Originally posted by NickFitz
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Microsoft's problem is that it has never really "got" the Internet, and rather than adapting its business model in the face of it, it tried to coerce the Internet into fitting into Microsoft's business model. For an example of this thinking, see this email from Bill Gates in December 1996 (PDF):
Given competition from a set of technologies built around open standards, Microsoft attempted to enforce proprietary lock-in. They failed. (This also explains why Office produces such appallingly malformed HTML - it's deliberate.)
Not so long ago there was another company that was the biggest computer company in the world, but had failed to realise that it had to adapt in the face of a new, disruptive technology - a technology that completely changed the way its world worked.
That company was IBM. In 1982 it was Big Blue, and people would have laughed at you if you had suggested it might ever lose its pre-eminence. Ten years later it was reporting a loss on the year of over $10 billion, and it seemed very likely that it would go to the wall. IBM was only saved by Lou Gerstner's drastic action in completely reversing the company's strategy, switching its direction from being predominantly a systems manufacturer to being a service provider.
There are some signs that Microsoft is finally realising that it needs to change drastically if it is to continue to succeed in the future. However, the current tinkering around by senior management isn't enough: Microsoft needs fundamental change. The fact is that Microsoft could survive on its cash reserves for at least ten years without a single successful product; but it can't survive forever without adapting, any more than IBM could have done.
One sometimes hears people say "Nobody ever got fired for buying Microsoft." Twenty-five years ago, the saying was "Nobody ever got fired for buying IBM." That's something worth considering if you believe Microsoft will always be there.
One thing we have got to change in our strategy — allowing Office documents to be rendered very well by other peoples browsers is one of the most destructive things we could do to the company.
We have to stop putting any effort into this and make sure that Office documents very well depends on PROPRIETARY IE capabilities.
We have to stop putting any effort into this and make sure that Office documents very well depends on PROPRIETARY IE capabilities.
Given competition from a set of technologies built around open standards, Microsoft attempted to enforce proprietary lock-in. They failed. (This also explains why Office produces such appallingly malformed HTML - it's deliberate.)
Not so long ago there was another company that was the biggest computer company in the world, but had failed to realise that it had to adapt in the face of a new, disruptive technology - a technology that completely changed the way its world worked.
That company was IBM. In 1982 it was Big Blue, and people would have laughed at you if you had suggested it might ever lose its pre-eminence. Ten years later it was reporting a loss on the year of over $10 billion, and it seemed very likely that it would go to the wall. IBM was only saved by Lou Gerstner's drastic action in completely reversing the company's strategy, switching its direction from being predominantly a systems manufacturer to being a service provider.
There are some signs that Microsoft is finally realising that it needs to change drastically if it is to continue to succeed in the future. However, the current tinkering around by senior management isn't enough: Microsoft needs fundamental change. The fact is that Microsoft could survive on its cash reserves for at least ten years without a single successful product; but it can't survive forever without adapting, any more than IBM could have done.
One sometimes hears people say "Nobody ever got fired for buying Microsoft." Twenty-five years ago, the saying was "Nobody ever got fired for buying IBM." That's something worth considering if you believe Microsoft will always be there.
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