Something came up in conversation today that struck a chord with the (my) favourite topic of the moment – why is MSFT not responding to everything going on around it?
I don’t really know anything at all about MSFT’s business – I’m a .net guy, I’ve been to Redmond, I’ve seen the inside of the machine, but I don’t know all the ins-and-outs. But I do know what they do – and more importantly, how they do it, and that gives me enough to form an opinion.
They produce software. And the software they produce, even to this day, is distributed on physical disks. That’s right – they burn their software onto shiny plastic disks, which are then distributed around the world (“filling the channel”). And this is their problem.
Culturally, MSFT is still working in a physical disk world. If you’re burning your software onto 100m disks, you can’t afford to get it wrong, and you can’t easily get it back again once it’s left the building. So they create enormous product development cycles, building towards huge, monolithic, releases. They still call their final releases RTM (Release to Manufacturing). Their development processes are built around this concept, their product development process are built around this concept. Worse still, they have partnerships with disk-pressing plants and disk-selling retail channels. And all of this baggage they haul around with themselves to this day.
Back in the 90s, the talk was of how MSFT missed the boat, misunderstood the internet, and then woke up. They suddenly Got It. The built a better browser, killed Netscape, and now they owned it. Except that they didn’t. They thought that the internet was the browser – and since they owned the desktop, they could fold in a browser for free and their job was done. Wrong.
They still don’t get the internet; only 18 months ago I was being told, in Redmond, that whilst the internet was nice, desktop applications were nicer, so could we please put our internet-only Silverlight idea on hold, and just get with the Windows 7 program.
Google has none of this this heritage – it was born from the internet. As was Facebook. They can innovate and release at internet speed. A Google search results page is a continuously evolving multi-variate test. When they say that they live life in beta – they’re not lying – they really are trying new ideas every single day, live. Google is never “RTM”.
And Microsoft cannot compete – because of its legacy. They have a vault of cash, and some fantastic talent, but until they start to shed some of their physical dead-weight, until they acknowledge what the internet has done to their business (a business they invented), they are heading into retirement. The world they built is innovating away from them, and they’re just too slow to react.