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Microsoft's Lost Decade
Old 07-10-2012, 09:46 AM   #1
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Microsoft's Lost Decade

I watched an interview with the author and it sounds like an interesting article Microsoft. How a one time behemoth became an also ran. Now you hear Google, Facebook, Amazon & Apple as the leaders, hard to imagine Microsoft not among them given how dominate they were for decades.
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Analyzing one of American corporate history’s greatest mysteries—the lost decade of Microsoft—two-time George Polk Award winner (and V.F.’s newest contributing editor) Kurt Eichenwald traces the “astonishingly foolish management decisions” at the company that “could serve as a business-school case study on the pitfalls of success.”

Today, a single Apple product—the iPhone—generates more revenue than all of Microsoft’s wares combined.

Eichenwald’s conversations reveal that a management system known as “stack ranking”—a program that forces every unit to declare a certain percentage of employees as top performers, good performers, average, and poor—effectively crippled Microsoft’s ability to innovate. “It leads to employees focusing on competing with each other rather than competing with other companies.”

“You look at the Windows Phone and you can’t help but wonder, How did Microsoft squander the lead they had with the Windows CE devices? They had a great lead, they were years ahead. And they completely blew it. And they completely blew it because of the bureaucracy.”

According to Eichenwald, Microsoft had a prototype e-reader ready to go in 1998, but when the technology group presented it to Bill Gates he promptly gave it a thumbs-down, saying it wasn’t right for Microsoft. “He didn’t like the user interface, because it didn’t look like Windows,” a programmer involved in the project recalls.

A former official in Microsoft’s Office division tells Eichenwald that the death of the e-reader effort was not simply the consequence of a desire for immediate profits. The real problem for his colleagues was the touch screen: “Office is designed to inputting with a keyboard, not a stylus or a finger,” the official says. “There were all kinds of personal prejudices at work.” According to Microsoft executives, the company’s loyalty to Windows and Office repeatedly kept them from jumping on emerging technologies. “Windows was the god—everything had to work with Windows,” Stone tells Eichenwald. “Ideas about mobile computing with a user experience that was cleaner than with a P.C. were deemed unimportant by a few powerful people in that division, and they managed to kill the effort.”

When one of the young developers of MSN Messenger noticed college kids giving status updates on AOL’s AIM, he saw what Microsoft’s product lacked. “That was the beginning of the trend toward Facebook, people having somewhere to put their thoughts, a continuous stream of consciousness,” he tells Eichenwald. “The main purpose of AIM wasn’t to chat, but to give you the chance to log in at any time and check out what your friends were doing.” When he pointed out to his boss that Messenger lacked a short-message feature, the older man dismissed his concerns; he couldn’t see why young people would care about putting up a few words. “He didn’t get it,” the developer says. “And because he didn’t know or didn’t believe how young people were using messenger programs, we didn’t do anything.”

“I see Microsoft as technology’s answer to Sears,” said Kurt Massey, a former senior marketing manager. “In the 40s, 50s, and 60s, Sears had it nailed. It was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The company just isn’t cool anymore.”

“They used to point their finger at IBM and laugh,” said Bill Hill, a former Microsoft manager. “Now they’ve become the thing they despised.”
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Old 07-10-2012, 10:00 AM   #2
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I heard the author speaking on PBS radio last night.In the authors opinion Microsoft is too big, too complacent, and increasingly irrelevant.

Perhaps others will do to Microsoft, what Microsoft and Intel did to IBM.

History has a habit of repeating itself.
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Old 07-10-2012, 10:34 AM   #3
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Don't count Microsoft out yet, they still have an enormous market share and control an enormous amount of technology that runs the world. To be sure, not a hi-growth stock anymore, but thinking of them as irrelevant would be a mistake.

Over the last 10 years there stock price has not down much, that is true, but their revenue more than tripled during that same period from $23B to $70B...I'd like to have a 'lost decade' like that.
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Old 07-10-2012, 10:44 AM   #4
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Originally Posted by farmerEd View Post
Don't count Microsoft out yet, they still have an enormous market share and control an enormous amount of technology that runs the world. To be sure, not a hi-growth stock anymore, but thinking of them as irrelevant would be a mistake.

