On Jul 23, 5:09 am, Roy Schestowitz <newsgro...@xxxxxxxxxxxxxxx>
wrote:
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> Opinion: Microsoft faces a turning point
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> | Instead, Microsoft's decisions have been shortsighted: It has turned software
> | antipiracy measures into a strategic initiative; it has delivered
> | Web-based "Live" products that require a program installed on the client; and
> | its CEO, Steve Ballmer, has asserted that Linux infringed on Microsoft's
> | intellectual property. These are not the hallmarks of a company leading the
> | technology industry with strategic vision.
This is very telling. One of the real advantages that Bill Gates had
over other CEOs is that he could plan strategies that might take 5,
10, even 20 years to execute and he didn't have to worry about a
couple of "bad" quarters, because he controlled the bulk of the
company's stock and proxies. In effect, even if he screwed up
royally, he couldn't be fired, and he knew it, so he planned with less
concern over bad quarters or even years, such as 1993-4 and 1998-9 and
2006-7. (NT 3.x, ME, Vista).
Ballmer on the other hand, is under much more pressure from the
numbers. To keep MSFT from crashing, he has to get at least $40
million per year or $10 million per quarter from PC users. He also
needs to find new sources of revenue, including advertizing, services,
and video games.
That Ballmer is so frantic to get control of Yahoo would indicate that
he's looking down the barrel of a loaded gun. He might talk a good
talk, but he's been hearing from Vista customers, and Vista market
penitration seems to be more like that of NT 3.x and ME than Windows
95, Windows 98, or Windows XP. The first group didn't make more than
10% market penetration within 2 years of release. The second group
achieved 30% or more in the first year and had 80% of the installed
target base by the end of the second year.
> | So now Microsoft wants to buy Yahoo, badly? Where was that kind of conviction
> | in 2005? Deep-pocketed Google has already won that war.
One of the reasons google does so well is that they bring a lot of
business to the content provider sites. When a few media companies
tried to sue Google, google pointed out that it was quite easy to have
their content excluded from their search engine, and that they would
be happy to help the plaintiff exclude their content from Google. The
lawyers had won what they came for (getting google to stop publishing
their content), but the institutional investors were livid. After
all, google was sending millions of users to those sites, and google
did not attempt to frame or otherwise interfere with their advertizing
revenue streams. In effect, although Google was making a fortune in
direct advertising, they were driving several times their own revenue
to tens of thousands of content providers.
> | (It's not by chance
> | that it did so by iteratively refining its products to make them easier and
> | more fun to use.) In the words of Ken Mingis, Computerworld's managing news
> | editor, Yahoo is becoming Moby Dick to Microsoft's Ahab. While Ballmer and
> | team are obsessed by the fish that got away -- Internet search and ad
> | sales -- Google is slowly plotting its way into Microsoft's enterprise
> | business.
Google's business model is exactly the opposite of Microsoft's.
Microsoft tries to get a monopoly control over information, forcing
customersr, partners, and even suppliers to pay them for access to
that controlled information.
Google on the other hand, tries to encourage the free exchange of
information, sending users to web sites that are most appropirate to
their immediate interests at that exact moment. Google does place
advertizers first, and sponsored links quite high, but they also
restrict the links to those which are directly related to the interest
specified in the search request. The result is that they ALSO refer
millions of users to other sites, without charging them or attempting
to interfere with their own advertizing revenue tactics.
Google has become as successful as it has because it decentralizes the
control of information.
Google does filter searches based on certain national criterie. For
example, some counries require that certain content, ranging from porn
to political content, be blocked. They have what amounts to "Net
Nanny" blocking even such seemingly innocent sites as tinyurl.
> | Microsoft needs to get its mojo back -- to regain its customer focus. But
> | it's not alone in failing to do so. The entire IT industry could use
> | inspiration. Tweaking your software license to increase profits is not
> | innovation. And leadership isn't putting a stake in the ground with a promise
> | of delivering a key new enterprise technology to box out smaller competitors.
> | That's the very essence of shriveled, short-term thinking.
