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Microsoft’s Creative Destruction

342 points| unignorant | 16 years ago |nytimes.com | reply

235 comments

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[+] Goronmon|16 years ago|reply
Despite billions in investment, its Xbox line is still at best an equal contender in the game console business.

I think he doesn't give Microsoft enough credit on this. They entered a game console market with two entrenched players, where one was clearly dominating the other. People gave Microsoft little to no chance of succeeding and yet, on there second iteration were able to put themselves on equal ground to Sony and Nintendo. And that is with producing one of the most unreliable consoles ever made.

[+] mckilljoy|16 years ago|reply
I agree, even that is an impressive accomplishment. But after nearly 10 years, it would be nice to see them actually profit on the endeavor.
[+] mattmaroon|16 years ago|reply
More impressive is that the Xbox 360 is the most successful of its generation. The Wii may have sold more units, but game sales on the Xbox crush it. They also somehow charge decent rates for the Xbox Live service which their competitors give away for free, and they get more use out of it while doing so. It's truly amazing.

The video game console market has historically done to consumer electronics corporations what Russia in winter has done to mighty European militaries. For MS to have succeeded, and by many metrics come out on top, in 2 generations is an incredible feat.

[+] baguasquirrel|16 years ago|reply
Perhaps, but it should be noted that:

(1) The Xbox did not conflict with any of MSFT's existing businesses.

(2) It was an established product that MSFT did not add much to. It was a console, which was operated the same way that other consoles were operated. It does not require much business leadership to do that. Ironically that's kind of like Linux's development model. For a band of scattered, (formerly) unfunded hackers, that's ok. For a company in an evolving area like tech, it's not really acceptable.

[+] aaronbrethorst|16 years ago|reply
(my background: I worked at MS from 2003-2007 until I jumped ship to join a 20 person startup.)

The answer is simple: Microsoft needs its own Steve Jobs, not a Steve Ballmer.

Without an absolute tyrant with a keen sense of where the market is, and where it's going at the helm, Microsoft will continue to flounder. And with good reason, there are too many internal fiefdoms, and too many internal rivalries.

To be honest, I think MS would've been very well served to have been broken up at the end of the 90s. If the company had been divided into three separate firms, like Office Inc., Windows Inc. and Everything Else Inc., I think things would've turned out very differently for those firms over the past ten years: fewer boondoggle projects that only have a prayer of making a profit in the distant future, less of a whackjob 'better together' mentality that hamstrings Microsoft developers into using inadequate internal solutions or forces them to bolt useless features onto their products, and so on.

Sigh, sorry. I really think Microsoft is capable of so much more than they've been able to do for years, and it frustrates me to see so much talent go to waste.

[+] tjmc|16 years ago|reply
I think what's lacking in Ballmer is passion: http://www.flickr.com/photos/airport-lounge/2093699327/

My impression of the man is he's just a sales guy - interested in making money, but lacking any vision or genuine enthusiasm for technology. Consequently Microsoft has mostly become a cash cow.

As the saying goes - a fish rots from the head down. When there's no passion for changing the world, it happens elsewhere.

[+] timothychung|16 years ago|reply
My opinion is that Steve Jobs won't survive in MS due to their culture. Their take on innovation is to be a late market joiner.

They win because they do things better with their resources.

MS has an innovation model. It's just that it is a very non-innovative innovation model.

[+] edw519|16 years ago|reply
In enterprise IT, we have 2 kinds of vendors, those we actively embrace and those who hold us hostage.

The biggest fear in making any major IT purchase is not the price, the conversion, or the change in culture; it's the potential loss of options in how we run our own business.

I've seen it over and over again: competitive pressure requires us to make a change in the way we run our business, but we can't. For all kinds of reasons. The license agreement kills any possible ROI. We don't have the needed IT support because so much of it is spent on keeping current. The systems don't talk to each other. The feature we need is still 18 months away. And probably most of all, the software is not as excellent as we need it to be (let's just leave it at that).

Long gone are the days when you needed IBM's permission to fart. Guess who the biggest culprit is today?

Just because you go with someone doesn't necessarily mean you like it. Almost every enterprise IT department I know would love an alternative to Microsoft. (And make no mistake about it, the enterprise is Microsoft's strength, much more so than the consumer.)

