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

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.