4 ms·

I find your comment interesting, however I do not agree that "Pushing a business model that commoditizes hardware, rather than software" is compelling. Google i

I find your comment interesting, however I do not agree that "Pushing a business model that commoditizes hardware, rather than software" is compelling. Google is already doing that, so Microsoft doesn't need to sell Windows 7 to achieve this goal. I also wonder if your statement that "If Microsoft doesn't compete, fiercely, in both mobile and web fate will end up being very similar to both General Motors' and DEC." I agree that it is in danger of irrelevance, but I am not convinced that Windows 7 is the right way to compete in mobile. I can't think of anything better, but that doesn't mean that Windows 7 is the right thing to do. I am reminded of the politician's fallacy: "We must do something. This is something. Therefore we must do it." But doing the wrong thing is worse than doing nothing at all.

scottdw2 15y ago
According to Clayton Christensen's model of disruptive innovation, once disruptors push all incumbents out of a low margin market segment, the prices in the lower market segment plummet, and margins drop toward zero. The only way for the disruptor to continue profiting is to follow the incumbent up the market, applying their disruptive invocation to more profitable market segments. The cycle continues until the incumbent is pushed out of the market entirely. Detroit's moves away from low-margin compact cars is what enabled Toyota to make Lexus. Microsoft moving away from mobile phones would have a similar effect. It's essential for their survival. Also, Google's business model doesn't commoditize hardware, it commoditizes software. Google's business model is to monetize data, not software. They are trying to do to Microsoft and Apple what Microsoft did to hardware manufactures.
- raganwald 15y ago
  I follow the structure of your argument. Going with autos, Detroit's move away from low-margin compact cars enabled Toyota to make Lexus. Let's grant this as true. But does it imply that sticking with low-margin compact cars would have protected their market for luxury cars? What if--like Windows 7 so far--they failed to make significant headway with the low-margin compact cars? What if they lost time and management attention trying to do so much? Or what if someone else--Hyundai or Kia, for example--beat them hollow on low-margin cars while Toyota moved upmarket and beat them on luxury cars anyways? This is why I'm not sure that Windows 7 is the right move. I can see they are in trouble in mobile, but I can't see that Windows 7 is the right thing to do. It would be nice if they could gain a dominant position, but a lot of things would be nice.
  - nextparadigms 15y ago
    Andy Grove understood this idea very well, I think before Clayton even wrote this book, but they later became very good friends. Andy Grove once that that "if we lose the low-end today, we lose the high-end tomorrow." That's actually how disruptive innovation works. The disruptor comes from the low-end and it slowly moves into higher levels, up market. That's why ARM is so dangerous to Intel for example, but Paul Otellini doesn't seem to understand this theory as well as Andy Grove. http://www.youtube.com/watch?v=DaKgMcFP4Mo&feature=related http://www.youtube.com/watch?v=DaKgMcFP4Mo&feature=relat...
    - wisty 15y ago
      Grove wrote a book on this called "Only the Paranoid Survive". Terrible title. Good book. He points out that if you own the low end, you gain huge economies of scale. You pay for your foundries and R&D with cheap low-end parts, but only barely. Nobody can compete, because they don't want your rubbish margins. But then you can put huge margins on your high-end products by using cost-cutting technology and your huge efficient factories to lower your costs. It doesn't work in all industries. But it's great in technology, as efficiences of scale do exist (what's the maringal cost of 1 more chip, or one more CD-ROM?)
scottdw2 15y ago
The best thing to do would be for them to disrupt themselves. Apple does that. Historically Microsoft has shied away from "canabalizing its existing businesses". Netdocs is a famous example. It's much better to own the disruptions rather than allow your competitors to do it. If someone at Microsoft can invent disruptive technology then someone outside Microsoft can do the same thing. It's better for Microsoft to get that money then Apple or Google. Accomplishing that, however, would require a cultural revolution within the company. I would argue that they should have groups inside Microsoft dedicated to continuously disrupting their existing businesses. That's the only way they can stay in front of people like Apple or Google. That would effectively convert "disruptive innovation" into "sustaining innovation". Sustaining innovation favors the incumbent. You could also look at it as a form of "meta-disruption", as it would disrupt the act of disruption. Is "Windows Mobile 7" the best response? Perhaps not. The ideal response would be to disrupt the smartphone market all together. You could see the purchase of Skype providing potential for this (whether or not that's their intention is a separate question). Producing a "carrier free smartphone" would be a good example. That's not easy to do. It requires ubiquitous access to free internet services. It would take a long time. There are high fixed costs. There may be better options. I think Windows Mobile 7 makes sense as an interim step. It provides a battle ground to impeded progress while they gear up for the real fight. Think of it like the Allied North African campaign during WWII.
- kenjackson 15y ago
  The best thing to do would be for them to disrupt themselves. Apple does that. When has Apple done that? Apple has never had a market until the iPod that was large enough to be cannibalized. But they've never actually cannibalized the iPod/iPhone/iPad market. Now pushing webapps over their appstore would be cannibalizing iOS. But simply shipping improved products isn't cannibalizing.
  - scottdw2 15y ago
    The IPhone disrupts the IPod and the IPad disrupts the Mac business. The IPad is not just an "improved product". It's disruptive.
kragen 15y ago
> I am not convinced that Windows 7 is the right way to compete in mobile. I can't think of anything better, but that doesn't mean that Windows 7 is the right thing to do. How about paying a dividend in excess of earnings, so that the investors can take the money earned at Microsoft over the years and invest it in Google or HTC instead?