Sure, pissing off your customers may pad today's bottom line. How do you think those customers will feel when your landscape changes and they have more choices?

[Entered using ie7 on xp pro. I didn't have a choice.]

[+] lispm|16 years ago|reply
I'm with you on that. I think it hurts the companies a lot. I did consulting for a company which was hostage of Windows NT for many years, old Internet Explorer's and so on. On TV and in print the company advertised themselves as young, innovative, communicative - if you actually worked there, much of that was really the opposite. If the employee gets greeted by a gray office, a gray desk, a gray PC and a gray user interface, then it will be clear that the company does not live the values it communicates to the outside.

So the plain gray PC with the interface that is either gray or childish has found its home in the enterprise. The computer is like it is, because the reality in many enterprise is not 'human' at all and Microsoft contributed to it and made its profit from it (because the companies choose their equipment, not only the computer, based on price mostly).

[+] DenisM|16 years ago|reply
So Microsoft is preventing you from buying copy of Windows 7 and installing Firefox? No? Your anger is misplaced then, should be angry with your IT department that doesn't let you upgrade form a 9 year old OS.
[+] kulkarnic|16 years ago|reply
As someone who's worked at MSFT himself, the author certainly knows what he's talking about. However, there's a couple of factors one must reflect on:

1. It's a HUGE company (80k employees?). When you get to that size, it's hard to ensure all great ideas get to market. For a very long time in its history, the company was guided by a dominating spirit (computers on every desk) and a similar leader (Bill Gates). With both outmoded now, it's easy for business-groups to take local decisions, rather than follow the war-plan.

2. BUT, they've made HUGE investments in the future. Consider Microsoft Research. MSFT isn't going to be IBM anytime soon (huge company, but better known for sales folks than tech enterprise). Though they'll possibly not be as sexy as Apple, they'll definitely have the tech/IP if/when they want to utilize it.

[+] mrduncan|16 years ago|reply
I think you hit on their biggest problem now. They have (mostly) succeeded in their original goal to get a computer on every desk. What's next though? It seems to me that they need a new grand plan for the company as a whole.
[+] jacobolus|16 years ago|reply
I don’t think your example in (2) is particularly effective. At least through 2000 or so, IBM spent more on R&D than just about anyone, Microsoft included. Others now spend comparable amounts, but IBM still got the most patents of any company last year: and they have for 17 years straight.

Big R&D budgets, with lots of interesting advanced research, DARPA grants, etc. etc. can certainly be helpful, but they don’t save a company that lacks a broader product strategy.

[+] AndrewO|16 years ago|reply
I agree with both points. In addition, from the sound of the article, it seems like the biggest problem with having 80k employees is the jealousy and feudalism at the management level when it comes to actually implementing the great ideas across multiple teams—the ClearType and Tablet PC incidents being examples of this.
[+] joshu|16 years ago|reply
I got an offer from MSR a while back. I remember asking, "so... how do you guys ship?" and they actually thought this was funny, laughing and laughing. "That's so cute!"

Because for them, it was an impossibility.

[+] ern|16 years ago|reply
A true story: a CS professor promotes Java widely and even writes undergraduate textbooks on Java.

Goes off on sabatical with Microsoft Research, and becomes a .NET evangelist. Stops writing Java books and starts writing .NET books.

Is there a quid quo pro? Probably not. But it does illustrate another purpose for Microsoft having a research organisation: winning over academics, and, by proxy, their students.

[+] maurycy|16 years ago|reply
Microsoft wouldn't be worth discussing, if not their role on the market. I mean, they were once innovative and now they're just plain stupid. Like many companies in the past, their success is slowly killing them.

The real problem, though, is that Microsoft slows down the innovation. Every time I see my friends working on Windows, I see an operating system that nearly not changed since 1995.

I know that there are nice fonts, widgets, and you have nice shadows here and there. All the basic concepts, though, are the same since 1995. There's basically no true innovation.

See what Apple does. Ten years ago they had ugly, and basically unusable OS. Five ten years ago they were comparable. Now, they are the frontiers of the touch&the mobile revolution.

Regular people still struggle with the same problems they struggled ten years ago. They still have to cope with utterly complicated filesystem, there's still too much voodoo, they still cannot find their programs easily, there's still mouse&keyboard, they still get unnecessary viruses, and the cloud integration is almost non-existing, so they have to use pendrives.