Over the last 10 years there stock price has not down much, that is true, but their revenue more than tripled during that same period from $23B to $70B...I'd like to have a 'lost decade' like that.
What you post is true, but as the author points out, The world is increasingly moving to a smart phone computing platform. In that arena Microsoft isn't much of a player and their dominance in desktop computing doesn't matter much.

Creative destruction may make Microsoft a loser here. That's all the author is saying.
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Old 07-10-2012, 10:49 AM   #5
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Don't count Microsoft out yet, they still have an enormous market share and control an enormous amount of technology that runs the world. To be sure, not a hi-growth stock anymore, but thinking of them as irrelevant would be a mistake.

Over the last 10 years there stock price has not down much, that is true, but their revenue more than tripled during that same period from $23B to $70B...I'd like to have a 'lost decade' like that.
No one is counting them out, simply pointing out they've gone nowhere in the last decade, where they were once a dominant colossus. They were aware of Amazon, Google & Facebook and dismissed them all. Ballmer actively ridiculed the iPod, iPhone & iPad when they were introduced. The days where they can wait for someone else to develop products and markets and then take them over with "me-too" products appear to be over (see Zune, MSN Messenger, Bing?, etc.). They've had several OS updates, their bread and butter, that were considered flops (Vista, Me). Whether they will become more relevant again as they say, time will tell...
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Old 07-10-2012, 11:51 AM   #6
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And Windows 8 sounds backwards again. They develop a pad/mobile operating system and insist that people need to use it on their mouse driven desktops. Maybe Win 8 will signal the beginning of mainstream growth of Ubuntu Linux.
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Old 07-10-2012, 12:14 PM   #7
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And Windows 8 sounds backwards again. They develop a pad/mobile operating system and insist that people need to use it on their mouse driven desktops. Maybe Win 8 will signal the beginning of mainstream growth of Ubuntu Linux.
Unfortunately (IMO - some people like it), Ubuntu has also switched to a default tablet-like interface on their last couple of releases (11.10, 12.04). But one can pretty easily switch Desktop Environments. I installed Xubuntu instead (same 'core' as Ubuntu, but with the Xfce desktop pre-installed), and I have it configured the way I like it with not much effort.

Really happy with it. I've got a panel on top with a hierarchical access to my folders/files, launchers for a bunch of often used apps, and time, weather and such. Bottom panel shows my multiple 'virtual desktops' (workspaces), and open programs, and some easy ways to switch between them. Beats Apples 'Spaces' all to heck in use-ability.

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Old 07-10-2012, 12:20 PM   #8
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And Windows 8 sounds backwards again. They develop a pad/mobile operating system and insist that people need to use it on their mouse driven desktops.
Apple's Mac OS and iOS are also converging. More "gesturing" with the mouse and reverse scrolling...
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Old 07-10-2012, 12:53 PM   #9
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What I find interesting is that in the MegaCorps that DW and I work for, Windows XP (released in 2001) is still the corporate OS of choice.
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Old 07-10-2012, 01:01 PM   #10
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I wouldn't rule Microsoft out yet. I remember when they release whatever version of Office that was Internet-interactive and the critics said no one would be doing business over the Internet. Focusing Windows8 on the mobile sphere might be genius.
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Old 07-10-2012, 03:05 PM   #11
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Just read the full article at the library. Makes the Microsoft execs, especially Ballmer, look pretty clueless. May be a hit piece, but there's no denying the huge missteps over the past decade, they're well documented. Didn't know they've lost $6B on Bing so far, WOWZA. I'm still running a Dell w Vista, but I use my iPad far more often. It's going to be a close call on my next PC, if there's ever another one (may be nothing but mobile devices and the cloud soon).
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Old 07-10-2012, 03:14 PM   #12
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What about their new Pad - do you think it will grab market share. I think they have an advantage with being able to build it around Win8 and maybe your Pad and PC work seemlessly together...
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Old 07-10-2012, 03:38 PM   #13
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Microsoft is stuck. A victim of its own success. They can't figure out how to protect their core business and compete with new technologies. It took IBM more than a decade, Kodak never figured it out, and Intel is still trying. A serious business risk when the business is so concentrated.

