How Microsoft Could Beat Apple and Google: Needed - One Child Executive
Feb 8, 2010 5:00 AM PT
The iPad has captured much of the technology coverage so far this year. It is a poorly named copy of a product that Microsoft launched nearly a decade ago, based on a concept Steve Jobs personally thought was stupid: the tablet computer. Yet Apple has effectively convinced the market that its device is new, different and desirable -- and managed to create a major industry event around it.
Microsoft had Flash before Adobe; it had a touchscreen phone before the iPhone; and it effectively had an iPod touch before there even was an iPod. In all cases, the problem to overcome wasn't competitive -- it was institutional stupidity, and you can look back at companies like Xerox and ahead at companies like Google and see the same kind of behavior.
Steve Jobs kind of points the way to a possible fix, which I'll call the "Child Executive" -- a concept I'm basing loosely on the story of "The Emperor's New Clothes." That's what I'll focus on this week.
I'll close with my product of the week: the TrekDesk, a more affordable competitor to the product that is helping keep me in shape.
When you look back and compare Microsoft's growth to Google (good article on this here), it is almost embarrassing. While Microsoft enjoys the highest margins -- and thus should be better able to afford growth-driving efforts -- Google's value has grown 433 percent and Microsoft's 12 percent. You could argue this is because Google was a new company, but if you look at Apple, its value has grown 1,268 percent, and it is close to the same age as Microsoft.
Microsoft has more income, with US$56 billion in revenue vs. $37 billion for Apple and $23 billion for Google; more margin, with 24 percent profit vs. 17 percent for Apple and 22 percent for Google; and more cash on hand, with $33 billion vs. $23 billion for Apple and $21 billion for Google. In terms of resources, Microsoft is still the 800 pound gorilla. While the others are clearly big, Microsoft should easily be able to outspend and out-execute either of them.
Granted, Microsoft is more complex, and that sharply dilutes resources focused on either competitor, but that was clearly a choice. It's one that could be corrected, however. You may recall that one of the first things Steve Jobs did when taking over Apple was to simplify the company -- primarily to save it, but it also set the firm up for the success that followed.
It is interesting to note that in a survey accompanying the article I link to at the beginning of this section, more respondents believe Google will be the most valuable company of the three in five years. Google is the smallest, and its growth is currently much slower than Apple's, in terms of valuation. I think this is because folks are more concerned with Steve Jobs' departure then they are with Google starting to make a lot of Microsoft-like mistakes.
Excessive Internal Competition
Take a look at this New York Times piece on Microsoft's creative destruction, which focuses on what went wrong with the tablet, and think about it -- I mean really think about it. This isn't about evil practices or technology or even individual ineptitude (though it comes close to that) -- it's about organizational stupidity. This is a company in which smart people who are paid lots of money are actively working to assure a company initiative fails because its success would reflect badly on them personally. This would be like two marines running to take a hill and shooting at each other so there was no chance the other got more credit.
Along these lines, the most troubling event I've seen had to do with Chrome Effects, a technology that could have put Microsoft decades ahead of where it is on the Web and effectively had it owning Flash. Microsoft currently has a prototype tablet that appears more advanced then Apple's poorly named iPad, yet I'll bet it will be killed inside Microsoft for reasons that will look just as foolish as those that killed its Tablet and Chrome Effects efforts. The problem is excessive internal competition -- but what's the fix?
The Child Executive
In most cases, it doesn't seem to take a rocket scientist to see that one executive shooting another's project in order to look better is stupid. Recall the story of "The Emperor's New Clothes"? People were told that the clothing could not be seen by people who were incompetent and ignorant, so no adult wanted to look stupid by pointing out the Emperor was naked. A child who clearly could be neither was needed to speak the truth. And the truth was that everyone was terminally stupid, including the Emperor (who was apparently OK with stupid people seeing him naked).
In Apple, I think Steve Jobs plays the role of a Child Executive. There is clearly conflict and competition in that company, but Jobs makes sure that executives don't excessively undermine each other by doing institutionally stupid things. I think Microsoft, and most companies -- because I see Google going much the same way and certainly saw this behavior while I was at IBM -- could use what is effectively a Child Executive. I mean by this someone who is more concerned about what is right then in career advancement or nest-feathering. Probably could use a bunch of them, come to think of it.
I think that the role of the "Child Executive" could be played by someone who either isn't a climber or who has reached a point in life beyond caring about getting another title; someone who prefers to be measured by the company's success rather than personal efforts. Kind of like a CEO is supposed to be measured.
Inside Microsoft there are some amazing efforts at risk of being killed by executive miss action. Windows 7 marketing, which has helped drive Windows from the Vista embarrassment to one of its biggest hits, is at risk. There are some Windows 7 embedded efforts that could result in product that could beat the iPad and open up an entirely new and lucrative consumer electronics efforts, and there is one very classified initiative that could revitalize the company. All of these -- and likely others I don't know of -- are at risk of being killed, because they make some other executive look less competitive.
I think it's arguable that the entire financial collapse was based on folks making stupid self-serving decisions, suggesting every company has this problem to some degree. As a result, I think we need more executives with the honesty of children who aren't afraid to buck a kiss-ass trend and actually step up and stop obviously stupid decisions rather than aggressively move to make them.
Microsoft, like most companies, is capable of amazing things if it can just find a way to reward team players and eliminate the folks inside the company working against them. A child should know better, and sometimes I think executives would benefit a great deal by letting their inner child once again point them in the direction that is right.
Product of the Week: TrekDesk
Last year, I bought a WalkStation from Steelcase, and it was a great purchase -- but at around $5 thousand, most folks simply can't afford a desk with a built-in treadmill.
Yet we all spend way too much time sitting on our butts working.
The TrekDesk works with any treadmill, bringing the cost down sharply. While it doesn't have all the bells and whistles of the WalkStation, it could be more than adequate for most of us.
It costs $479. You still need to buy a treadmill if you don't already own one, but you should be able to get a reasonably good one for under $700, giving you a solution cost of under $1,200 before taxes -- well under the WalkStation's price.
In an office setting where lots of people would use the product, the WalkStation would clearly hold up better. For individuals, the TrekDesk could be an affordable life saver.
Living longer, better lives is something I think is important to all of us, making the TrekDesk an obvious choice for my Product of the Week.
Rob Enderle is a TechNewsWorld columnist and the principal analyst for the Enderle Group, a consultancy that focuses on personal technology products and trends.