.
> They were never innovative. Never.
Had anyone done something like Bob before? :-)