Yesterday I was watching coverage of the Microsoft's Worldwide Partner Conference where Kevin Turner, Microsoft's COO compared Apple's newest iPhone to Microsoft's problematic Windows Vista release.
This likely would have gone over better had the comparison not been against a product Microsoft screwed up and at a time when Microsoft is being compared to Apple unfavorably in general. This had the expected impact of suddenly shifting a lot of negative focus from Apple and back onto Microsoft, something I imagine neither Steve Ballmer, Microsoft's CEO, nor Chief Marketing Officer Mitch Mathews appreciate.
But there is a lesson underneath this, and it was just showcased by Intel's stunning financials. That lesson is that if you focus on your competitors excessively, you'll do poorly, but if you focus on driving market growth and correcting your own problems, you'll do very well. Let's explore this.
Intel vs. AMD and Nvidia
For much of the past decade, Intel focused like a laser on AMD, so much so that it was charged for antitrust violations in a number of countries, including the United States. During much of this time, Intel's CEO was on death watch and seemed to be hanging on by his teeth, neither AMD nor Intel were doing particularly well financially, and the market for hardware stalled. Granted, the collapse of the economy toward the end of the decade didn't help, but the constant bickering focused executives in both companies on each other and neither firm did that well.
However, Intel settled with AMD last year, focused back on the market and market requirements, and even though AMD had the most design it has ever had, Intel's latest quarter was a record-breaking one. AMD's and Nvidia's numbers have been improving as well, suggesting this focus on the market rather than each other is paying dividends for all parties.
At the Core of the Problem
At the core of this problem appears to be a behavior that many of us have (and I've personally run into many times in my life). That is the behavior that says that for one competitor to win, the other must lose. This behavior tends to result is pyrrhic victories, like the one that Microsoft won over Netscape.
In that case, Microsoft was successful in driving Netscape out of the market, but in the end helped build a foundation for Linux, created a funding base for Google, focused Google on killing Microsoft, and got Microsoft pounded and fined in the United States and Europe. That cost the company billions along with its recently acquired unchallengeable dominant position in the market. By focusing excessively on Netscape, Microsoft put itself at terminal risk and many of its problems last decade, including Bill Gates deciding to move on, can be traced back to that mistake.
Ironically, Netscape was failing anyway due to poor management. That suggests that the same result could have been achieved without the pain had Microsoft chosen to leave Netscape alone and instead focused more tightly on finding ways to better meet the needs of UNIX users or keeping existing customers happier.
Economic Cost: Focusing on the Leader's Butt
I used to compete, and one of the things you learn in racing or any other sport is that if you focus on the competitor and not the goal, you will generally lose. The winner gets to the goal first and the loser tends to lose track of that goal by focusing excessively on the butt of the runner in the lead. By the time you get to where the butt was, the leader has moved on and the loser, well, loses.
We saw this play out in the initial fight between Google and Microsoft. The goal was the advertising revenue, yet Microsoft initially focused on search. While Microsoft chased Google on search, Google bought leadership in companies closer to the advertising revenue that was the goal, something that Microsoft could have afforded long before Google could had it stepped back and looked at where Google was going rather than where Google was.
The AMD/Intel battle was defined by both companies constantly having "oh crap" moments when one or the other did something the other didn't anticipate and then scrambled to catch up. Recently both companies have done a better job of looking at where the market is likely to go rather than each other. Intel has driven Atom and portable devices, and AMD has driven Fusion and blended computing -- both non-exclusive paths to likely market futures.
The economic cost is the full cost of a decision. The cost to Intel for focusing on AMD excessively and to Microsoft for focusing on Netscape excessively tracked into the billions. Both would have been better served by focusing more tightly on where the market was going and less on their competitors.
What Microsoft's Kevin Turner Should Have Done
Given I have a marketing background myself, I can't resist (though I likely should) taking an aside and share what I likely would have advised had I been asked about this Apple iPhone comment before it was made.
The leading talent at Microsoft focused on marketing and message is Kathleen Hall, whose mission is to respond to Apple's Vista attacks. She also is one of the most talented and experienced marketing people I've ever met. Turner should have consulted her and crafted a more elegant way of making fun of Apple.
The dialog might have gone like this:
Kevin Turner: "I hear Apple is having problems with the new iPhone."
Slide shows comments by third parties comparing the phone to Vista (there are a number).
Kevin Turner: "Given Apple helped us so greatly during our own problems..."
Slide shows a picture of the Mac-vs- PC ads.
"We felt we owed them some similar help when we launch Windows Phone 7."
Voice that sounds like John Hodgeman from behind the stage says, "Hey does this mean I can play the Apple guy now?"
Kevin Turner: "Stay tuned."
There are actually two lessons here. The first is that you never want to lose sight of the goal. Just because someone is in front doesn't mean he knows best where to go -- you might be able to go around them.
The second lesson is that if you are going to make fun of a competitor's problems, it needs to be done elegantly, with humor, indirectly and with the full support of whoever is running the related messaging. Otherwise it has a tendency to backfire and really piss off the marketing folks. This is their turf, after all, and they are supposed to be good at it.
If you have a moment, I'd like to know what you think Kevin Turner could have done better with the Apple iPhone 4 shot, or whether you think he should have left well enough alone.