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"since everyone - including Microsoft - knows that a ubiquitous Web means fewer sales of Windows and Office" I would think that the real problem is Microsoft's

"since everyone - including Microsoft - knows that a ubiquitous Web means fewer sales of Windows and Office" I would think that the real problem is Microsoft's unwillingness to become something completely new, something other than Windows and Office. Apple was a computer company, then it became a cell phone company, a music company, a lot of other things. Microsoft now sort of reminds me of Sun circa 1999: yes, they would sort of like to innovate and do something new, and they make the occasional try at it, but right now they have an insanely profitable product, so the easiest thing to do is to just keep milking it.

brentb 16y ago
"I would think that the real problem is Microsoft's unwillingness to become something completely new, something other than Windows and Office." Inability, perhaps. Unwillingness? You're out of your mind. Microsoft has had their fingers in smartphones, music players, search engines, touch computing, web mail, [you name it] for YEARS. And they are not just dabbling... they have poured billions into these areas, trying to come up with something that gains traction. Microsoft doesn't make "the occasional try" at innovation, they are a veritable firehose of attempts to innovate. Microsoft Research is HUGE (and well respected within the research/academic community) and as I mentioned above they spend billions every year trying to develop new products and break into new markets. The fact that Microsoft's efforts in this area have been largely unsuccessful over the past decade doesn't mean they aren't trying or aren't willing.
- mkr-hn 16y ago
  I'm all for trying a lot of different things, but there's a point where a company needs to step back and look at why all their tries fail.
- hugh3 16y ago
  Xbox was their last big success in entering a new market. That's just under a decade ago. The problem is that they have a sucky innovation model. They find something that's already successful, throw money at making a slightly better version (or whatever they can convince themselves is a slightly better version). Sometimes it works, sometimes it doesn't. It worked when they copied the Macintosh to make Windows. It worked when they copied Netscape to make IE. It worked when they copied Playstation to make Xbox. It stopped working when they copied iPod to make Zune, and continued to not work when they copied Google to make Bing. Why it's stopped working? Either (a) a run of bad luck or (b) folks have learned to preempt Microsoft's move or (c) the really good people don't work for Microsoft any more.
  - deleted 16y ago
    [deleted]
  - Tyrannosaurs 16y ago
    Their last big success? It was launched 10 years ago, last year was the first time the XBox division made a profit and it's still years and years away from recouping the investment made in it. If that's a success I really don't want to see one of their failures.
    - hugh3 16y ago
      I'm not familiar with the detailed financials, but the Xbox has at least captured a substantial market share, which is more than I can say for any of their subsequent major pushes into new market segments. I'm actually surprised if the xbox hasn't been profitable. It can't have been that costly to develop (get a fancy graphics chip and stick it in a box), they've sold a helluva lot of them, and they only update it once every five years, and they're making a crapload of money on the games too (don't forget they own Bungie) so I would have thought it would be a bit of a cash cow. But maybe they need to sell the consoles at a loss.
      - electromagnetic 16y ago
        The 360 has recently started making a profit, why? Because they released the 360 making a loss, and dropped the price rather quickly. They then dropped the price even more. And even more. IIRC they've always made money off of the special edition elite consoles, they've been making a profit off of the elite as a whole for a while now, however these represent a small amount of their sales compared to the big sales of the arcade consoles they had. PS3 made huge losses to try to stay competitive with 360, and never really dropped much in price and lost huge market share because of it. However, both have been ridiculous profit makers for their parent companies as the entire devision makes wheelbarrow loads of cash from selling games for ridiculous prices (again something Sony fucked up with by getting greedy in the beginning, although Xbox eventually followed).
        16y ago
- unexpected 16y ago
  I agree with you, but I fear that the internal politics with Microsoft have been absolutely stifling! Let's take smartphones for instance - look at the Kin. From all reports, killed b/c of politics, in favor of Windows 7. Why not have both and see what the market decides? The Courier. Killed - who knows why? Most likely politics. Microsoft has so many innovative ideas that we see in Research - but we never see them in products! It always feels like the right hand is slapping the left hand. Competing fiefdoms are fighting over resources, over pub, and over power. Microsoft needs to empower it's best leaders to make a product, from start to completion - much like Jobs does with Apple. At the end of the day, the buck stops with Jobs, and his vision goes. What happens at Microsoft? You have 100 PM's working on one project. You work diligently. Your design is "design by committee" but hey, it looks like it's going well. Then some jealous VP of some other division has a beer with Ballmer expressing some concerns and the project gets killed. This needs to stop. There was no reason that the Kin/Courier should have been killed. If it flops, let it flop. If you don't take chances, you'll never grow. Microsoft right now is afraid of its own shadow.
