It’s Time for Microsoft to Be One Company with Two Systems

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It's time for Microsoft to think differently. The company announced earlier this week that it was buying Nokia. That's certainly thinking differently, but Big Redmond needs to go much further. In today's unsolicited advice column for Microsoft's board of directors, I'm suggesting that Microsoft turn to Communist China for inspiration and become one company with two systems.

The Notebook

Officially, China has embraced the notion of one country, two systems. This was how the country justified keeping the benefits of Hong Kong's phenomenal success as the capitol of capitalism (and the wealth that comes with that) while mainland China technically remained a command economy.

Note that even mainland China has embraced more and more capitalism in the decades since one country, two systems was proposed, but that's not the point.

Like China, Microsoft has a legacy system. It's called open licensing and it has heretofore defined who and what Microsoft is. Under open licensing, Microsoft licenses its Windows operating system (and Windows Phone) to any and all comers willing to pay.

This system has made Microsoft fabulously wealthy, and it has not only defined Microsoft, it has defined the PC industry as a whole, and in some quarters it has come to define the very concept of success in technology.

But—and this is the crux of this column—open licensing has been a complete failure for Microsoft in the smartphone and tablet businesses.

Worse, Microsoft under soon-to-be-former CEO Steve Ballmer has tried to have it both ways by licensing Windows 8 to any and all tablet comers while also making its own (poorly envisioned and disastrously implemented) tablets.

On the smartphone side, Microsoft has maintained open licensing while also partnering with Nokia, and now Microsoft bought Nokia, bringing with it the ability to do its own hardware in house.

At this point I'm going to pointedly ignore that Microsoft is betting its future on a company that has failed as a smartphone maker headed by a guy—Stephen Elop—who failed to turn things around. It's taking great willpower, but that's not the point I want to talk about.

Devices and Services

Steve Ballmer announced last month that he's retiring. He's also gone on record as saying that he wants to transform Microsoft into a device and services company. I get this, and I applaud it, but Microsoft will not be successful doing so if it keeps doing business the same old way.

Something I've written and podcasted with Jeff Gamet about a lot of late is that Microsoft has approached every new category from the standpoint of perpetuating and extending its Windows and Office legacy empires. According to folks who are smarter and more experienced than me, this is a classic mistake that companies make when the sales and marketing folks take over.

Microsoft has proven this, too. The strategy it has pursued in mobile is a failed strategy. Continuing to pursue it will run up against Einstein's definition of insanity. More importantly, Windows doesn't deserve to be perpetuated or extended. It's time is waning and Microsoft must let it go if it wants to be relevant in the post-PC era we are entering.

Two Systems

This is where the one company, two systems idea comes into play. If Microsoft wants to be a devices company, it needs to do it right, it needs to go all in and become a whole widget company in full.

It can do so while maintaining the status quo for its Windows and Office businesses. Microsoft can, and should, continue to offer Windows on an open licensing basis, while making whole widget tablets and smartphones that stop trying to be "Windows" devices.

That means no third party Windows tablets and Windows phone smartphones, but that's OK because it's not like anyone actually buys them.

Microsoft's mobile team needs to focus entirely and only on making the best devices and most compelling services it can. The needs of third party licensees are an unnecessary distraction, and again, the company has already proven that open licensing in mobile is a failed strategy.

Legacy Hurdles

While I'm at it, it needs to abandon the Windows moniker in mobile. Nobody cares about Windows in mobile, and it's not an asset. If anything, it's a detriment at this point.

If the team is free to make its new mobile platform the best it can be without worrying about dragging Windows kicking and screaming where it doesn't belong, Microsoft can make a real dent in the future.

The company needs to let Windows be what it was while finding a new way to make mobile devices that people actually want.

It's the letting-Windows-be-what-it-was thing that will be the hard part for Microsoft. This will require new thinking and burning new neurological pathways in its corporate brain. It will require embracing not only the reality that Windows will become less important, but actively working on making that happen.

Can Microsoft do that? Not with Steve Ballmer at the helm. We'll see what the next person (probably Stephen Elop) can do, but I'm not holding my breath.

Image made with help from Shutterstock.

Comments

geoduck

One thing this would require is they walk away from Windows 8. Abandon it utterly. Just pretend it never happened. This is not without precedent, I remember how quickly they bailed when Windows ME proved to be a disaster. They could do it again. They need to roll out something called Windows 9, which would just be Windows 7-SP2, next spring. Just pretend that Win 8 never happened. Give all Win 8 users, (both of them), free “upgrades” to 9, then move on.

davebarnes

Excellent idea geoduck.
Excellent idea Bryan.