scottdw2 15y ago

According to Clayton Christensen's model of disruptive innovation, once disruptors push all incumbents out of a low margin market segment, the prices in the lower market segment plummet, and margins drop toward zero. The only way for the disruptor to continue profiting is to follow the incumbent up the market, applying their disruptive invocation to more profitable market segments. The cycle continues until the incumbent is pushed out of the market entirely. Detroit's moves away from low-margin compact cars is what enabled Toyota to make Lexus. Microsoft moving away from mobile phones would have a similar effect. It's essential for their survival. Also, Google's business model doesn't commoditize hardware, it commoditizes software. Google's business model is to monetize data, not software. They are trying to do to Microsoft and Apple what Microsoft did to hardware manufactures.

raganwald 15y ago
I follow the structure of your argument. Going with autos, Detroit's move away from low-margin compact cars enabled Toyota to make Lexus. Let's grant this as true. But does it imply that sticking with low-margin compact cars would have protected their market for luxury cars? What if--like Windows 7 so far--they failed to make significant headway with the low-margin compact cars? What if they lost time and management attention trying to do so much? Or what if someone else--Hyundai or Kia, for example--beat them hollow on low-margin cars while Toyota moved upmarket and beat them on luxury cars anyways? This is why I'm not sure that Windows 7 is the right move. I can see they are in trouble in mobile, but I can't see that Windows 7 is the right thing to do. It would be nice if they could gain a dominant position, but a lot of things would be nice.
- nextparadigms 15y ago
  Andy Grove understood this idea very well, I think before Clayton even wrote this book, but they later became very good friends. Andy Grove once that that "if we lose the low-end today, we lose the high-end tomorrow." That's actually how disruptive innovation works. The disruptor comes from the low-end and it slowly moves into higher levels, up market. That's why ARM is so dangerous to Intel for example, but Paul Otellini doesn't seem to understand this theory as well as Andy Grove. http://www.youtube.com/watch?v=DaKgMcFP4Mo&feature=related http://www.youtube.com/watch?v=DaKgMcFP4Mo&feature=relat...
  - wisty 15y ago
    Grove wrote a book on this called "Only the Paranoid Survive". Terrible title. Good book. He points out that if you own the low end, you gain huge economies of scale. You pay for your foundries and R&D with cheap low-end parts, but only barely. Nobody can compete, because they don't want your rubbish margins. But then you can put huge margins on your high-end products by using cost-cutting technology and your huge efficient factories to lower your costs. It doesn't work in all industries. But it's great in technology, as efficiences of scale do exist (what's the maringal cost of 1 more chip, or one more CD-ROM?)

scottdw2 15y ago

The best thing to do would be for them to disrupt themselves. Apple does that. Historically Microsoft has shied away from "canabalizing its existing businesses". Netdocs is a famous example. It's much better to own the disruptions rather than allow your competitors to do it. If someone at Microsoft can invent disruptive technology then someone outside Microsoft can do the same thing. It's better for Microsoft to get that money then Apple or Google. Accomplishing that, however, would require a cultural revolution within the company. I would argue that they should have groups inside Microsoft dedicated to continuously disrupting their existing businesses. That's the only way they can stay in front of people like Apple or Google. That would effectively convert "disruptive innovation" into "sustaining innovation". Sustaining innovation favors the incumbent. You could also look at it as a form of "meta-disruption", as it would disrupt the act of disruption. Is "Windows Mobile 7" the best response? Perhaps not. The ideal response would be to disrupt the smartphone market all together. You could see the purchase of Skype providing potential for this (whether or not that's their intention is a separate question). Producing a "carrier free smartphone" would be a good example. That's not easy to do. It requires ubiquitous access to free internet services. It would take a long time. There are high fixed costs. There may be better options. I think Windows Mobile 7 makes sense as an interim step. It provides a battle ground to impeded progress while they gear up for the real fight. Think of it like the Allied North African campaign during WWII.

kenjackson 15y ago
The best thing to do would be for them to disrupt themselves. Apple does that. When has Apple done that? Apple has never had a market until the iPod that was large enough to be cannibalized. But they've never actually cannibalized the iPod/iPhone/iPad market. Now pushing webapps over their appstore would be cannibalizing iOS. But simply shipping improved products isn't cannibalizing.
- scottdw2 15y ago
  The IPhone disrupts the IPod and the IPad disrupts the Mac business. The IPad is not just an "improved product". It's disruptive.

kragen 15y ago

> I am not convinced that Windows 7 is the right way to compete in mobile. I can't think of anything better, but that doesn't mean that Windows 7 is the right thing to do. How about paying a dividend in excess of earnings, so that the investors can take the money earned at Microsoft over the years and invest it in Google or HTC instead?