It is doubtful that the person reading this report does not know about Microsoft and its business practices and reputation. However, Microsoft is much easier to deal with in the enterprise software area than say SAP, Oracle or IBM because they are far less potent than in the consumer software market. However, one is still dealing with Microsoft, the toughest software vendor, at least in the consumer software market. Microsoft is still considerably more difficult to deal with than most of the other software vendors in the markets in which they compete. As Microsoft does not offer a single competitive solution in the enterprise software categories that we cover, companies that have a preference for Microsoft products most often will be the target market for their applications.
Quality of Information Provided
Microsoft misinforms its customers and prospects, pretending it has innovative and high-quality enterprise software applications when it does not. Microsoft does not have the products in the enterprise space, so it relies on salesmanship, marketing, and lock-in. If you buy from Microsoft, it will mean being aggressively pitched everything from SQLServer to Sharepoint regularly. Microsoft will pitch Sharepoint as one of the best content management system when it is the worst application in its category. Microsoft’s technology advice is best discarded, and among technologists, Microsoft receives little respect and is considered a marketing organization primarily. Steve Ballmer was famously quoted as predicting that the iPhone.
“There’s no chance that the iPhone is going to get any significant market share. No chance. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.” Steve Ballmer, Microsoft CEO 2007
Then there was the attempt to promote the Xbox, a gaming console for video conferencing.
“According to Lyons (of Microsoft), the Xbox One “is an affordable option for small business owners, as there are many features built into the console that could help it rival even the most modest of videoconferencing and networking platforms”. Among its uses, the Xbox One provides access to Microsoft’s soon-to-be renamed SkyDrive cloud service using a dedicated app, so you can share images, videos, Excel spreadsheets and PowerPoint presentations.”
Of course, the author covering this Microsoft proposal was good enough to write the following:
“But this is nothing you can’t do on your PC.”
One of the most amusing comments on this topic was from a commenter, which read.
“Xbox will not become a business tool in its current form. This isn’t visionary; it’s a solution looking for a problem. This is what you get when you put the director of Windows in charge of Xbox. All they know is their traditional market so they might as well try pounding that square peg into the round hole.”
This may sound like it is unrelated because it is commenting on different Microsoft products but is typical of the information quality that comes from Microsoft. Microsoft proposes different sales pitches, which because of their size, are picked up and repeated by the business and technology media, regardless of whether they have any basis in reality.
Consulting and Support
Microsoft primarily relies upon partners and mid-market consulting companies to implement its software. The quality of this consulting is too varied is make any definitive comment upon, but there is little doubt that the value is weaker than software vendors that provide their consultants.
Microsoft internally is highly bureaucratic and inefficient, as well as one of the most political companies in the software industry. Microsoft has adopted a rapid reassignment approach to career management, so employees are routinely moved into new areas they know nothing about.
Microsoft is essentially a software conglomerate and lacks a vision of what it should be, aside from being opportunistic and going after every market that it can. This is shown in other areas outside of enterprise software such as cell phones where it never had a compelling product, and with their Xbox, which while now popular has been a money pit for them.
As with other super large monopolistic software vendors, employee satisfaction is high. However, the type of employee who works at Microsoft is attracted to the stability, and most are not under the illusion that they make much of a contribution to technology or that their ideas will be listened to. Microsoft’s hiring practices and management practices are a recipe for bringing in conformist employees. Microsoft provides a stable job in an industry, which is quite unstable.
Microsoft has had decades to develop an efficient and usable operating system in Windows – all while receiving the most money ever allocated to any operating system, and they still have not been able to do it. They released Windows 8, had six years to copy the iOS and were still unable to pull it off.
