Microsoft, the Bad Years: Servers and Confusion
Unlike with PCs, many of the OEMs had a server business that consisted of software largely subordinated to hardware that was either proprietary or UNIX-based. Microsoft rolled out Windows NT Server in direct competition with these platforms. I can recall one meeting I had as an analyst for Giga with Hewlett-Packard's senior management; they wanted me to try to explain to Microsoft why they couldn't do with Windows NT what Microsoft wanted because HP had too much invested in HPUX. We clearly had a fractured relationship because no vendor should be forcing its customer to do something they don't want to do, yet this was the problem HP was describing.
What the OEMs needed, because they were badly fragmented, was a centralized UNIX. But Microsoft provided something different -- a product that came from inside Microsoft that appeared to completely ignore its primary customers, the OEMs. Conflict resulted. Microsoft then went around the OEMs and created demand for this product with the OEMs' customers, the IT businesses with which the OEMs dealt. The OEMs effectively went from being customers of Microsoft to being its vendors and competitors, but the vendor relationship (building servers for Windows Server) was never finalized and remains largely in flux. In short, the vendors should have become ODMs, which design and manufacture products for another company, with the servers carrying Microsoft's brand, because Microsoft, not the OEMs, was calling the key shots.
Many customers also had wanted a better UNIX. This disconnect between what the OEMs wanted, what the customers wanted, and a customer/vendor relationship in flux created a fertile breading ground for an alternative offering, and Linux was born. Still, this wasn't ideal because it, too, fragmented. It didn't throw off much profit or marketing and seemed to fuel outsourcing, which left the door open for Google and its public cloud, Android and ChromeOS efforts. Microsoft and industry growth slowed substantially on all fronts.
Therefore, I maintain that at the core of Microsoft's problem is role confusion between Microsoft and its large partners. For example, during the Windows Vista launch, Intel expressed concern that its imbedded graphics processors wouldn't comply with the "Vista Capable" logo program. It was treated like a customer and the program was adjusted, resulting in breakage and litigation. Had Intel been treated like another vendor, which is what it actually was, Intel would have had to make the adjustment and no litigation should have resulted.
This doesn't suggest that vendors should be ignored, only that they be made subordinate to customer needs and that related conflicts be resolved favoring the customer. Whoever the "customer" is. And Microsoft is in flux with regard to who that customer is.
In my next post, I'll write about how to fix this, but I leave you with a brief definition of what I think the problem is.
Microsoft has four groups that are being treated in balance, but that should be in a hierarchy. They consist of end users, OEMs, IT and critical partners (Intel, EMC, Cisco, AMD, Nvidia, etc.). The resulting confusion over ranking results in products that are not really focused on any one of these groups, largely incomplete or counter-strategic from the perspective of any of them, and that generally underperform their market potential. Apple, Acer, IBM and EMC all seem to have a much tighter focus on who their customers are and appear better able to expand their companies and maintain higher customer satisfaction as a result. Microsoft has one question it needs to answer: Who is your primary customer? Its answer of "all of the above" is currently getting the company a "C-minus" on the test.