Unfortunately, 90% of the new computers is sold with Windows, and it takes some unnecessary effort to find&learn better tools. We cannot expect regular people to give up their jobs in search of better IT solutions. They just want to get their job done, and it's OK.

We, as a developers, like to speak how Microsoft slows down the web. I think, Microsoft slows down the whole society. The time wasted on their today's deprecated software is the whole society's loss.

[+] halo|16 years ago|reply
I don't see how you can say with a straight face that's Windows has "nearly not changed" since 1995 while saying that Mac OS X has significantly changed since 2001.
[+] mckilljoy|16 years ago|reply
Technologically, a lot has been done under the hood since 1995 just to allow modern hardware to work. USB devices, wireless NICs, and multicore CPUs didn't even exist when Windows95 was released. Much of the "innovation" is unseen.

While I also wish they had innovated the UI more over the past decade, we are probably in the (admittedly growing) minority. You shouldn't switch the gas and break pedals in a car just to be "innovative", and I think for Microsoft the risk of alienating old users outweighs the risk of losing new users.

Apple of course has been more free to make sweeping changes to their OS over the past decade because, frankly, they haven't had much to lose. It will be interesting to see how dramatically they change OSX now that they have found something that sells.

[+] dan_the_welder|16 years ago|reply
Microsoft makes productivity software, games, embedded OSes, hardware, business software, commercial suites.....etc etc etc. They can't focus with so many irons in the fire.

Apple makes well designed prosumer products....and thats it. They are focused on shiny, evolved high end consumer goods.

Apple will refine and refine and refine, while MS will dump things unless it's a huge money maker or they have an axe to grind.

Not an Apple fanboy BTW, I personally don't like anything Apple, and would be 100% Linux if not for legacy software that I need Windows for.

I am personally quite happy with the Windows 95 look and feel and set up all my machines, Linux or Windows, with plain vanilla UIs and remove anything extraneous.

As far as the tablet thing goes, most Windows tablets were well over 2000 dollars, so I really blame the hardware manufacturers for that one.

[+] wglb|16 years ago|reply
While it is natural to attribute much of this to individual efforts within the company, and to lack of innovation, the result you see at Microsoft might be more of a natural consequence of a company of that size and success.

Just a little thought experiment here: in the eyes of shareholders, which is more important at the end of each quarter -- innovation, or profit? So did the profitability of the Office division suffer from not engaging the tablet? (note that some think that the anticipated use of the iPad is more on the consumer end, and less on the creation end).

And another little quiz: where does Simon Peyton Jones work and what does he do and what has he produced?

To me, the underlying takeaway from this story, and I disagree a little with the slant the author of TFA has, is that execution can trump innovation.

There have been articles referenced here on HN that talk about others stealing ideas (my favorite was one told by Steve Blank) but at the end of the day, the winner is the one who executes well.

Isn't this the bottom-line message from the Microsoft story?

[+] eagleal|16 years ago|reply
From Wikipedia: Simon Peyton Jones is a British computer scientist who researches [...]functional programming languages, particularly lazy functional languages. [...] Since 1998 he has worked as a researcher at Microsoft Research in Cambridge [...].

He is a major contributor to the design of the Haskell programming language, and a principal designer of the Glasgow Haskell Compiler (GHC). He is also co-creator of the C-- programming language.

http://en.wikipedia.org/wiki/Simon_Peyton_Jones

EDIT: Perhaps this article applies only to Microsoft Research, not MSFT as a whole.

[+] gabrielroth|16 years ago|reply
Just a little thought experiment here: in the eyes of shareholders, which is more important at the end of each quarter -- innovation, or profit? So did the profitability of the Office division suffer from not engaging the tablet?

And yet shareholders are not, in fact, rewarding Microsoft for its consistent profitability: http://www.google.com/finance?chdnp=1&chdet=126531720000... msft&ntsp=0

[+] Kilimanjaro|16 years ago|reply
"I am going to fucking kill Google" it's been their mantra for the last ten years (since ballmer got the CEO spot).

They don't innovate, they just embrace and derail, extend and delay, patent and extinguish, copy and destroy.

