Microsoft’s impending doom and how Apple & Microsoft differ on achieving success

TMO has a post from a recent Smart Money interview with Steve Ballmer. Ballmer gets the inevitable Apple question. His answer:

it’s a romantic notion that Apple has the lead. People who build overpriced, underpowered equipment and then market it in an edgy way do not have a formula for broad success.

This fits in well with his earlier comments that Apple promotes rampant piracy with its products (probably enabled by that “edgy” marketing):

iPod users are thieves

Nevermind the inanities (Overpriced? No. Underpowered? Hmm – how so?), these quotes illustrate how Microsoft goes about competing, or rather, how Microsoft/Ballmer thinks firms should compete with them: not at all. According to Microsoft, the only way for Microsoft to win is if competition loses, or better yet, dies. This is the underlying philosophy. And this isn’t something new or restricted to Ballmer. This sense of anger and violence has been embedded in the organizational culture. Microsoft’s death-star treatment of Netscape, Corel, Borland, Lotus, Netscape, AOL, IBM, and numerous others are well-chronicled.

In the past, Microsoft was able to successfully get rid of the competition by exploiting it’s power relationships and monopoly. In a period where the power structure has shifted, it is readily apparent that Ballmer and Microsoft are annoyed by the sheer thought of having to compete with losers like Google, Novell, and Apple:

Bill Gates hinted the software giant will crush Google in the same way that it crushed Netscape — by integrating enterprise search deeply into Windows Vista, Office 2007, Outlook 2007 and SharePoint 2007 and with the rest of the Windows platform and also with emerging web services from Microsoft.

Ballmer vows to “kill” Google

“I’m going to f***ing bury that guy ed: referring to Eric Schmidt>, I have done it before, and I will do it again. I’m going to f***ing kill Google.”

Ballmer from earlier this year deriding Google’s efforts and revenue model (the not so subtle implication is that Google’s business model is unsustainable and unworthy of all the adulation):

“They are trying to double in a year,” Ballmer told a crowd of Stanford Graduate School of Business students on Thursday. “That’s insane in my opinion.”

Says Google is still in an early phase, in which it can milk its “one good idea.”

As in the past, he characterized Google as a one-trick pony, playing down the company’s efforts beyond search.

“They do a lot of cute things,” Ballmer said, to huge laughs from the business students.

The result of their one cute pony? Death within 5 years:

According to concept developed by Ballmer, the online search engines represent the key points of the future technology, and the leader in this domain, none other than Google, is destined to perish in less than five years

Ballmer quote from last year about Linux/Novell implying that Open Source = stolen code and that enterprises should be wary of using it:

We’ve had an issue, a problem that we’ve had to confront, which is because of the way the GPL (General Public License) works, and because open-source Linux does not come from a company — Linux comes from the community — the fact that that product uses our patented intellectual property is a problem for our shareholders. We spend $7 billion a year on R&D, our shareholders expect us to protect or license or get economic benefit from our patented innovations. So how do we somehow get the appropriate economic return for our patented innovation, and how do we do interoperability. The truth is, because of the complex licensing around the GPL, we actually didn’t want to do one without the other.

Of course, this is more civil than his earlier tone:

Linux is a cancer

Linux crowd is communist

Let’s recap:

Apple doesn’t compete on quality or innovation, but counts on edgy marketing, and marketing alone can’t make a company succeed. So Apple must die.

Google is an one-trick pony with an insane revenue goal that is not supported by it’s business model. So Google must perish within 5 years.

Novell & the entire Linux movement is promoted by communists who spread like a cancer and steal code from Microsoft. Communism and cancer are bad, so Linux must die.

This the only way Microsoft knows how to compete: denigration, destruction, mayhem, and death. In their ideal world, Microsoft would have no competitors and in the absence of any meaningful challengers, people will recognize the “wow” of their products.

Contrast that with the way Apple under Steve Jobs is viewing competition: he doesn’t care (okay, obviously he cares about competition, but not to the point of getting in the way of executing on his vision). In his return keynote speech, the first thing Steve Jobs said was this:

We have to let go of the notion that Apple to win, Microsoft has to lose

And he’s pretty much acted that way. Since 1997, Jobs has focused primarily on making Apple innovative. His singular focus has been on re-energizing Apple into an innovative firm with nary a thought about Microsoft or their products (except for the usual “edgy” marketing jabs).

Maybe this is what is actually holding Microsoft back – the need to constantly peer ahead and see what Apple, Novell, and others are doing and how they need to react. If Microsoft was focused on it’s products, they could have been miles ahead. Instead, Microsoft and Ballmer are besot with death. If they are not careful, this could mean their own.

This is a leadership and culture issue and one that I am not sure can be fixed.

Culture is not something you manipulate easily. Attempts to grab it and twist it into a new shape never work because you can’t grab it. Culture changes only after you have successfully altered people’s actions, after the new behavior produces some group benefit for a period of time, and after people see the connection between the new actions and performance improvement.

Steve Jobs was able to re-capture Apple’s innovative culture by getting rid of dead wood and radically altering the power structure. Recall that he disbanded the vaunted academic research group, the cling-on executives, and stopped development on non-core projects. Once they were gone, he resold Apple on the innovation culture and design mantra.

Since I started writing this, MSFTExtremeMakeover has a very interesting article. Not much to quibble about there. I would add one more thing: losing respect.

It used to be that Microsoft genuinely had the attention of every industry. CE/IO’s used to draw up plans based on Microsoft product announcements and mere forward-looking statements. Look around today and see if Microsoft garners a tenth of the respect. Even it’s biggest fans are giving up. Ballmer has effectively killed it all thanks to his acerbic tone, over the top antics, and offensive language. It is going to be very hard for Microsoft to regain credibility, trust, and respect even after Ballmer is gone.

They are five years too late in recognizing the problem and fixing it. Someone at Microsoft should consult Dr. Ichak Adizes and his theory on corporate lifecycle:

Judging by Dr. Adizes theory, Microsoft is a stable company, but:

Stable is positioned at the top of the Lifecycle curve, but it is not the place to be. That position is Prime, where organizational vitality is at its maximum. Companies that are in the Stable phase have started to lose their vitality and are aging. When an organization first begins to age, the symptoms won’t show up on its financial reports. In fact, the opposite is true. Stable companies are often cash rich and have strong financial statements. Like medical tests, financial statements reveal a problem only when abnormal symptoms finally surface late in the Aristocracy stage. If you wait until the signs of aging appear in the numbers, the company will already be significantly aged. If you want to catch aging early, you must look elsewhere.
…
Slowly and subtly, the entrepreneurial spirit in the Stable organization dwindles. The momentum of aging increases and the organization slides down into Aristocracy, the next phase of its lifecycle. This transition is subtle. Unlike the transitions in growing companies that are dramatic and obvious, the slide into deeper aging is more of a continuous process of gradual decay.

We are witnessing the death throes of once unbeatable company.