Wednesday, November 09, 2005

Microsoft's Lack of Innovation

Today an internal memo from Ray Ozzie and email from Bill Gates have leaked onto the internet. The two pieces of information outline Microsoft’s direction for the next 5 years:
It is now 2005, and the environment has changed yet again – this time around services. Computing and communications technologies have dramatically and progressively improved to enable the viability of a services-based model. The ubiquity of broadband and wireless networking has changed the nature of how people interact, and they’re increasingly drawn toward the simplicity of services and service-enabled software that ‘just works’. Businesses are increasingly considering what services-based economics of scale might do to help them reduce infrastructure costs or deploy solutions as-needed and on subscription basis.

The email and memo both make references to Google and many have jumped on the bandwagon of looking at this as a source of explanation for Google-Microsoft relations. I will not concentrate on this, because that is not the most important part of the memo. The most important part is that, once again, Microsoft has no clue what the next jump is. They have jumped onto the existing bandwagon internet services without realizing where the future markets are opening up. Surely, the next year or so will be a hot bed for standard internet services. However, Microsoft has completely missed the next big market.
In the next 5 tears developing nations will become a huge market. Cell phone companies are already realizing the profits that can be made in 3rd world and technologically un-advanced countries through cell phone distribution. Obviously, where cell phones go, computers will follow. India has been a good case of capitalizing on a developing nations need for computer infrastructure, but Microsoft has overlooked their Indian lesson.
Since 1995, inexpensive computing and communications technologies have advanced at a rapid rate that even exceeded our expectations. It’s so very difficult now for us to imagine a world without the PC, the web and the cell phone. In the US, there are more than 100MM broadband users, 190MM mobile phone subscribers, and WiFi networks blanket the urban landscape. This pattern is mirrored in much of the developed world. Computing has become linked to the communications network; when a PC is purchased, it’s assumed that the PC will have high-speed internet connectivity.

Microsoft is intent on being a caterer to the developed world and do not realize how they made their money in the first place. Microsoft became the company that it is by getting in and releasing something when the computer industry was being born. Now that industry is being born in developing countries, and Microsoft is overlooking it. They are continuing to follow what they’ve done before with the GUI interface, internet exposure and more recently, consoles. Microsoft is once again jumping on the bandwagon and hopping that it will get by on its pure brute money.
The biggest market becoming available to the computer world is China. Unlike Google, Microsoft has no prominent Chinese (or Asian) division. In the Microsoft memo, Ray Ozzie states:
Just as in the past, we must reflect upon what’s going on around us, and reflect upon our strengths, weaknesses and industry leadership responsibilities, and respond. As much as ever, it’s clear that if we fail to do so, our business as we know it is at risk. We must respond quickly and decisively.

Yet the company is blind to the development of new markets which it can (for a lack of a better word) exploit. Microsoft is very much at risk if it continues on this trend of bandwagon jumping and lack of innovation.
Microsoft’s number one competitor, Google, has a much better of the emerging market. To take us back to my long standing Google OS debate, if Google releases an OS for free and makes it appealing to the emerging Chinese market (as well as other developing markets) Google can easily rip Microsoft’s dominance from it. Before today’s memo leak, there was still debate about Microsoft’s opportunity in the service market but now it is already that Microsoft will not pull itself up to become a leader in online services or the new business model introduced by Google. To make matters worse, Microsoft is now running of losing even its shrink wrapped products in its failure to recognize the coming markets. Microsoft has exposed itself to competitors like Google and now their fate as an industry leader is in the hands of those companies.

Labels: ,

0 Comments:

Post a Comment

Links to this post:

Create a Link

<< Home