Lou Gerstner had to "teach an elephent to dance". When he took over
IBM, John Akers had created a real problem, believing "If we build it
they will buy". They spent $billions putting out MVS 4.0, OS/2 2.0,
Microchannel, and in general tried to promote a tightly coupled family
of products that had complex interdependencies. They offered "Open"
solutions such as AIX/Unix and TCP/IP, but the commission structures,
bonuses, and all other incentive programss were designed to penalize
those who sold Open solutions and only reward those who sold the IBM
proprietary lines.
Gerstner was an outsider, and he had been a frustrated IBM customer.
One of the first things he told his people was to "Shut up and
Listen". He realigned the entire company to focuse on solving the
customer's problems, instead of selling products. When the customers
needed to integrate different systems from different vendors, the last
thing they wanted to hear was "We'll put it all on OS/400 and
Mainframes, connected with SNA LU 6.2".
Much of the company was refocused into consulting. Rather than just
installing software, a whole division was created to help customers
with their IT and Integration problems, and that group often found
that what the customer really needed was UNIX and TCP/IP. They even
found that in many special situations, Linux was the perfect fit for
certain pieces of an integration solution. Not only was IBM making a
huge profit by supporting Open Systems standards, but also by
supporting Open Source standards.
By the time Sam Palmisano took control of IBM, customers could get a
tailored solution that used IBM parts where needed, but could also
integrate very effectively with other vendors and interconnections and
combinations. For example, AIX could run Oracle really fast, even
faster than DB2 when properly tuned. WebSphere could run on Windows
NT or Linux as well as AIX and Solaris.
Microsoft has to learn to "play nice with the other kids" or they
could quickly find themselves getting thrown out of the sandbox, the
same way that John Akers' IBM found itself being thrown out of the
sandbox in the early 1990s. Remember that at one point, IBM was
preparing to close down it's mainframe business and only support it as
a legacy business because customers were refusing to pay huge sums of
money for upgrades.
Remember that the revolt was very sudden and very dramatic, and
totally unpredicted.
IBM Released MVS 4.0 and a suite of related mandatory upgrades,
expectig about %5 million in revenue per mainframe, even though the
maiframes had been depreciate to about $2 million, and needed
additional hardware upgrades to run the new hardware.
Instead of IT managers just writing checks, they started looking at
UNIX and Oracle, and suddenly a $50,000 Unix machine like Sun 6/50 6
processor server could take some of the load from the Mainframe. And
at that price, $5 million could buy about 100 such servers, or just 20
or thirty servers and a few sparcstations for executives.
In one quarter, IBM stock price fell almost 60%.
With each new release of Windows, or Vista, Microsoft faces the same
risk of a similar rejection. In 1993, Windows NT 3.x was released and
Microsoft got just such a rejection. Just as the stock looked like it
would take a huge tumble, Bill Gates announced "Chicago" which would
have all the benefits of NT but wouldn't be such a memory pig. In
fact, Microsoft has snatched victory from teh jaws of defeat numerous
times by brashly announcing vaporware which didn't even exist on
paper, as if it was going to be out in a few months.
Ballmer isn't that good at the whopper lie, and customers and
investors are not that gullible. Each of these vaporware
announcements was followed by a 3-4 year wait and the release almost
always fell short of the original vaporware promises.
Microsoft's "Ace up the sleeve" is their control of the OEM market,
but with Apple moving from number 7 to number 3 largest OEMs and 3 of
the previous top 5 now insolvent take-over targets absorbed by other
companies, Microsoft has a much more hostile OEM environment.
Businesses are scaling down their Microsoft support programss, and
many, worried about being force-fed vista, have obtained irrevocable
and transferrable XP licenses that can be used to install either
Windows 2000 or XP on any machine, including virtual machines.
The irony is that Vista's problems with drivers was the same barrier
that Linux used to face, and most of the OEMs and IHVs have now made
Linux driver support a higher priority, with Nvidia and ATI writing
graphics optimizations for XGL X11/OpenGL displays.
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