Readers of this blog know that I’ve recently started a new job at Microsoft in Redmond, WA. I’ve only been there for a week, but I’ve already started to feel a sense of pride creeping into my psyche when I read about the company’s breakthroughs in tech news. Conversely, I feel involuntarily defensive when people bash it.
If you want to know why Microsoft’s share price has been flat for 11 years while Apple, Amazon, and Google shares have soared, this is why. Microsoft is not innovating aggressively. It is not leading categories or blazing trails. No, it’s acquiring aggressively as a shortcut to innovation. That isn’t working. Its own history suggests as much.
Let me begin by acknowledging that Microsoft is not a perfect company. It’s a massive organization with nearly 100,000 employees and on a fundamental level, large organizations just can’t move as quickly as lean and mean startups. Microsoft’s track record in the consumer market has not been perfect (see this interview with MS executive Robbie Bach for a fascinating take on this), but it’s frequently come out with products that demand and deserve our attention.
Goldfayn’s piece is pretty meandering; he brings up a bunch of random examples and doesn’t really tie them very well to his thesis. The primary focus of his article is Microsoft’s recent investment in Barnes & Noble. Why invest in an organization that is so far removed from Microsoft’s core competencies? Goldfayn cites several acquisition examples to back up his claim that this acquisition will turn out to be ill-fated: 1) Windows Phone/Nokia, 2) The Yahoo/Bing search deal, 3) Skype.
With regards to Windows Phone, although Nokia had a rough quarter recently, people love their Windows Phones! With Windows Phone, Microsoft accomplished what any sane observer would have deemed impossible: it took a flagging operating system off the market (Windows Mobile), righted the massive ship, then came back from nowhere with a user experience that some reviewers have described as being “in a class of its own.” Windows Phone may not have the market share of other OSes but we are just getting started over here.
With regards to Bing, Goldfayn writes that “Google’s search market share is a dominant 66%, with Microsoft’s Bing a very distant second at 15%. After spending billions building and marketing Bing, Microsoft is barely visible in Google’s rear-view mirror.” Again, Microsoft has shown that it’s in this thing for the long haul, and its recent innovations in social search show that it’s not content to merely be a follower. Will the market share come? I can’t say, but I know that we’re the only company that has made significant inroads against Google. Who else can say that? Who else even has the capability to be able to do that?
And as for the extremely recent acquisition of Skype, even Goldfayn acknowledges that “it’s too early to tell”! Give it a few months, will ya? Sheesh.
There’s a broader trend here that really troubles me among the tech pundits, and that’s the following implication that I sense from reading pieces such as Goldfayn’s: “You stink at this so just stop trying already.” I read Apple-centered blogs such as Daring Fireball pretty religiously, and the unadulterated joy that the authors get from seeing Apple completely lay waste to their competition is palpable. It’s fun to root for the winning team; no doubt about it.
What we forget is that a world where one company dominates an entire industry isn’t really great for anyone (Microsoft is no stranger to this concept). Do we really want ridiculously important industries like search, mobile, and publishing to be dominated by a single company (i.e. Google, Apple, and Amazon, respectively)? Do we really want people like Microsoft to lay down their arms and just give up? Because if so, we’re asking for a world with less choice. We’re asking for a world where consumers lose big time.
As for me? I for one am glad we’re fighting these fights.