A Matter of Relevance October 31, 2010Posted by Peter Varhol in Software platforms, Strategy.
Microsoft has never been an innovator. That’s a bit strange to say, for a couple of reasons. First, it remains the world’s largest software company. Second, it employs among the brightest people in the world, and it spends billions of dollars a year on pure and applied research (and much more on R&D, which is the term used in software to refer to building new software releases). There must be something innovative there.
Still, it has never been first to market with any significant product. There was a time, in the latter part of the 1990s and the first part of the 2000s when it was commonly said that Microsoft “validated” an existing market by choosing to enter it with a product of its own. That introduction also meant that the game was over for that particular product category, and the early innovators would do well to find an exit strategy.
Perception changes quickly. In the last week or so there have been two major articles in the MSM (mainstream media) declaring that Microsoft was little more than a footnote in the annals of consumer electronics. Of course, this talk died down somewhat since Microsoft reported record profits for the preceding quarter.
I’ve made similar pronouncements on Microsoft in the past.
So what is holding Microsoft back? I’ll offer several possible explanations.
- Microsoft doesn’t innovate. I don’t really buy that. A look through the Microsoft Research pages should convince anyone of its ability to come up with interesting new ideas.
- It is unable to bring new products to market. I think we’re getting closer here. Great ideas don’t easily make it out the door, largely for cultural reasons.
- Like all large and established companies, Microsoft bets on its longtime winners. It’s less risky and more profitable to come out with a new version of Office than it is to hope that something new and unproven is the next multi-billion dollar winner. Because at its current size, that’s what it takes to get it to justify the effort.
The biggest problem may be that Microsoft no longer believes and acts like it’s the underdog in the market. The cultural paranoia that drove the company to succeed against often daunting odds was annoying, but it worked for a long time. Without this paranoia, Microsoft mostly seems to be mailing it in.
One characteristic of the industry over the last several years is that no other company is waiting for Microsoft to validate the market. While the company may have a reasonable competitor with Windows Phone, such success is demonstrated in the marketplace, not the press event.
If Microsoft expects to succeed with Windows Phone or other new product, it has to regain its underdog culture, for better or worse.