Competition vs. Innovation at Microsoft
Probably you know Hamid Shojaee from my past posts or other places but if you don't know him, he's the CEO of Axosoft company where they build some products including OnTime.
Hamid has worked at Microsoft, Intel and IBM and now owns his own company. One of his interests is software business so recently he has started a new blog with main focus on software business and has already published some worth-read posts and articles about this topic from his experiments and knowledge.
Recently he wrote a post about innovation and competition at Microsoft and the strategies that this company has chosen to achieve to this point where Apple and Google is going to beat it in some fields. Today I had an email conversation with him and eventually took a look at comments and they bit me to add my thoughts here.
First of all, I agree with Hamid in general and just want to add a few points.
Microsoft was going to become alone in the software industry in the late 90s. Microsoft's strategy to compete with all other companies was going to replace the software industry with two words: "Microsoft" and "Microsoft partners". The success of Microsoft didn't keep any open area for other companies to grow. They had written the most popular software for all fields and were the only company with an excellent integration between their products.
At this point, they even went further and tried to compete with companies outside the software industry or companies that were working on special areas of software. Game consoles like Xbox and Xbox 360, Microsoft Game Studios, Windows Mobile and some other products and services were their attempt in this field.
But the problem that they had was (as Hamid has pointed) the innovation in their products. Microsoft forgot that software itself was an innovation and without innovation it's almost nothing. As time goes, people find new requirements and the success is with the company that can predict these requirements and innovate the best answer to them.
After that Microsoft reached to the top, it suddenly fall down because they couldn't predict the future. They were just competing and had no idea about what do do next and obviously at this point they had to go down again.
If you go back and forth, can see that Microsoft never had any innovation in its products. Actually it always has tried to get ideas from others then put much effort into these ideas and rebuild the product with some minor changes. It was also using its market and brand in order to kill smaller companies.
What has been the result of this strategy? One result is what Hamid has written and that is the fact that Microsoft has missed innovation and now other companies such as Apple and Google have gotten stronger by working on some fields that Microsoft didn't attend to them.
The other result was splitting the software industry into two groups of companies: big companies and small companies.
What a nice grouping! Yes, now we have these two kinds of companies. Big companies like Microsoft, Apple, Google and Yahoo are very strong and it seems that smaller companies can't get them. They focus on multiple products and eat ideas and smaller companies whether by acquiring them or by rebuilding their products.
Smaller companies are those that usually focus on a specific side of products from bigger companies. There are many instances of these companies. Telligent or Axosoft are two of them. Telligent focuses on ASP.NET from Microsoft to build some products like Community Server or Graffiti. So their target market is Microsoft product users and somehow they promote Microsoft at upper level as well. Axosoft is also building some products with Microsoft technologies such as a bug tracking and project management software like OnTime.
In the recent years we saw that some medium scale software companies joined together to build bigger companies like what Adobe and Macromedia did. On the other hand some other medium scale companies were acquired by big companies and these are all signs of the progress that I mentioned above.
Nowadays Microsoft is just a big bear that only eats and doesn't return anything back! If Microsoft didn't have a big name that is brought with it from 90s and if there weren't those small companies and lots of people who had started their business around Microsoft products to support it then we could expect Microsoft to be something much smaller than what it is.
I have to add one point here: a part of the success that Microsoft could get was from the fact that it was the first company that did many things in a large scale. As they had done this and had kept it up for some years and there were many users for Microsoft products around the world, they were (and still are) using their previous markets to get success and be up. You can be sure that there are still many people in the world that don't know any software company but Microsoft and any operating system but Windows and any browser but IE!
However, if Microsoft doesn't change its strategies, I personally guess that it won't have a good future after 2010! Microsoft needs to hire more bright minds than this. In 2007 they began such a progress to hire really talented developers but this isn't enough at all. They also need to support more innovations in the community rather than just supporting anyone who's promoting them without adding something new to the world. The best promotion for Microsoft can be innovations for their products to bring more users to the products. The success of such innovations (that are based on the Microsoft products) is Microsoft's success. Microsoft is like a girl. When someone says she's so beautiful, he can steal her heart and she can be happy until the first struggle happens then ...!
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1 Comment : 01.10.08
#1
Vikram Lakhotia
01.11.2008 @ 12:10 AM
Interesting one.
But I also have a feeling that one of the major reason for Micorosft falldown is that many of major companies came back and hit Microsoft at one time. I mean lets face it, Microsoft has got competition from many places in a small span of time. Like Apple with iPod, Leopard, iPhone. Google with search, Gmail, Earth and other idea. Yahoo already has a huge portal, Linux has also been steadying the server market, PHP gained lot of momentum in langauge space, Firefox vs IE. There can be many example like this.
But the truth I feel is that in last 6-12 months Microsoft has made a good start to come back in the big arena. Its bringing out god stuff and its starting to gain some lost space. If Microsoft continues these momentum till 2010 It will not have a problem in becoming the biggest again...