Great company solely focused on money, at the cost of fucking up everybody else, and killing progress for their own benefit, when the rest of the world is focused on progress, and money.

Ballmer must go, and that destructive mentality must change.

[+] mckilljoy|16 years ago|reply
Microsoft's lack innovation is a result of a couple of factors I can think of:

-Leaders without vision: Gates wasn't perfect, but he at least put forward the vision of a PC in every house. Ballmer is more of a cheerleader than a visionary, and "three screens and a cloud" isn't a vision of the future so much as commentary on the present.

-Hubris: Making billions of dollars is an easy way to justify that you are "doing the right thing", even 15 years later.

-Customers focused: This is a little more subtle, but I think a culture making products (Windows, Office) for "Customers" is different than a culture making products (Gmail, Search) for "Users". For the former, you could pessimistically say that your main objective is to make a product you can convince someone to buy. Whether or not the customer uses the product is somewhat incidental. Each subsequent version must have enough features crammed into it to justify the customer paying again, even if they aren't useful. In contrast, focusing on the user provides more motivation to keep the product relevant, make the product useful, and so on. If it isn't, the users can simply stop using it.

-Middle-child syndrome: If your team isn't making $1+billion, no one cares. It is hard to have the proper resources to innovate and be creative if most of your management chain doesn't know your project exists.

[+] joe_the_user|16 years ago|reply
Another thing is that "embrace and extend" tends to lead to monolithic, dead-end products. You can only cram so many useful features into a closed desktop application before in becomes a nightmare. This prevents you from doing the sane thing - producing a bunch of small modular tools. A lot of the good coming out of the web is just a product of not having to start with context of an application competing with other existing applications.
[+] cubicle67|16 years ago|reply
thanks... Your description of Ballmer as a cheerleader has now given me a mental image I'd rather not have :/
[+] davepeck|16 years ago|reply
I left MSFT a couple years ago; my experience was in line with the author's. Microsoft was a strange, fantastic, ultimately frustrating place to work. My blog post on it:

http://davepeck.org/2008/12/12/meditations-on-microsoft/

[+] city41|16 years ago|reply
My last day with Microsoft is on Tuesday. I also feel the same way. I think working at MS in the 80s/early 90s would have been exciting, fresh and challenging (not to mention extremely lucrative). But now? "Frustration" is the best word to describe it :-/
[+] b-man|16 years ago|reply
No one in his right mind should wish Microsoft failure.

I've met quite a few people, who in my opinion had quite sane and intelligent minds, who wished for MS failure, for a lot of well based reasons.

[+] Groxx|16 years ago|reply
It would hurt for a while, but I for one would welcome Microsoft's demise. Linux is much nicer to program for, and wouldn't take too long to convert the majority of programmers over to it, and thus most programs.

Plus, it's not like there aren't any other options, several of them quite good. The market would adjust to fill the gap.

[+] pragmatic|16 years ago|reply
Hackers take note.

The dominant OS for Business (on desktops) is Windows. This can't change (soon), too many companies are locked into software that requires it (either built in house or purchased).

That's changing, more applications are going web based. But there are always those little niche apps that hang out in purchasing or accounting that require windows and aren't going away soon.

Most companies can't function without Excel. Go to the accounting department. Even if they have an "accounting system" ask the people working their what the use (or watch them). They probably have Excel open all day. Excel is hard to do in a browser.

Every company in the world would love to be MSFT. High profits and a locked in customer base.

[+] tmountain|16 years ago|reply
I'd say companies are less locked into Windows the OS and more so tied to binary compatibility with Windows products. I've been watching and using Wine since the project began, and it has made unbelievable progress in the last decade. Given a few more years, I wouldn't be surprised if it reached the stage of near perfect compatibility with Windows products. That coupled with the shift to more and more "cloud applications" spells big trouble for Microsoft.
[+] simon_|16 years ago|reply
Even complete lock-in might not work for them forever.

The entire US financial industry uses Windows desktops and will for the foreseeable future, but adoption of Vista, Windows 7, and Office 2007 has been (anecdotally) pretty negligible.

I imagine that their future profits are in trouble if they can't innovate enough for users to even upgrade their products.

