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.

Why We Hate IE6 Part 2

As Anonymous posted under “Why We Hate IE6”:

Screw IE altogether!
The world's crappriest browser.

I did not believe that at first, but earlier today more bugs came from internet explorer. My blog no longer shows up with IE at all. I will fix the problem as soon as I can. On Macs (when running IE) the blog still shows up but with formatting problems in the right sidebar. I think the errors are from the new Google Maps feature I added, and I will make the feature invisible for IE users as soon as I can.

To make matter worse, my great grandmother died today. This of course is not related to IE at all (or so I hope), but I only found out moments ago as I was writing this post. I hope she is given a nice funeral, I wish I could attend, but my papers are expired and I would not be granted entrance into my mother country.

Microsoft Live Battalion

Introduction
I have been avoiding discussing Microsoft Live for as long as possible, but today I will have to start. Bill Gates has launched Microsoft into the “Live era” as the company likes to say. The company has finally gotten around to copying some established products and establishing its own front in the war between Google, Yahoo and other internet giants. Some experts believe that Microsoft will not get anywhere with its efforts:

And while Microsoft has talked about accelerating its business by offering services, some analysts worry that its race to compete with Google and others could leave Microsoft’s very profitable business model in the dust. (source)

I am however not as optimistic and I am very much afraid that if a behemoth like Microsoft is given a chance to rear its ugly head, the fate of other companies might be very grim.

While the "live" software push is seen mainly as an effort to compete with rivals such as Google and Yahoo, there are a number of smaller companies that suddenly find themselves in Redmond’s competitive crosshairs. (source)

The unveiling of Microsoft’s Live software brings up three major questions: possible damage to Google, possible damage to Microsoft and possible damage to third parties. An internet war is starting to take shape between the giants of the web and the giants of software. Everyone has their own agenda and much collateral damage will be taken among third parties. Hopefully the conflict makes the web a better place for the users and is not destructive. But as we know from experience, wars rarely leave their battle zones unscarred.

In the past several months, some insiders and former employees have said that Microsoft has become too bureaucratic and process-driven to compete with nimbler competitors such as Google. (source)

To get ready for the competition Microsoft has reorganized itself to streamline decision making. The company has been split into three independent branches that answer to Steve Ballmer, the company’s CEO. In my mind this is Microsoft’s mobilization for the oncoming wars. In the words of an insider email sent to Microsoft employees by Steve Ballmer:

Our goal in making these changes is to enable Microsoft to achieve greater agility in managing the incredible growth ahead and executing our software-based services strategy

Possible Damage to Google
For Google the damage comes from direct clash. Windows Live Mail Beta is very much like GMail Beta. Both services are providing around 2GB of storage with similar interfaces and a Java based programming (so you don’t have to wait for every site to load). For Google the treat comes from that Microsoft has a whole lot more people in its Hotmail accounts that Google has in their GMail accounts. For now Google has been able to win over users from Hotmail but mounting competition may stop that trend. Google is already being challenged by increases from Yahoo and providers such as 30Gigs.
Google might carry a good brand name and be very popular with users that spend a good chunk of their lives on the internet and around computers. For the average user though, Microsoft is a better known and more trustable name for software. Over 37% of people might know Google’s great search engine, but Google software’s user base is much smaller. Services such as Blogger are in a fit to compete with “convenience” providers like MSN My Space. Google has a jump start on Microsoft and its worth is soaring, but Microsoft has a lot of weight to throw around. Google has to now play keep-away from Microsoft and try to knock the competitor down from their feet before they get started.

Possible Damage to Microsoft

Analysts say the move is probably necessary to help the company compete with rivals that threaten to offer online equivalents to some of Microsoft's cash cows, like Office. However, depending on how far Microsoft takes the strategy, it could also put the company in competition with its existing--and already lucrative--way of doing business.(source)

The biggest damage to Microsoft is the mishmash between its current model and the model needed to succeed in the internet market. Microsoft has been fueled by high-volume, high-margin software. The web business model requires the company to be fueled by low-margin advertising. Sadly (or maybe Happily), Microsoft can not provide its software at the same rate and make effective internet products. Making advertisement fueled products is bound to cannibalize Microsoft from the inside.

Bittman thinks Microsoft could eventually outflank Google but, ironically, find itself worse off. "I think Microsoft can win, but in the end it means Microsoft loses, unless there is some other magic there we don't see." (source)

Possible Damage to Third Parties
Microsoft’s offers of free calling, free virus scanning and free contact management are putting some companies in a jam. Most small companies are downplaying the risk and saying that Microsoft will never catch up to them. However, everyone knows the speed of Microsoft from experience. Google has no need to stop Microsoft in some of its markets and neither do any other big companies. VoIP providers might get some “help” from Google if it tries to stop Microsoft’s moves into VoIP communication, but Google Talk is not proficient enough as of yet to battle it out with MSN. On the security front, there are some big companies like MacAfee and Symantec to hold their ground against Microsoft, but the have enough quarrels between each other as is. Some markets though, (like the contacts market) have no big companies in place and are Microsoft’s for the taking. I think the companies in those fields are watching a very fine line by downplaying the importance of Microsoft’s infringement into their markets. For their sake, I hope the downplay is on a public one and not present inside the companies.

Conclusion
As of now, the future of Microsoft and Google is still too far away to predict. Google has the agility behind it, but Microsoft is trying to become more agile, again. Google has a wonderful capital value, but Microsoft’s capital value can not be compared to. I think that Google and Microsoft are very much on par right now in the internet software market. Google has a lead and better agility but Microsoft has a lot more money and is know to be quick to catch up. The best strategy for Google I think is to try to undermine Microsoft by cutting off the company’s shrink wrapped, high-margin OS and Office sales. Google has already taken a step forward by allying with Sun Microsystems, but Microsoft is trying to counter that with Office Live. The trick left in Google’s sleeve (if they want to undermine Microsoft) is to release a Google OS. I can not predict exactly what the two internet giants will do and will be watching their activities closely.

Why We Hate IE6

Another small post because as the reader can see, I have been remodeling my blog lately (and that took away writing time). I have been making the posts resize to fit your screen. I know it might look kind of bad right now, but I will be adding another sidebar on the left with navigation and things will look better. Expect more improvements soon.
Unless of course… you are running IE! Gah! I tested my new CSS style on Mozilla Firefox and it was flawless. Oliver then checked it on his Mac with Safari and it was flawless, too. However, when you run IE on the Mac, the sidebar becomes superimposed over the post text. If you are running IE6 on Windows then the sidebar is just gone. Just freaking gone!
I am very much angered by IE’s incompatibility with all other browsers. In due time I will fix up the errors happening with IE, but for now all the IE users will have to put up with no sidebar. Sorry.
I cannot wait until IE7 is released along with Vista. Hopefully version 7 will be at least half-decent.