Why Intel and Microsoft’s Mobile Efforts Failed

    Slide Show

    IT’s Role in Sales Force Transformation

    The technology market is a blame-oriented world. This means when a failure occurs, people who may not actually be at fault get fired, and we don’t seem to learn anything about why the failure occurred. Executives walk away thinking, falsely, that they fixed the problem.

    I see this in the failures by Intel and Microsoft in the mobile arena, which cost both companies billions of dollars and crippled the PC market they dominated. Most of the executives responsible for making the related decisions are gone, but I’ll bet the companies are no wiser as a result of the experiences. In a few years, they’ll make the same mistakes again.

    I can’t tell you how annoying it is to see how firms that are founded on data and analysis don’t use either to avoid mistakes. It’s particularly annoying when they don’t learn from the mistakes. Let’s walk through the mistakes both firms made that got us to where we are today: once again facing major layoffs (and apparently targeting the most experienced employees).

    Chasing Someone Else’s Market

    Microsoft chased someone else’s market several times, first with the Xbox, then with search, and finally with mobile.  Each time Microsoft saw a threat, rather than responding from a position of strength using its own well-learned weapons, it immediately tried to pivot and be better at whatever the competitor did.

    Do you remember the Taken movies with Liam Neeson? At one point, he says something along the lines of, “I have a very particular set of skills.” Now imagine how this would have ended if, instead of using his particular set of skills, he decided to try to learn the skills of the bad guys and then tried to kidnap their kids? The line would have been, “I have a particular set of skills, but screw it, I’m not going to use them, I’m going to learn your skills!” And the movie would have sucked.

    But back to the situation with mobile. Microsoft and Intel bought companies to help them with mobile, but then they overrode the related decisions from the more experienced managers. The worst instance was a company called Danger that Microsoft acquired. The firm couldn’t execute under Microsoft, and then the folks left and were largely responsible for Google’s relatively successful Android operation.

    The biggest lesson here is that you’ll always do better fighting from your own position of strength, not your competitor’s. If you decide to enter a new market, hire people with the best skills you can find, and then let the folks who know the market make the decisions until you become an expert.

    Forgetting Why You Were Successful

    I’m sure you’ve heard of marriages that go bad but the spouses decide to stay together for the kids. That’s kind of what we had with Intel and Microsoft. They stayed a couple until about 1998, when there was a dust-up. Both parties seemed to decide they wanted someone different but kept up appearances for the PC and server kids.

    So, when it came to the chase for mobile, Intel kissed up to Google (which did it no good at all) and Microsoft kissed up to ARM (which did it no good at all). The reason neither effort worked is because both already had better partners in each other. Both Google and ARM were from the open source, non-proprietary, low-cost-to-free era, not the high-margin era that founded Intel and Microsoft. Add to this the fact that Google was Microsoft’s mortal enemy and ARM was Intel’s, and you get just how nasty this likely was. And yet both firms acted publicly as if nothing had really happened.

    So both firms tried to go it alone and the result is that both of them failed. Combined, their budgets and efforts would have easily doubled. By working against each other, they not only had fewer resources, but the resources they had were largely offset by the other’s efforts. Let’s be kind and say it reduced their focused budget to around a fourth of what it otherwise would have been.

    Not Doing What Needs to Be Done

    Years ago, I was brought in to review a failed Microsoft bid to do email for Rockwell. After asking around, I found that the issue was that five divisions were involved, and all five had to agree. Three were either neutral or liked Microsoft and two hated Microsoft. Microsoft spent something like two million dollars wining and dining the three divisions that were neutral or positive, and spent no time with the divisions that didn’t like the company. Rockwell ended up going with IBM. The Microsoft team was unwilling to do what it took to turn around the two anti-Microsoft divisions, and it wasted two million dollars.

    With every endeavor, there is a list of things that you have to do to be successful. It’s not multiple choice; it’s all of the above.  Folks often seem to think they should be measured on how hard they work, and that generally isn’t the case; you’re measured on whether you achieve the goal. If you are unwilling to do what it takes to get to the goal, then pick something else to do.

    For mobile, Microsoft had to not only create a solution, but it had to get app developers to develop it and buyers to buy it. That means it either had to flip the market like Apple did with the iPhone, copy Apple like it did with Windows and Google did with Android, and/or buy the market, like Microsoft originally did with Internet Explorer. And when I say “buy the market,” I mean pay whatever it takes, not a fraction of what it takes. And, whatever it takes in an entrenched market is generally 10 times more than what the competitor is paying for developer support and demand generation (unless the market leader screws up badly, like Sony did against the Xbox).

    Wrapping Up: What to Remember

    The number of people who have lost their jobs over the failed mobile effort at Microsoft and Intel is massive. Most of Nokia was let go, Danger went, and there have been downsizing efforts at both Microsoft and Intel, with Intel just getting rid of 12,000 more. These are mostly parents who had to go home and tell their kids and spouses that belts would have to be tightened and planned events, which could include college for the kids, might never happen. A huge number of lives were disrupted, if not completely ruined, along with otherwise solid careers, just because two companies wouldn’t do what it took to win. And, sadly, this will all happen again because the companies likely won’t take the time to understand what they did wrong.

    Not only did they not achieve their mobile goals, but the collateral damage was the health of the PC market, where the resources they wasted on mobile could have had a far greater positive impact on the financial performance of both firms.

    If you take anything away from this, it is that there is always a set of things that have to be done to ensure success. If you aren’t willing to do them or even discover what they are, the result will be traumatic and often catastrophic. Be smarter and avoid it; just look at those 12,000 people that Intel just cut loose and realize you don’t want to be one of them.

    Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+.

    Rob Enderle
    Rob Enderle
    As President and Principal Analyst of the Enderle Group, Rob provides regional and global companies with guidance in how to create credible dialogue with the market, target customer needs, create new business opportunities, anticipate technology changes, select vendors and products, and practice zero dollar marketing. For over 20 years Rob has worked for and with companies like Microsoft, HP, IBM, Dell, Toshiba, Gateway, Sony, USAA, Texas Instruments, AMD, Intel, Credit Suisse First Boston, ROLM, and Siemens.

    Latest Articles