The MS executive team is too tied to Windows. They need to bring in a new team that can refocus the business. They generate so much cash the right leadership should be able to turn it around.
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Old 07-10-2012, 04:11 PM   #14
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What about their new Pad - do you think it will grab market share. I think they have an advantage with being able to build it around Win8 and maybe your Pad and PC work seemlessly together...
Gates and others are convinced the Surface creates a new segment. In his Charlie Rose interview last week he seemed to suggest it would replace the PC and the tablet. Probably just salesmanship, not something Microsoft has done well since the Win95 rollout (a long, long time ago). Though Bill personally killed off an eReader Microsoft had developed years before Kindle...makes you wonder how in touch with users he might be?
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Old 07-10-2012, 04:26 PM   #15
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Gates and others are convinced the Surface creates a new segment. In his Charlie Rose interview last week he seemed to suggest it would replace the PC and the tablet. Probably just salesmanship, not something Microsoft has done well since the Win95 rollout (a long, long time ago). Though Bill personally killed off an eReader Microsoft had developed years before Kindle...makes you wonder how in touch with users he might be?
Seeing how they changed office, forcing users to learn a new interface, they are not in touch at all and also have little respect for the knowledge investment users have made in their products.

Microsoft completely lost share of heart to Apple, Google, and others. They cannot get it back competing in existing product areas - its already lost. They need to open a new technology front, be first to market and have a compelling story and offering.
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Old 07-10-2012, 04:51 PM   #16
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Microsoft completely lost share of heart to Apple, Google, and others. They cannot get it back competing in existing product areas - its already lost.....
In the mall closest to my home there is a long-established Apple store and a fairly recently opened Microsoft store. The Apple store is like a cult headquarters, always crowded, products flying off the shelves, just a hipster central place.

Microsoft store is always empty.

Idiots thinking they could just copy the Apply store.
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Old 07-10-2012, 05:01 PM   #17
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What about their new Pad - do you think it will grab market share. I think they have an advantage with being able to build it around Win8 and maybe your Pad and PC work seemlessly together...
That's what they said about the Zune - and that failed.

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Old 07-10-2012, 09:15 PM   #18
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That's what they said about the Zune - and that failed.

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Good Point...
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Old 07-10-2012, 09:33 PM   #19
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I have a nephew who is the consumate geek, Microsoft individual contributor. There is no doubt that they have the best systems programers ... but .. I am not sure that they are in a truly creative envoirnment. In the interview there was a comment about a rack & rank performance matrix... that is so GE! Not appropriate for a high tech creative enviornment. Heck, I am in my 70s and have spent my professional life in HR and even I know that is no way to manage in their industry.

Today, for example, my browerser was 'upgraded' to the new MS Explorer without, to the best of my knowledge, my permission. I lost my bookmarks and my spell checker!!! I am not a happy camper, in fact if an old lady can be pissed that is me! What are my options? Goggle Chrome?
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Old 07-10-2012, 09:55 PM   #20
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Microsoft missed the boat by thinking software innovation is all that counts. Software innovation is critical (though arguably Apple and Google have been better at it than Microsoft for a while now), but that didn't stop Apple from innovating in industrial design, hardware design, processor design, high tech retailing, the carrier/phone manufacturer relationship, app distribution, content distribution, etc. Where any of these subsidiary functions were broken or outdated from a user standpoint, Apple stepped in and fixed it, often drawing ridicule from status-quo oriented industry pundits. Microsoft made the critical mistake of assuming that the boundaries between these functions and their software monopoly was stable, which they obviously were not. It will take a long time for Microsoft to once again prove itself to be a software innovator, let alone develop anywhere close to the breadth of multi-disciplinary expertise now enjoyed by Apple.

(disclosure -- long APPL for a while now, and sitting tight!)
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