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Why 'Windows Live' Ain't Dead Yet
Posted on Nov 15, 2005 at 02:26 PM by John Foley
The Microsoft doubters are at it again. Skeptics are questioning Microsoft's ability to deliver on the "Windows Live" strategy outlined recently by Bill Gates and Microsoft CTO Ray Ozzie. If history is a lesson, however, it's a mistake to underestimate Microsoft, a company that has repeatedly shown an ability to catch up to competitors when it falls behind, as it often does. And Microsoft has advantages in the world of Web software that even Google may find hard to match.
It's wrong to think of Microsoft as a newcomer to the Web 2.0 concept of fast software development and free delivery. While it's true that most of Microsoft's flagship products—Windows, Office, SQL Server—are monolithic globs that get major upgrades only every few years, Microsoft releases incremental improvements in the form of downloadable service packs and other updates for many products on a regular basis. MSN.com gets refreshed frequently with new features and functions. And Microsoft already makes it possible for other companies to use its software to offer hosted services, so it knows something about that, too.
My colleague Mitch Wagner questions Microsoft's ability to deliver on Gates' vision in a blog entry titled "Microsoft Windows Live? Not Yet—And Maybe Not Ever." Gates and Ozzie reinforced the view that Microsoft has its back up against a wall with internal memos that were leaked for everyone to see. Salesforce.com CEO Marc Benioff seized the chance, in an E-mail to his employees, to declare Microsoft so woefully behind the software-as-service trend that "perhaps they should rename their entire Microsoft software product line, Microsoft dead."
But, the question isn't, "Can Microsoft deliver software in new ways?" It's already doing that. The real issue is how well can Microsoft match Google and others in speed, flexibility, and innovation. I'm not betting against Bill & Co. for the following reasons:
Installed base. Windows and Office may be 20-year-old software dinosaurs, but they also give Microsoft a huge footprint, with something like 600 million Windows PCs worldwide. Microsoft already has the ability to deliver refreshed software to PCs via Windows Update, and the technology is in place to automatically get feedback from those systems when things go wrong. Think of those PCs as 600 million pairs of open arms just waiting to catch whatever Microsoft throws their way.
An operating system. Google is the top dog of Web search and has demonstrated its skill at rolling out impressive new features quickly. But don't underestimate the inherent advantages of the operating system in a world in which software and services become one in the same. There's the tight integration of tools like Windows Media Player and Internet Explorer, which become an important part of the user experience, and the ability to extend features across platforms, from cell phones to PCs to TVs.
Resources. Microsoft will hire more people this year (7,000) than Google has employees. Microsoft generates more income than Google does revenue. Microsoft Research is a world-class technology development organization, and Microsoft is rapidly expanding into India and China. Microsoft had $37.8 billion in cash and short-term investments at the end of fiscal 2005. With those kinds of funds, Microsoft can buy its way into software-service market, and it probably will.
A plan. Microsoft execs aren't denying there's a problem, but they see a way out. Read over those nine pages of memos by Gates and Ozzie, and what you'll find, in addition to a call to action, is a game plan for turning things around. In a section titled "Moving Ahead," Ozzie outlines points of action for each of Microsoft's three divisions. Admittedly, most of the work still lies ahead. But Microsoft's willingness to admit its mistakes and move on are positive signs. Google's tight-lipped corporate culture could still, someday, prove its undoing.
Fight. Reports that Steve Ballmer broke into a screaming fit when he learned that Kai-Fu Lee was jumping ship to Google should warm the hearts of Microsoft fans. That's the kind of mad-as-hell attitude that, focused in the right way, will work to Microsoft's advantage. The company has been battle tested many times, yet it keeps growing in size, expanding around the world, and branching into new areas. There's some fight left in this old software company.
Everyone agrees that Microsoft has big challenges ahead, but we're not talking about quantum physics here. It's software development and delivery. If Microsoft were allowed to pick its battles, this is one it would choose.
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