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What Ails Microsoft

A much-discussed reorganization is necessary—but not as much as a focus on the next big thing, instead of the last big one.
By Mark Roberti
Jul 21, 2013

The business media was awash last week with articles covering Microsoft's plan to reorganize itself and do away with its product divisions. Most of the articles I read suggested that CEO Steve Ballmer's goal was to make Microsoft more like Apple, which is organized around functions, rather than products. I'm not in the business of telling other CEOs how to run their companies, but I think Microsoft's problem is one of vision—and that's one problem most technology companies share. Let me explain.

Every big company (except perhaps Apple) has divisions that sell different products. They compete with each other for talent within their business, marketing funds and CEO mindshare. The various divisions dislike selling each other's products, as they are rewarded based on how their own divisions do. This is not uncommon, and for many companies, it also isn't crippling. Just look at General Electric. Its divisions operate as virtually separate companies, and it has been highly successful.

In my view, what ails Microsoft is a singular focus on going after the last big thing. When MP3 players became hot, thanks to Apple's iPod, Microsoft had to create the Zune. When search advertising was delivering billions of dollars to Google, Microsoft had to create Bing. When the iPhone became popular, the lords of Seattle had to get into the phone software market. When the iPad took off, Microsoft created its Surface tablet. And yet, in each case, Microsoft has failed to make much headway into these markets. According to IDC, a provider of market intelligence, advisory services and events for the IT, telecommunications and consumer technology markets, Microsoft's market share in tablets is only 1.8 percent, compared with Apple's 40 percent.

If Steve Ballmer read Geoffrey Moore's books, he'd know that displacing a gorilla (a dominant technology provider) is very difficult. Perhaps Microsoft learned the wrong lesson from its first battle with a gorilla. Netscape dominated the early market for browsers, but Microsoft leveraged all of its resources and eventually crushed the startup. As a result, Microsoft seems to have learned that it can beat gorillas. Instead, the firm should have learned that it took massive resources to beat a small firm like Netscape, so it's doubtful that it could dislodge a wealthy company like Apple or Google.

What does this have to do with RFID? Two things.

First, RFID is a big opportunity—for Microsoft and for many other technology players. Microsoft has a good RFID product called BizTalk RFID. But amid all the focus on the last big thing, the company has not done much with its one product in a market that it could dominate.

USER COMMENTS

Dave Geyser 2013-07-22 05:01:01 AM
I think bill will move up high on the rich list. Microsoft could be THE company that chages the history books. Timing is of the essence for all players

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