It Pays to be a Nervous Wreck
from an article in Livemint
Two weeks ago, Microsoft issued the sort of quarterly report usually seen of a company in finest mettle. Redmond’s sales were up 15% and profit double that, excluding certain deferrals. And the rest of the year, it projected, would be just as sanguine—certainly unlike in the economy as a whole.
Two weeks ago, Microsoft issued the sort of quarterly report usually seen of a company in finest mettle. Redmond’s sales were up 15% and profit double that, excluding certain deferrals. And the rest of the year, it projected, would be just as sanguine—certainly unlike in the economy as a whole.
Elsewhere, that would be a mandate for staying the course. In Redmond, though, they were crossing off days on their calendars, waiting until Friday, the first day of February and thus the first opportunity Microsoft would be able to truthfully state, “Okay, Yahoo, it’s been a year since we talked to you guys; where’s the beef?”
Microsoft remains obsessed about Google because it reads the same things everyone else does about how Google’s style of free, “in the cloud” computing means the slow and steady decline of Windows and Office. That’s a technical debate, one in which both sides have good arguments. But...Microsoft’s pattern is to assume the worst and charge forward.
It’s the manic-depressive opposite of complacency, and one sees evidence of it in big and small ways. A dozen years ago, when there was talk, much like now, of the Internet being a threat to Microsoft, the company made its browser better than anyone’s, and became the Web’s best friend. In large part as a result, the company enjoyed years of astonishing growth.
While that’s an oft-told tale, consider one of the less-publicized features of Vista, which shows some of the same dynamics at work.
In the months before Vista’s release, there was a lot of talk in tech circles about how hot new tech trends such as “RSS feeds” and “desktop widgets” were going to be the future of computing. Microsoft dutifully built them into Vista, and announced them with some fanfare. Computing remains unchanged. Microsoft, though, lost nothing for hedging its bets. It wins even when it loses.
Is Google-style computing really the threat to Microsoft everyone thinks it is? Office, one of the pillars of the Microsoft edifice, would seem the most at risk. But there’s been talk of “feature bloat” and “upgrade fatigue” in Office for many years, and still Office 2007 is here, with Office 2008 (or 2010) on the way.
As for Windows—or, at least, some sort of substantial desktop operating system—it’s hard to imagine the Web making them obsolete. To the contrary, the many new and amazing things happening online—video, telephony—may well need an operating system to be enjoyed to the fullest.
Microsoft cares about Google not because of the money Google makes on advertising—Redmond would happily cede that cash flow to Jerry Yang, as long as it could keep Google out if its hair. But it’s hard to see Google’s percentage of the search pie shrinking.
Perhaps the best Microsoft can hope for is that the economic value attached to search will diminish, maybe through the rise of social networks or something entirely different. (It) can also hope that it is strategically overreacting to this threat the same way it has strategically overreacted to all the others. Sometimes, it pays to be a nervous wreck.