Here is the problem. People inside Microsoft think Windows is strong, positive brand.

mrmwebmax

+

Good points, all. I just wonder if a third mobile OS/ecosystem can thrive, regardless of its merits. And I think it all comes down to people consciously or subconsciously limiting choices to duopolies in everything from soft drinks to desktop computers to servers to political parties.

On the desktop there’s OS X and Windows. Maybe desktop Linux is good, maybe its not. But has it ever stood a chance against Mac/Windows? Nope.

Linux shines in the sever room, as does Windows. Did Mac ever have a chance? Ask Apple how many XServes they sold.

Who buys RC Cola? It might be a very fine soft drink, but it doesn’t stand a chance of denting the Coke/Pepsi duopoly. Don’t like caffeine? Then you can choose from the 7Up/Sprite duopoly.

Like comic books? There’s Marvel and DC Comics. Any others that even make a dent in that duopoly?

Anyone here like me fiscally conservative and socially liberal, of the opinion that people should get to do what they want with both their money and their personal lives? If so, you just might be a Libertarian. And yes, there’s a Libertarian party. But do you think a Libertarian candidate has a shot for President against the Republican/Democrat duopoly?

And so we turn to mobile, where we have iOS and Android. Sure, there are other mobile OSs out there, who have the market share of an RC Cola or the mindshare of a Libertarian Presidential candidate. This is, unfortunately for Microsoft, the position they find themselves in. Its like two major brands establish themselves, and everything else isn’t even considered a serious contender. I’ve yet to see a single smartphone that wasn’t iOS or Android, the latter now dominated by Samsung devices. (With devices, you could even say there’s an Apple/Samsung duopoly.)

How or why so many duopolies come to be is beyond me. I just see it a lot, and know Microsoft will have to somehow get past that to stand a shot in mobile, regardless of the quality of their offerings.

Nathan Hillery

What is Microsoft’s raison d’ĂȘtre? They started by showing that software could be made into a business, a very successful business. Then they showed what could be done by de facto standards backed with gorilla-strength business practices. But what now? What’s the undiscovered country? I’d applaud being proved wrong, but I can see only a slide into irrelevance (Microsoft could still be large and profitable, witness IBM, but they’ll never shape (& shake) the market like they used to.

wab95

Bryan et al:

Wonderful ideas and commentary, backed by sound reasoning and illustration.

History, sadly, suggests that this is where it will end, namely where it began; with words. Human entities, whether tribes or corporations (some might argue that there’s no difference), cities or nation states, while governed by laws and principles, however informal, ride the momentum of - indeed are driven by - their culture; and history amply demonstrates that the momentum of culture is formidable and a bear to change, at least quickly.

What all of these excellent suggestions argue for is not only change, but near unprecedented change within the context of MS’s corporate culture. Geoduck is correct that MS quickly jettisoned Win ME, but so far, that stands as an isolated case. What about Vista? And, if their current messaging and actions are an indicator, MS appear to be doubling down on Windows 8 (e.g. 8.1). Nathan asks, what is MS’s raison d’ĂȘtre. In the second decade of the 21st Century, it appears to be to keep Windows alive by building and extending all of their products and services around it.

All of this speaks to a corporate culture that is not simply Windows centric, but Windows dependent. This dependence suffuses the whole corporation and all of its divisions. The change associated with a departure from that pervasive culture and its momentum would be so radical and alien to its trajectory and would have to be so violent that pain would be inevitable. Mass would need to be shed, such that only a sleeker and more nimble expression of its former self would emerge from that turn. If done correctly, and only wasteful mass was shed, it would be a fitter expression of its former self. If done poorly, the transformation could be lethal. Therein lies the conundrum. More often than not, the members of that community will retreat to the safety of the known parameters of their culture, rather than launch into the unknown wilderness where the prospect of death is real. Tat is survival instinct working against our better interests.

Again, history suggests that that same survival instinct can compel a people to propel themselves into a radical change, but more often than not, only if failure to do so means certain and immediate extinction.

This devolves to a single question for MS; how do they see their current situation. Do they see themselves in an immediate threat to their survival or do they feel they have time, and therefore other options. My feeling is that they will perceive the latter. The only way I can see them getting to radical change is if there is a wholesale, St Valentine’s Day - style massacre of corporate leadership, with all senior leadership replaced by fresh blood whose vision is entirely independent of this culture, and that leadership is united by courage in their commitment to change.

Bryan Chaffin

I agree with everything you wrote, wab95.

graxspoo

I totally agree Bryan. I’ve been saying something similar to anyone who would listen to me for months. Microsoft really needs “Windows RT” to succeed, but by giving it that name, by associating it in people’s minds with the “Start Menu” fiasco and by releasing Surface Pro at the same times as Surface RT (thereby saying RT is not “Pro” and it’s a step down from desktop Windows) they have stabbed, shot, and bitten themselves in the foot. They really don’t get tablets through, and this goes back to the numerous failed Windows tablet experiments of theirs. They still don’t get that no one wants to use a stylus to drive an interface designed for a mouse. They don’t understand why the iPad is successful, or how people use tablets. So, good luck Microsoft, you’re going to need it.