  - rospaya 16y ago
    > Why not have both and see what the market decides? Kin was killed after six weeks, the market decided it was crap and only a couple were sold. Actually not so much that the Kin itself is bad, but carriers weren't enthusiastic enough, and Microsoft had marketing problems for a product that would battle WP7 6 months later.
    - unexpected 16y ago
      you're right - it was killed after 6 weeks, but if you read the post-mortems/insider "scoops", it seems as if the Sidekick team wasn't allowed to make the product that they wanted to make. Features were getting pulled, changed, and strip-mined. You illustrate another problem - I don't know why MS would view it as "battling" WP7 6 months later: 1) 6 months is a LIFETIME for a phone. The Pre went from amazing, potential company-saver phone to dud in less than that. 2) At the end of the day, all the money goes back to Microsoft. Why is that a battle? Internally it's a battle for mindshare - but MS needs to realize that they're both on the same team. Apple is happy cannibalizing its iPod sales for iPod Touches/iPhones. 3) If Microsoft wants to grow, several products are going to overlap. There seems to be a convergence towards "the one true device". A year from now, MS is going to start worrying if mobile phone sales are creeping into their netbook sales - they already worry that Office 365 sales are going to creep into Office licensing
- m104 16y ago
  One way to look at this failure to innovate is to see plain old leadership ignorance: Microsoft, despite all of their efforts and hired brainpower, just hasn't been able to connect these dots. The GP sees this failure as something else: continued unwillingness, by the corporate leadership, to seriously support these innovation efforts. I agree. If you disagree and think that Microsoft's leadership is willing to change and has just not been able to, then their leadership must be phenomenally incompetent. Just ask yourself, what's their cohesive product strategy? Where's their commitment to excellence? How many of these research projects are designed to build on the strengths of Microsoft's offerings or fix their weaknesses? Why aren't these research projects winnowed down into economically viable and marketable products and services? What's the corporate vision? A simpler explanation is that the leadership of Microsoft is afraid of anything that competes with their two cash cows: Windows and Office. If this explanation is correct, then any product or service that Microsoft makes (or participates in) will be sufficiently hobbled in order to keep Windows and Office at the forefront of their offerings. It's their "strategy tax." Mobile devices and web services both compete with Windows and Office, in some way, so the company has done relatively little to advance in these two areas. It doesn't matter which way you look at it, though: spending billions and having little success to show for it isn't a merit badge, it's a mark of failure.
- lkrubner 16y ago
  "The fact that Microsoft's efforts in this area have been largely unsuccessful over the past decade doesn't mean they aren't trying or aren't willing." Yes it does. That is exactly what it means.
- InclinedPlane 16y ago
  Microsoft is rich enough to be able to pour billions of dollars and millions of engineer-hours into a project without seriously committing to it (Kin). Throwing crap against a wall and hoping it sticks, even if you spend billions, isn't innovation, that's flailing.
fragmede 16y ago
Ubiquitous web means fewer end-user sales of Windows and Office. End-users don't buy Windows, it just happens to come with their computer. End-user sales of Office may well decline, but if there were a good online version, Microsoft could sell two versions. A cloud-based, subscription version for smaller businesses, hosted by Microsoft. The second version would be a for larger corporations that want to host their own. For a large corporation, licensing could then be simplified to some fashion of a site-license; the cost of upgrading ALL computers would be simplified. Note that I'm NOT suggesting that Microsoft give up on a fat client for office, just that there's room for Microsoft needs to pivot if they wanted to, but that's easier said than done.
motters 16y ago
It seems very unlikely that they will be able to depend upon Windows and Office as their primary revenue stream for very much longer, so their survival depends upon being able to go into new territory. They've done this to some extent with games, but have been struggling to compete with mobile.
- mkr-hn 16y ago
  They can fall back on development tools and expand to other platforms if all else fails. Though that might not happen before they've spent too much of their reserves (and don't have enough coming in) to do it.
mtrn 16y ago
Maybe then Oracle will buy Microsoft in 2020 for their legacy integration.