Microsoft is a company that lives in a bubble regarding its degree of innovation. They are sensitive on this point, which is why suppliers to Microsoft are counselled to speak only about Microsoft products when visiting the company if they plan to make a sale. Microsoft has never been an innovative company. This is true, even though as with IBM, they are every year a top patent producer (number 5 and number 1 respectively in 2013). As with IBM, Microsoft’s large number of patents may have something more to do with how the company has the resources to invest in the patent process. Which is expensive, and Microsoft’s weak actual innovation compared to its patent ownership also says something about software patents generally, which are by many patent experts not considered particularly legitimate. It also says something about our patent system that it can be gamed by large companies like Microsoft that have the resources to put into patent applications creating the illusion of innovation. As a counterpoint, none of the best of breed software vendors that we analyze, that are the most innovative companies have very many patents.
What Has Happened Since Satya Nadella
Satya Nadell’s ascension marked an opportunity for Microsoft to freshen up their image.
If we look at some of Microsoft’s nonlegacy offerings, we can see the following:
- BING: A search engine that has captured 20% of the search engine market.
- Edge: An attempt to recapture some of the positions in browsers that it lost with the rapid loss of market share to Google Chrome on the part of Internet Explorer. Has been ineffective in doing this.
- SQLServer: An undifferentiated Oracle RDDMS copy, but one that has its adherents.
- XBox: A reasonably successful gaming console, but one that has not contributed much to Microsoft’s profits.
- Windows Mobile: A colossal failure for Microsoft that has not revived since Nadella took the helm.
- Windows Surface: After showing promise, sales have significantly declined, and Microsoft’s commitment to it seems to be waning. Microsoft is probably not acculturated to the lower profits in the hardware space.
- Sharepoint: Went from being probably the worst content management systems to a decent one in the past few years. But there is little doubt that Sharepoint has increased IT project failures (and other project failures) since its inception. Is primarily sold because it is thrown in with other products. That is, it exists because of Microsoft’s other offerings.
- Azure: One of the few bright spots in Microsoft’s non-core offerings. Along with AWS, Azure is a leading player taking business away from stodgy data centre operators like IBM and CSC, in addition to growing the market for PaaS. However, even within Microsoft, Azure is seen as a loss leader, and a way to keep Microsoft relevant.
- Dynamics: A lagging ERP system that is held in place primarily due to Microsoft’s size.
- LinkedIn: An acquisition that was a head-scratcher. First, it is as an acquisition that should not have been allowed by the FTC. The reason is that LinkedIn contains network information for companies that Microsoft competes with. This means that Microsoft can review the previous and current messages of all people that work for say Oracle. This would give Microsoft a leg up in competing with Oracle and other competitors. Secondly, LinkedIn has been an active publishing platform since 2014. And what if anti-Microsoft articles are written, will Microsoft censor them? For instance, could I publish this article on LinkedIn without worrying about my membership being compromised? Beyond that, Microsoft now controls how much an article is sent in notifications to your contacts. Microsoft could quickly implement a review process for articles that contain the word Microsoft and also reduce the exposure of authors who are known to write unflattering articles about Microsoft and Microsoft products. Microsoft had another plan to leverage LinkedIn. “Microsoft is working to integrate LinkedIn Sales Navigator and Dynamics 365 to make sales employees more useful by allowing them to tap into professional networks and relationships, “giving them the ability to improve their pipeline.” This will not work and seems like Microsoft stretching to come up with some reason to sell people on why the LinkedIn acquisition is a good thing. Since Microsoft’s acquisition, LinkedIn has declined in terms of its usage. Microsoft rolled out a significant change which negatively affected the publication on LinkedIn. But overall, Microsoft has not seemed to leverage the LinkedIn purchase beyond possibly spying on its competitor’s messages.