[+] carbon8|16 years ago|reply
Not so much anymore. Google Apps and/or Open Office are more than sufficient for most small businesses. 10 years ago Windows and Office didn't have any viable competition. Times have changed.
[+] pragmatic|16 years ago|reply
OR: "The reports of my death are greatly exaggerated."
[+] ShabbyDoo|16 years ago|reply
Why is it that Google does not seem to suffer from the same internal competition as this article claims present at MSFT? Perhaps Google is seen by its employees as the Land of Plenty while MSFT employees see the company as a zero-sum game? I'm not suggesting that either view is necessarily rational, but such perceptions could explain the behaviors.
[+] angelbob|16 years ago|reply
It sounds like Microsoft's internal competition is exactly the same kind of dysfunctional as its external competition.
[+] Groxx|16 years ago|reply
Except they can't simply buy out their internal competition.

If your business is consistently shooting itself where it most needs to grow, you're doing something so fundamentally wrong you deserve to die. This isn't anti-Microsoft fanboyism, this is natural selection at its core. I take this stance with any business that behaves like this to a large enough degree.

[+] stcredzero|16 years ago|reply
From article:

But those of us who worked there know it differently. At worst, you can say it’s a highly repentant, largely accidental monopolist.

If you want people to forgive your "accidental monopoly," it pays to not act the 800 pound gorilla.

[+] bensummers|16 years ago|reply
So, they managed to destroy a competitor producing a tablet computer, only to fail to produce their promised product because of infighting?

(See Jerry Kaplan's book, "Startup: A Silicon Valley Adventure" for the depressing story.)

How exactly is this defensible behaviour?

[+] rabidgnat|16 years ago|reply
All of the internal issues wouldn't be a huge problem if consumers wanted to buy their products, but they just don't know how to tell a compelling story of improving lives. Microsoft just launches products that they think will compete well in certain sectors, but they're not really thinking about what people need. The XBox is really the only counterexample from the whole past decade! "Hey, we have this thing that plays games, but you can also get updates and games online using our store. When's the last time you've been able to apply a bugfix to your console game?" Show me another Microsoft consumer product that really improves someone's life like the XBox did
[+] elblanco|16 years ago|reply
"Another example: When we were building the tablet PC in 2001, the vice president in charge of Office at the time decided he didn’t like the concept. The tablet required a stylus, and he much preferred keyboards to pens and thought our efforts doomed. To guarantee they were, he refused to modify the popular Office applications to work properly with the tablet. "

This is easily solved with a few strategic firings.

[+] grandinj|16 years ago|reply
By an accident of history and a lot of skill, Microsoft wangled themselves a virtual monopoly. Their skill at keeping that monopoly was second to none.

But now that other markets are opening and their monopoly power is fading, we see the truth - they don't really have anything special beyond the likes of HP and IBM.

[+] csmeder|16 years ago|reply
"At worst, you can say it’s a highly repentant, largely accidental monopolist."

Incorrect, at worst it's a monopolist.

`

"It employs thousands of the smartest, most capable engineers in the world. More than any other firm, it made using computers both ubiquitous and affordable. Microsoft’s Windows operating system and Office applications suite still utterly rule their markets."

By monopoly...

`

"over $100 billion in the past 10 years alone and help sustain the economies of Seattle, Washington State and the nation as a whole."

So we are supposed to support monopolies if they support Seattle? and apparently "the nation as a whole." You don't support the economy by monopolizing it.

`

"Its founder, Bill Gates, is not only the most generous philanthropist in history, but has also inspired thousands of his employees to give generously themselves. No one in his right mind should wish Microsoft failure."

This is philanthropy by force, he is a Robin Hood, steal from the rich USA and give to the poorer countries. Out of all the statements this is the one I find least fault with. Fine steal from me to give to the poor. But do it straight up. Don't also hinder technological advancement while your stealing from me. Just take my money and leave technology out of it.

[+] PJNasty|16 years ago|reply
Don't forget about xbox360 - most US males age 7-18 wants/has one. It's an excellent Microsoft product that is often overlooked.
[+] Glimjaur|16 years ago|reply
"Despite billions in investment, its Xbox line is still at best an equal contender in the game console business."

He didn't forget the Xbox, but he did give the impression that he wouldn't consider it a success.

[+] djcapelis|16 years ago|reply
"the luxury of not one but three chief technology officers"

Someone mistook the problem as a benefit.