brentb 16y ago

"I would think that the real problem is Microsoft's unwillingness to become something completely new, something other than Windows and Office." Inability, perhaps. Unwillingness? You're out of your mind. Microsoft has had their fingers in smartphones, music players, search engines, touch computing, web mail, [you name it] for YEARS. And they are not just dabbling... they have poured billions into these areas, trying to come up with something that gains traction. Microsoft doesn't make "the occasional try" at innovation, they are a veritable firehose of attempts to innovate. Microsoft Research is HUGE (and well respected within the research/academic community) and as I mentioned above they spend billions every year trying to develop new products and break into new markets. The fact that Microsoft's efforts in this area have been largely unsuccessful over the past decade doesn't mean they aren't trying or aren't willing.

mkr-hn 16y ago
I'm all for trying a lot of different things, but there's a point where a company needs to step back and look at why all their tries fail.
hugh3 16y ago
Xbox was their last big success in entering a new market. That's just under a decade ago. The problem is that they have a sucky innovation model. They find something that's already successful, throw money at making a slightly better version (or whatever they can convince themselves is a slightly better version). Sometimes it works, sometimes it doesn't. It worked when they copied the Macintosh to make Windows. It worked when they copied Netscape to make IE. It worked when they copied Playstation to make Xbox. It stopped working when they copied iPod to make Zune, and continued to not work when they copied Google to make Bing. Why it's stopped working? Either (a) a run of bad luck or (b) folks have learned to preempt Microsoft's move or (c) the really good people don't work for Microsoft any more.
- deleted 16y ago
  [deleted]
- Tyrannosaurs 16y ago
  Their last big success? It was launched 10 years ago, last year was the first time the XBox division made a profit and it's still years and years away from recouping the investment made in it. If that's a success I really don't want to see one of their failures.
  - hugh3 16y ago
    I'm not familiar with the detailed financials, but the Xbox has at least captured a substantial market share, which is more than I can say for any of their subsequent major pushes into new market segments. I'm actually surprised if the xbox hasn't been profitable. It can't have been that costly to develop (get a fancy graphics chip and stick it in a box), they've sold a helluva lot of them, and they only update it once every five years, and they're making a crapload of money on the games too (don't forget they own Bungie) so I would have thought it would be a bit of a cash cow. But maybe they need to sell the consoles at a loss.
    - electromagnetic 16y ago
      The 360 has recently started making a profit, why? Because they released the 360 making a loss, and dropped the price rather quickly. They then dropped the price even more. And even more. IIRC they've always made money off of the special edition elite consoles, they've been making a profit off of the elite as a whole for a while now, however these represent a small amount of their sales compared to the big sales of the arcade consoles they had. PS3 made huge losses to try to stay competitive with 360, and never really dropped much in price and lost huge market share because of it. However, both have been ridiculous profit makers for their parent companies as the entire devision makes wheelbarrow loads of cash from selling games for ridiculous prices (again something Sony fucked up with by getting greedy in the beginning, although Xbox eventually followed).
      - 16y ago
unexpected 16y ago
I agree with you, but I fear that the internal politics with Microsoft have been absolutely stifling! Let's take smartphones for instance - look at the Kin. From all reports, killed b/c of politics, in favor of Windows 7. Why not have both and see what the market decides? The Courier. Killed - who knows why? Most likely politics. Microsoft has so many innovative ideas that we see in Research - but we never see them in products! It always feels like the right hand is slapping the left hand. Competing fiefdoms are fighting over resources, over pub, and over power. Microsoft needs to empower it's best leaders to make a product, from start to completion - much like Jobs does with Apple. At the end of the day, the buck stops with Jobs, and his vision goes. What happens at Microsoft? You have 100 PM's working on one project. You work diligently. Your design is "design by committee" but hey, it looks like it's going well. Then some jealous VP of some other division has a beer with Ballmer expressing some concerns and the project gets killed. This needs to stop. There was no reason that the Kin/Courier should have been killed. If it flops, let it flop. If you don't take chances, you'll never grow. Microsoft right now is afraid of its own shadow.