Same Old Microsoft
Around three-quarters of Microsoft’s profits come from the two fabulously successful products on which the company was built: the Windows operating system, which essentially makes personal computers run, and Office, the suite of applications that includes Word, Excel, and PowerPoint. – Vanity Fair
So let us contemplate that for a moment. Three-quarters of Microsoft’s profits come from Windows and the Office Suite. And these are applications that were mostly the same 10 years ago. Microsoft has for decades been attempting to grow out of its typecasting and its reliance on these products, however, it can’t find very much success elsewhere. Microsoft, due to its financial resources, has considerable sway over the IT media apparatus. They pay off journalists and media entities to write positive stories about their new introductions, which is why it consistently seems as if Microsoft has some unique and sexy product. Yet, as the product becomes generally used, the sales begin to nosedive, and the process starts anew with another new product introduction.
And for this contribution, Microsoft pulls in over $100 billion in revenue per year? Part of this evidence was the effect of Ballmer.
“Steve will never get the credit he’s due,” a former executive says. “He was brilliant—brilliant—in finding ways to harvest more money from Windows and Office.” – Vanity Fair
That is right, Ballmer was great at extracting more for Windows and Office, but not at actually improving the value to the customer. It makes you wonder what the 114,000 employees that work at Microsoft do daily. How much work is it actually to refresh Windows and Office every few years and then maintain the rest of the Microsoft stable of low value-added applications?
What if Microsoft Were Disbanded?
Aside from pulling out $100 billion a year from the global economy, there is no real reason for Microsoft to continue to exist. They do provide 114,000 jobs, but it’s difficult to see how practical most of these jobs are as Microsoft does not do very much but chase its tail in an infinite loop. Secondly, Microsoft routinely fails in the new businesses that it enters. This indicates that Microsoft only really came up with a few marketable products, and for decades has been using that monopoly to fund a series of poor investment decisions. What this means is that Microsoft is a highly dissipative entity. In this way, the $100 billion that Microsoft receives every year can be seen as a tax which is paid on inventions and development that was already paid for long ago. How much does it cost to develop Windows, Word, PowerPoint, and Excel and Outlook? Is it not time that these applications be open-sourced? Similar suites like OpenOffice are already open-source suites.
We could make Windows and Office open source projects. Companies could arise that are paid to provide support, not that Microsoft provides much support for these products currently. Most companies that run these applications support them with their own internal IT department. Individuals figure out Microsoft’s Office and Windows OS by themselves without much support from Microsoft anyway.
Overall, if Microsoft were disbanded, it would not only return a great deal of money to the economy, but it would allow companies to use that money to better effect. And spread wealth over other innovative applications, and fund vendors that are starved of income by companies like Microsoft and SAP.
Another benefit of disbanding Microsoft would be the ability to promote people getting off of Windows and on to better alternatives.
The Inefficiency of Microsoft Windows
With virtually unlimited resources and decades to do it, Microsoft has still not been able to create a productive operating system. One of the tricks to my productivity has been that I never touch a Windows machine unless I have to. I have two Windows laptops for work, and at one point, I set them up at home in different rooms, thinking I could leverage them for simple stuff. However, after a month of doing this, I realized that even for simple stuff, Windows has a way of sucking the productivity out of you. I realized that I needed to place my two Windows laptops into a box and buy another Mac. I then, in a way, instituted a rule that I would not touch the Windows laptops unless there was a specific reason to do so. Such as a need to get into SAP, or to use some of the applications that I have that only run on Windows.
Interestingly, many people that use Windows don’t even know how much they lose productivity, but it is a drag on the productivity of countries worldwide. And secondly, Windows is not improving. Windows was probably at its more productive in Windows 7, and every new introduction since then has just been a decline in productivity.
Microsoft Post Satya Nadella
The story post-Satya Nadella is the same as the story pre-Satya Nadella. Microsoft is a monopoly vendor that gets most of its profits from just Windows and Office. This monopoly fails at most things that it tries, and the fact that Satya Nadella is at its head does not make much of a difference. Satya Nadella has had over three years to make changes at Microsoft. And it’s not clear that anything has changed. The honeymoon period is over, and now it seems time to face facts that there is very little exciting going on at Microsoft.
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