Microsoft wants the cake and eat it too

Steve Ballmer has been reported to be irritated by Apple's series of ads targeting Windows (and particularly Windows Vista) as the uncool operating system. Poor darling!

Frankly Mr. Ballmer, what did you expect?

On the one hand, Windows Vista has become infamous. Not only it is a resource hog, forcing you to purchase a more powerful machine to keep the same performance, but it is rigged with problems. Incompatible software, incompatible drivers, incompatible peripherals, you name it. The situation is so bad that even Intel is said to refuse to upgrade its 80,000 PCs to Vista.

But on the other hand Vista sales have been doing very well, thank you very much. Genius marketing? Nope! Vista just comes pre-installed with most computers these days. As of today, Microsoft has stopped selling Windows XP. One day you'll eventually have to change your PC and thus get the Vista license that comes with it (unless you want - and can - switch to Mac). In some rare cases you can get XP... if you agree to pay more: you actually pay for a Vista license and an XP license. Yes, you have to pay more to stay on XP.

In other words, in a supreme act of arrogance, Microsoft came up with a crappy operating system, shoves it down our throats and is annoyed to get some flack for it.

You can get power, money and fame but not all three of them. Microsoft has the power to force us to upgrade to Vista and makes a lot of money in the process. Sorry guys, if you expect a thank you note you live in lala land.

Is the modern IT world too complex for Microsoft motus operandi?

Microsoft's plans have always been to be on present on (almost) all fronts. Back in the 80's when the PC market was exploding, apart from the hardware tier that it consciously avoided, Redmond was everywhere. It was aggressively pushing its presence on the operating system market as well as the office application market. In the operating system tier, although they were successful with MS-DOS, Microsoft were also co-developing OS/2 with IBM, developing Windows on their own, and had a stake in a Unix flavor for the PC.

In other words, Microsoft philosophy of world domination has always been to bet on as many horses as possible to make sure it picked the winner. It's very hard to determine what tier of a market will be the one controlling the whole market and reaping most of the profit. So let's invest in them all. And Microsoft's strategy worked great as they were able to capture the operating system market and leverage it to capture the office application market - two huge cash cows even decades later.

But the IT world has grown much more complex since, especially with the rise of the Internet. Worse, because of its complexity, standards had to arise, meaning that the various tiers of the modern IT world aren't as much intertwined as during the early PC days (so conquering one tier doesn't necessarily help you conquering other tiers). That's where Microsoft's "be on all front" approach doesn't work as well as it used to.

Consider the early days of the Web. As soon as he realized (belatedly) the potential of the Internet, Bill Gates launched his company full steam ahead against Netscape. Even though Microsoft was successful in crushing it and winning the Web browser market, Gates admitted years later that Netscape made Microsoft ignore the rise of Google. The big winner of the Internet didn't end up being the Web browser but the Web search.

And that's the problem Microsoft is facing nowadays: a company can focus only on so many markets. Right now Microsoft top brass needs to focus on several markets deemed strategic:
- the search engine / online advertising market against Google
- the video game console against Sony and Nintendo
- the MP3 player market against Apple
- the PDA / cell phone operating system market against and several Linux flavors as well as Apple
- the technology behind Web 2.0 against Javascript-based AJAX or Adobe Flash
- the cloud computing market against Amazon and Google
- the coolest operating system (even though it enjoys a virtual monopoly, the latest Windows announcements haven't exactly excited anybody)

It's hard for any CEO to keep track of so many battlefronts (and I'm not even counting the countless Microsoft products which aren't deemed strategic such as the Microsoft mice or Sharepoint). Focus too much on a front and it could be at the expense of another. For instance, the team behind the success of the Xbox was put in charge of the Zune to try to compete with the iPod. Does this mean it's putting the Xbox at risk? The video game market is also a cruel world where legacy barely counts as you're only as good as your latest console. The same way Sony came out of nowhere in the mid-90's and crushed Nintendo and Sega with its PlayStation, another player might slaughter a future version of the Xbox if it makes a false step.

There are also bordering markets. Even though Apple doesn't do PDAs, its iPhone is sure competing with them. And the Apple TV might end up competing with the Xbox as the so-called "digital hub" of the home.

But even though it hasn't been reported much by the press (if at all), there is one strategic area where Microsoft has actually lost ground (which is unheard of). It's the technology behind the Web. Remember, the whole point of going after Netscape was to be able to control the future Web standards, and make sure they're tied as much as possible to Windows. For a start, Internet Explorer, ActiveX and .NET failed to reach this goal. But Media Player actually got kicked out of the Internet. Years ago Media Player was indeed a very common player to watch videos online. But since YouTube, pretty much everyone is using Flash-based solutions to display videos. I don't know if it's because he's too obsessed with Google but Steve Ballmer seems to have missed the fact that it's Adobe and not Microsoft which is about to control the technology behind the Web. Although not a huge moneymaker, the spread of Flash means that people can - one of the early promises of the Web.

This alone can have some impact on the cell phone / PDA operating system market... as well as the client PC market.

If Microsoft "be on all fronts" approach allowed it to become the giant it is today, Redmond seems to increasingly become a jack of all trades and master of none.