- rospaya 16y ago
  > Why not have both and see what the market decides? Kin was killed after six weeks, the market decided it was crap and only a couple were sold. Actually not so much that the Kin itself is bad, but carriers weren't enthusiastic enough, and Microsoft had marketing problems for a product that would battle WP7 6 months later.
  - unexpected 16y ago
    you're right - it was killed after 6 weeks, but if you read the post-mortems/insider "scoops", it seems as if the Sidekick team wasn't allowed to make the product that they wanted to make. Features were getting pulled, changed, and strip-mined. You illustrate another problem - I don't know why MS would view it as "battling" WP7 6 months later: 1) 6 months is a LIFETIME for a phone. The Pre went from amazing, potential company-saver phone to dud in less than that. 2) At the end of the day, all the money goes back to Microsoft. Why is that a battle? Internally it's a battle for mindshare - but MS needs to realize that they're both on the same team. Apple is happy cannibalizing its iPod sales for iPod Touches/iPhones. 3) If Microsoft wants to grow, several products are going to overlap. There seems to be a convergence towards "the one true device". A year from now, MS is going to start worrying if mobile phone sales are creeping into their netbook sales - they already worry that Office 365 sales are going to creep into Office licensing
m104 16y ago
One way to look at this failure to innovate is to see plain old leadership ignorance: Microsoft, despite all of their efforts and hired brainpower, just hasn't been able to connect these dots. The GP sees this failure as something else: continued unwillingness, by the corporate leadership, to seriously support these innovation efforts. I agree. If you disagree and think that Microsoft's leadership is willing to change and has just not been able to, then their leadership must be phenomenally incompetent. Just ask yourself, what's their cohesive product strategy? Where's their commitment to excellence? How many of these research projects are designed to build on the strengths of Microsoft's offerings or fix their weaknesses? Why aren't these research projects winnowed down into economically viable and marketable products and services? What's the corporate vision? A simpler explanation is that the leadership of Microsoft is afraid of anything that competes with their two cash cows: Windows and Office. If this explanation is correct, then any product or service that Microsoft makes (or participates in) will be sufficiently hobbled in order to keep Windows and Office at the forefront of their offerings. It's their "strategy tax." Mobile devices and web services both compete with Windows and Office, in some way, so the company has done relatively little to advance in these two areas. It doesn't matter which way you look at it, though: spending billions and having little success to show for it isn't a merit badge, it's a mark of failure.
lkrubner 16y ago
"The fact that Microsoft's efforts in this area have been largely unsuccessful over the past decade doesn't mean they aren't trying or aren't willing." Yes it does. That is exactly what it means.
InclinedPlane 16y ago
Microsoft is rich enough to be able to pour billions of dollars and millions of engineer-hours into a project without seriously committing to it (Kin). Throwing crap against a wall and hoping it sticks, even if you spend billions, isn't innovation, that's flailing.

fragmede 16y ago

Ubiquitous web means fewer end-user sales of Windows and Office. End-users don't buy Windows, it just happens to come with their computer. End-user sales of Office may well decline, but if there were a good online version, Microsoft could sell two versions. A cloud-based, subscription version for smaller businesses, hosted by Microsoft. The second version would be a for larger corporations that want to host their own. For a large corporation, licensing could then be simplified to some fashion of a site-license; the cost of upgrading ALL computers would be simplified. Note that I'm NOT suggesting that Microsoft give up on a fat client for office, just that there's room for Microsoft needs to pivot if they wanted to, but that's easier said than done.

motters 16y ago

It seems very unlikely that they will be able to depend upon Windows and Office as their primary revenue stream for very much longer, so their survival depends upon being able to go into new territory. They've done this to some extent with games, but have been struggling to compete with mobile.

mkr-hn 16y ago
They can fall back on development tools and expand to other platforms if all else fails. Though that might not happen before they've spent too much of their reserves (and don't have enough coming in) to do it.

mtrn 16y ago

Maybe then Oracle will buy Microsoft in 2020 for their legacy integration.