What would you do if you were Microsoft’s Steve Ballmer? Specifically what would you do about the mobile phone industry.
He could sit in his ivory tower, taking more and more profits from the areas where Microsoft is strong, perhaps even increase them, but the seeds of Microsoft’s destruction, or at least the destruction of its stranglehold on the main office working device, are already sewn.
There are over 4 billion and there will soon be 5 billion handsets in the world, and Microsoft’s Mobile platform is simply not good enough to guarantee itself a seat at the mobile table. Last year it garnered promises aplenty from Taiwanese and Korean handset makers, that it would be used increasingly, but already Android has surpassed Windows Mobile by handset units and it is barely out of short trousers.
The arrival of ARM multi-core based application processors in devices which can support web browsing, email, basic office functions and every form of entertainment, from reading to video, will slam the door in the face of Microsoft for future device growth, if it does not embrace this fact and spread its reach to ARM based devices. But so far it has not done so.
The launch of the iPad shows already that ARM cores will reach into the base for PC devices. Okay right now everyone agrees they cannot do what a netbook can do, but what no-one takes account if is how few people need the full capabilities of a laptop or netbook ‘ in their work, at home or on the road.
The rise of more and more form factors for Smartbooks (including Cloudbooks (pushed by the idea that all processing can be done on remote internet connected servers ‘ something that Google has consistently maintained) will take future growth away from both MP3 players at the lower end, and netbooks and notebooks at the high end. They are Mobile Internet Devices which have growth up.
If NONE of these are driven by Microsoft software, and if Microsoft continues to write its software purely for Intel devices, it will completely miss the transition to more powerful portable devices, to replace part of the function of laptops and netbooks.
In turn this process will sponsor a form of operating system, likely to be Google Chrome, which can cater for more powerful devices. And that operating system can act as a focal point for application groupings which can challenge Intel’s grip on the laptop and desktop. ARM has over 200 licensees, so that’s potentially 200 new rivals for Intel’s crown. Add a Chrome version of Android market, supported by an SDK which helps put processing in the cloud, and the portable end of the PC business will shift to ARM processing.
Under this kind of pressure we have to ask if even Apple will stay the course with Intel? Apple moved to Intel from an IBM chip, specifically because of assurances made by Intel to drive MIPS per Watt considerations ‘ the amount of battery power needed to drive a million instructions per second. The Intel architecture remains about 25% as effective as the ARM architecture on this point.
Articles speculating on what Microsoft might do about all this conclude that it still has its Danger subsidiary it bought in 2008. This pushes a fairly dumb device called the Sidekick, which keeps server side data within its reach. A server glitch which resulted in the loss of much Sidekick customer data at T-Mobile USA last year, underlined just how tricky it is to keep everything in the so called ‘Cloud’ despite all the preaching of Google, but it remains a trend.
Microsoft also still has its “Project Pink” multimedia touchscreen device, which is merely a touch screen version of the Sidekick supposedly commissioned by Verizon, which leaked almost a year ago.
What Microsoft publicly says it that its next release of Windows Mobile, version 7, is on track for delivery early this year, and they will go head to head with Android devices. There will be an HTC Windows Mobile 7 device in Q109. Key enhancements include multitouch and gesture recognition support, and a more ‘consumer friendly’ user interface.
Before you think about what you’d do as Steve Ballmer, we’d like to draw your attention to an article written last week in the New York Times by Dick Brass, a VP at Microsoft from 1997 to 2004. In it, he blames internecine strife for the failure of project after project ‘ and here we can picture visions of Dilbert and Dogbert cartoons ‘ where powerful men in charge of Windows or Word just say no to including any innovation which they don’t own.
It’s a good piece, and worth a read, but Brass misses the real point. He is simply too young to remember. He bemoans his time at Microsoft and assumes that the company must have done something right before he came along. It didn’t.
We followed the process for years at Microsoft and at IBM before it, and watched both become uncompetitive. IBM was that way at a time when Windows was climbing. IBM had been holed below the water by the anti-trust actions in Europe, which happened in the early 1980s.
Now it’s Microsoft’s turn and we have had a few glimpses of this when one division or another at Microsoft, describes another division as ‘idiots’ for failing in this or that technical marketplace. Hearing confirmation of that from a VP confirms that it also is suffering from a repeat of those problems at IBM.
Last year Faultline called for a modern day Gerstner to take over Microsoft, and when the profits begin to dry up, that’s what investors will call for, but not for a while yet.
Part of the problem is that Steve Jobs presides over product development at Apple in a way that Bill Gates (and now Ballmer) never did at Microsoft. Jobs would never let a VP squash a good idea because he didn’t own it, he’d fire him first.
That’s because design at Apple is from the top down, not the ground up. There is a popular myth that Bill Gates actually went around looking at projects and offering advice on code. Please email us if you ever had your code improved by Bill Gates.
Our understanding is that Gates was never an accomplished programmer. He got his break (if you believe the book Hard Drive) when someone asked his mother where they could find someone that understood technology and she recommended her son, who by then was about to drop out of college. Gates from here went on to copy and steal ideas from friends and rivals. The company really came together when the VCs which propped it up all, put people into executive VP positions and eventually the sacred 12 VPs were formed. This is when Ballmer came on board doing what he did well, marketing.
If anything made Microsoft, it was the huge effort every Microsoft employee, collectively put in about the time of Windows 2.1, to make Windows actually work and make sure that everyone wanted it. Not consumers you understand, but developers and PC makers. It was an effort to shut out the superior IBM OS2. You have to go back a long way to remember that Microsoft and IBM worked together on OS2 internally and then the Microsoft engineers all split at once and went to war with IBM.
But this and other moves were all opportunistic in nature, not innovatory.
Microsoft brought Windows to market by manipulating contracts with PC vendors to say they could not market rival systems. A move which would have been anti-trust in its monopoly years.
So the truth is that Microsoft has never made a product that people would go out and buy, it has forced its products on the world through intermediaries. So it has not lost the knack of innovation. It simply never had it.
Now answer that question. Staying true to the nature of Microsoft, if you were Ballmer would you?
a) Continue with Windows on the mobile
b) Come up with an OS that rivaled Chrome, and borrowed from both Windows and Linux, but ran on ARM
c) Buy Research in Motion, for its huge lead in enterprise smart phones
d) Keep Danger at arms length where Microsoft VPs can’t hurt it, give it a huge budget and walk it into contacts at AT&T and Verizon through some form of connection with its Mediaroom IPTV software.
e) Drop Windows 7.0 and put your applications on other operating systems
f) Do two or more of these at the same time
Okay your first answer will say more about you than predict the right answer. Now try it three times in all, first thinking about how to keep your job a Microsoft CEO, secondly by thinking about what would be good for Microsoft’s long term future. Now try it once more trying to keep Microsoft’s share price up for the next quarter or two.
That’s right, you get different answers each time. It’s not so easy is it?
Our vote goes to giving Danger its head but from inside Microsoft Entertainment and tying it to other entertainment options at Zune, Mediaroom, and Xbox. That way you have all of your loss making entities in one basket, ready to float off when profits turn south, although it might just make it.