John Dingler, artist

Hi Bryan,
Gee, you and others are so willing to demonstrate their analytical skills in the service of aiding and abetting predatory monopolist Microsoft, the company that virtually stole the Mac OS and did tried to blackmail Apple to kill off (I believe) QuickTime. Given this context, can you make an intellectually honest argument for your helping Microsoft achieve success?

Bryan Chaffin

John, I don’t accept the premise of your question, but I do accept the spirit. smile

1.) Microsoft’s past crimes are spilt milk under the bridge. I wrote frequently and vociferously about those issues when they were relevant, but the most effective punishment Microsoft has gotten was to have to continue to be Microsoft.

2.) Microsoft isn’t going to listen to me. I’m just fascinated by everything the company is doing wrong, and it’s fun to deconstruct.

wab95

Hi Bryan,
Gee, you and others are so willing to demonstrate their analytical skills in the service of aiding and abetting predatory monopolist Microsoft, the company that virtually stole the Mac OS and did tried to blackmail Apple to kill off (I believe) QuickTime. Given this context, can you make an intellectually honest argument for your helping Microsoft achieve success?

John:

I had to chuckle when reading your post and Bryan’s response. Forgive my double-dipping, as I’ve responded to your similar comment in John’s column, but I couldn’t resist. I think your concern, understandable though it may be, and undoubtedly shared by others, lacks two ingredients, which if included, would quash that concern entirely. Because I don’t think you are alone in this, kindly permit my further reply.

First, competition in this business is vital in order to move the technology forward at pace, and within reasonable cost to consumers. Bryan is absolutely correct, in my opinion, in his take on MS’s past as water under the bridge. SJ effectively said as much upon his return to Apple in 1997. Unlike Samsung, a company that is a convicted, brazen and unrepentant serial infringer on others’ design and work, and who by the way, is now accused of [s]ripping off[/s] infringing on one of vacuum maker Dyson’s patents (indeed to quote Sir James Dyson on the BBC website, “This looks like a cynical rip-off”), MS have, in the main, been a good citizen and honest competitor. True, their past predatory practises put many out of business (e.g. Netscape), but what did not kill the competition only made them stronger (e.g. Apple). Of late, particularly in the post-PC era, MS have done their own and original work, despite their lack of success in the mobile space. Indeed, Apple need the competition in order to be at their best, and MS is in position, should they be able to seize the opportunity, to provide the kind of competition that would benefit the industry and the consumer.

This leads to the second thing. You can lead a horse to water, but you can’t make it drink. Given MS’s current dogmatic and unimaginative adherence to their current course, despite input from a number of sympathetic pundits, many of whom have offered constructive input, the likelihood of MS taking Bryan’s (or anyone else who posts on TMO) advice and running with it is on par with the danger of setting a donkey loose in Oxford and having it walk out with a PhD in Eastern philosophy. To say that MS have been obtuse to input and opportunity is an understatement.

So long as MS remain driven by a Windows-dependent culture, as they currently are, whose fruit is to preserve and extend Windows as the company’s platform, there is little danger in offering them sound advice.

I, for one, would be pleased if they’d listen.

John Dingler, artist

Hi Web95
People say this a lot: “competition in this business is vital in order to move the technology forward.” Perhaps, but I don’t accept this wholesale; Cutthroat competition can destroy companies, so does this move technology forward? It depends on the personality. It can make a weak personality to give up. But what about Apple? Does your assertion apply to Apple? I doubt it; Young Jobs and young Wozniak were not inspired by competition but by wanting to make life easier and things better looking, it seems to me, so they were not competing with other companies. Then you say that you hope that MS succeeds. I don’t, except only as much as it allows them enough life support to once again be a good Apple developer. No, I don’t know how any person can wish MS well after it stole from and then wanted to kill Apple, grind it into the ground. As to your other point, yeah, MS is not likely to take Chaffin’s advice unless, of course, the new CEO is wise and able to turn around that massive ship, and then Chaffin would turn into a goat for helping MS out.

You and Chaffing speak as if the water (Chaffin says milk) passing (Chaffin says spilt) under the bridge is a unit of water clearly defined like a clump or huge block of frozen water…there it goes underneath the bridge, now it’s passing beyong the bridge, and moving down the riverbed, receding into the distance, getting smaller and smaller, good by, and that’s the end of the water passing under the bridge. No, no. Water does not stop flowing toward that bridge just like MS does not stop predating, just waiting to victimize some company. Therefore, I resist MS, knowing that, for MS, its predation continues just like water approaching the bridge.

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