How to Turn Microsoft Around: A Primer, Part 3

Rob Enderle

I started out this series of posts by looking at the foundation for Microsoft, and any company, and arguing that Microsoft has a varied group of parties that it treats as if they were customers who have conflicting needs and goals. These groups include end users, vendors, and technology partners. We then took a hard look at IT, another group treated as customers, and I argued that IT was more like a VAR, assisting with solutions, but not really owning the actual spending power needed to drive sales and revenue growth. They appear to be more of an enabler, and certainly a critical one, than a customer in this instance. This suggests two generally mutually exclusive paths that Microsoft could take to regain momentum and growth. Both would require painful choices and result in a Microsoft vastly different from the one we see today. Let's explore both.


Return to the Past: Vendor Centric


The first path is to return to the path that originally fueled Microsoft's growth and differentiated it from Apple, Commodore, Atari, and companies like IBM. Go back to being a parts vendor and focus like a laser on PC, server, and cell phone OEMs. They own the customer, and Microsoft once again become their outsourced software organization and drives to keep everyone from creating their own IBM-like internal software practice. Focus is clear in terms of developing products to keep the vendors happy and away from doing deals with Google and assures the leveraged sales model that founds much of Microsoft's core business on the desktop.


This is a safe choice but this means that Office would once again need to be subordinated to Windows and driven as a platform completion tool, it would give the various OEMs sole responsibility for marketing again, and it would force decisions that would discontinue projects that were customer focused in favor of those that were vendor focused. In other words, it would provide a clear decision hierarchy but would put projects like Xbox and Zune at higher risk as non-strategic.


Margins would become the exposure because, by giving back control of the solution to the OEMs, Microsoft once again becomes a parts vendor and the OEMs would likely be much more successfully able to drive reductions in pricing. However, it would be the OEMs who then would discount to corporations, suggesting Microsoft might be able to successfully transfer much of the end-user pricing problem to these OEMs. Microsoft would not need a stronger services organization nor would it need to worry about Apple as much. That's the OEMs' problem, and any resulting lack of growth could more easily be blamed on the OEM. But growth could remain elusive because the OEMs don't trust Microsoft and are already relatively far down a path of shifting a lot of future products to Google and Android. CES is awash with Android products this year and the OEMs have already started to work with the ChromeOS and seem to like it. So while this path looks safe, it could turn out to be disastrous for the company.


Complete the Shift to a Customer-Focused Company


Basically, Microsoft is caught in the middle of a shift from being a parts vendor to being a solutions provider, or end user rather than customer/vendor focused. What is hurting it is the transition. It's progressing (the Microsoft stores are the latest indicator), but too slowly, and the transition is creating too many unresolved conflicts. To do this right would require a relatively massive change to the company, which might eventually include buying companies like Dell and HTC, or at least taking control of the related solutions (like Google did with the Nexus One and Microsoft is doing in the Microsoft store), so that it could assure the customer experience and drive a complete solution across all covered platforms.


Focus then is like a laser on the folks who are making the buying decisions rather than those building products for these folks. Microsoft becomes more like Apple on steroids and possibly gets to where Google appears to be already starting to head before Google can make its own similar transition. In other words, Microsoft would need to focus on the users of their products and shoot for Apple or better customer satisfaction levels. To do that, it means making an investment in marketing in line with what it did for Windows 7 across product groups to assure demand is driven down to those that are making the budgetary decisions.


Simplify, focus on the customer, and drive market leading satisfaction scores. In other words this is a primer.


Wrapping Up


I'm way over-simplifying both the problems and the solution to get this into blog format. This could easily be several books on subjects starting with basic command and control (to assure customer voice) and ending up with executive oversight into quality (like EMC), improved intelligence (market/competitive) and strategic vision, but in the end it can be done.


Microsoft was started from a vastly more focused place and Apple demonstrated what focus can bring during the last decade. I think Microsoft, and any company, really, can do this if it takes the effort. I also know most companies won't take the effort; it is generally easier to pass the problems on to the next guy. We can, however, always hope.

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Add Comment      Leave a comment on this blog post
Jan 8, 2010 6:13 PM a. asdf a. asdf  says:

Dvorak had a column about Microsoft the other day (http://www.pcmag.com/article2/0,2817,2357628,00.asp) where he says that Microsoft pretty much hinders progress in the tech field and gives smartphones and tablets as examples.

I have to agree. Apple pretty much recreated the smartphone market, when it was rather stagnant. And now, everyone is jumping on the tablet bandwagon trying to preempt the Apple tablet. No one was even aware that tablets existed before the Apple tablet rumors started. And Balmer's tablet introduction at CES was unimpressive to say the least. I don't know what say Microsoft had in the product, but it's just an HP netbook without a keyboard. It's not even close to the kind of innovation that devices like the Lenovo U1 Hybrid (http://www.youtube.com/watch?v=-5DYuVN6nuY) have brought to the tablet scene. With a few modifications, I see a lot of potential for that device.


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