The lead story in the Sunday New York Times Business section this week focused on Microsoft’s broad business strategy. Titled “Forecast for Microsoft: Partly Cloudy”, the piece included interesting quotes from various Microsoft executives discussing how cloud computing fits into their overall strategy and how they differentiate themselves. This paragraph caught my attention:
(Microsoft CEO) Steve Ballmer contends that Microsoft is the only company prepared and positioned to merge computing from both ends – the desktop and the cloud. “We’re just investing more broadly than everybody else,” he says, adding that when it comes to software, “I want us to invent everything that’s important on the planet.” (emphasis mine)
How’s that for a mandate? What does Microsoft do? Everything.
Microsoft is one of the few vendors out there trying to simultaneously serve both the business and consumer markets. While it’s true they have huge resources, even big companies run the risk of being spread too thin. On the surface Microsoft’s $10 billion budget for research and development seems large enough to tackle “everything” until you start looking down a list that includes desktop software, data center software, developer tools, health care systems, video game consoles and games, music payers, phones and phone software, Web properties, and office collaboration products.
Offering customers a broad set of products and services is one of its great strengths, according to Microsoft. Being able to offer solutions spaning PC’s, browsers and a proliferating set of hand-held devices (part of what Ray Ozzie, chief software architect at Microsoft calls “the gizmo revolution.”), is valuable and part of what sets Microsoft apart from its competitors.
But the strategy isn’t without risks. At smaller companies, not being able to clearly answer the question “What do we do?” results in unfocused products that partially solve many customer problems but fail to offer a compelling value proposition in any one particular domain. For a company the size of Microsoft the risk of a “we do everything” strategy is that customers who automatically put Apple on their short list for music players or cell phones, and HP or IBM on their list for data center software, might not know exactly which list Microsoft belongs on anymore.
Then there is the issue of whether or not all of these areas get the focus and freedom needed to innovate. When I started my career working with software startups there was an accepted wisdom that if Microsoft moved into your space, your company was finished. Once Microsoft pointed their arsenal of resources at your market they would easily produce something better and more quickly than any team of folks in a garage could. Today there are startups thriving in markets where Microsoft plays. These startups have the luxury of being able to focus deeply on doing a single thing well without the overhead of worrying about how their products interact with a massive list of other products and services from different divisions. In fact the goal of many of these companies is to eventually be acquired Microsoft.
Perhaps that’s just as it should be. Companies like Cisco and even IBM have been using acquisitions as a successful innovation strategy for years and Microsoft has no shortage of money to invest in any market it wants to. In both cases however, I can easily tell you what those companies do. For Microsoft, I think they may need to articulate what customers buy from them more succinctly than “everything.”
Photo credit: The CBI
Subscribe to this blog or follow me on Twitter or Friendfeed
It is interesting to compare Microsoft and Cisco. Cisco is clear that everything they do is to help business communicate and collaborate. While Microsoft has huge resources, what is the value – to me – of the resources working together. It sounds like Microsoft is aligning it’s ‘advantages’ not is ‘value’.
Of course, I hear the first $20B in free cash is the toughest.
Hi Paul.
Thanks for your comment. You hit the nail on the head – the quotes from the MS execs in the Times piece spoke to how the pieces coming together might benefit MS, but didn’t get into the value to customers. There may well be great value to customers in their pieces working together but I’m not sure it’s being clearly articulated to the market.
April
I used to think that focus was a critical strategic success factor, and that being a serial dilettante was only OK if you’re an absolutely spectacular fast follower. The mishegas over there is stunning. Nice article, good catch.
Hi Bob – thanks for the comment and for using the word “mishegas” which I haven’t heard since I lived in New York 😉
April
RT @aprildunford: Blog post: Microsoft and the Market for "Everything" http://bit.ly/3P2ZAH #prodmgmt
RT @aprildunford: Blog post: Microsoft and the Market for "Everything" http://bit.ly/3P2ZAH #prodmgmt
RT @aprildunford: Blog post: Microsoft and the Market for "Everything" http://bit.ly/3P2ZAH #prodmgmt
RT @pphilp RT @aprildunford: Blog post: Microsoft and the Market for "Everything" http://bit.ly/3P2ZAH #prodmgmt
"Microsoft and the Market for "Everything"" http://bit.ly/35Yk8V – via @aprildunford
RT @aprildunford: Blog post: Microsoft and mkt 4 "Everything" http://bit.ly/3P2ZAH #prodmgmt – smaller companies must answer "what do we do"
“… positioned to marge [sic] computing from both ends…”
With respect to the Simpson matriarch’s bountiful tresses, perhaps Microsoft is the next Big Blue.
Aw great, I just spit coffee all over my lovely laptop laughing at that one! Typo fixed and I refuse to discuss Marge Simpson’s playboy pics……
Thanks,
April
From my perspective the wording “invent everything” is interesting. I think that no company can do this (or could ever do this). In the current software business it is more important than ever to be open for other ideas (as well), and to accept that there are bright people everywhere, and not only in “my own” company.
.@chenelaine @gacconsultants @ElizabethHannan @pphilp @BilalJaffery Thanks for RT-Microsoft & the Market for Everything http://bit.ly/3P2ZAH