Sunday, January 28, 2007

It also rains on Microsoft

Many of you will have heard me say, "It's not raining on you. It's just raining." The point's a simple one: don't feel like newspapers are being picked on.

The changing economics and business models emerging in an increasingly networked world are affecting lots of other industries, too: Ford Motor Co., Delta Airlines, Sony.

And Microsoft.

There's a long, fascinating article in Sunday's NYT focused on Microsoft CEO Steve Ballmer and his challenge in navigating through the changes. Nobody's holding a bake sale on Microsoft's behalf just yet, but the article does note some warning signs:

Competitors once feared and respected Microsoft. Now they simply respect it. And as Microsoft prepares to unveil new versions of its desktop operating system and office programs on Tuesday it finds itself facing emboldened competition, even uncertainty. With the Internet revolution upending business models across a broad swath of industries, Microsoft itself is feeling the heat. The challenges that the company confronts today are different from those of the past, and its market power in the personal computer business matters less than before.

There's a great deal in this analysis worth taking note of. In describing the dilemma of bringing change to a large, successful enterprise, this:

... Microsoft, despite its deep pockets and immense resources — in fact, precisely because of those vast resources — has potentially much more to lose in the Internet age than other companies. “This is every bit as disruptive for Microsoft as it is for others,” said George F. Colony, the chief executive of Forrester Research, the technology consulting firm. “The dilemma for Microsoft is that it is a prisoner of its business model, and the fact that it is a gilt-lined prison makes it brutally hard to change.”

One of the evolutionary laws of business is that success breeds failure; the tactics and habits of earlier triumphs so often leave companies — even the biggest, most profitable and most admired companies — unable to adapt.

Even with billions in profits and tens of thousands of the best minds and sharpest programmers around, Microsoft faces a battle in adapting to the key change: namely, that the sweet spot has moved away from the PC and its software, and onto the net. Another snip:

An internal memo written 15 months ago by Ray Ozzie, who has taken over for Mr. Gates as Microsoft’s chief software architect, had a [more threatened] tone. It was titled “The Internet Services Disruption,” and it was a call to action. “It’s clear that if we fail to do so, our business as we know it is at risk. We must respond quickly and decisively.”

In an interview, Mr. Ozzie framed the challenge further. “This is a big change; there’s no question about it,” he said. “But it’s been coming since the beginning of the Web.”

No comments:

Post a Comment