The rise of Office

Sorry for the delay but being unemployed is hard work.  Well back to products and my first year at Microsoft.  If you ask anybody what Microsoft’s biggest sellers are they will likely say 2 things.

  1. Windows
  2. Office

These two products have defined Microsoft for the past 15 years and resulted in billions of dollars in revenue. The first we discussed in an earlier blog the second was fueled by a couple of things:

  1. Microsoft’s existing OEM relationships
  2. Microsoft looked at its application set collectively not individually

On the, OEM front this was easy.  Microsoft already had relationships with all the major OEM’s, therefore it was easy to go in and up sell them on adding Office to their list of pre-installed applications with their PC’s.  Another thing that is a bit of a grey area to me but certainly there were enough internal hallway conversations to verify, the agreements that Microsoft had in place those days were very restrictive. A OEM could be penalized for shipping something other than Office with their PC’s.  In short Microsoft leveraged its positions on Windows to secure other applications.  Some might call that monopolistic behavior but that is a story for a later blog entry.

The second point was Microsoft’s vision for the workplace.  I think Microsoft’s chief competitors looked at customers as word processing customers, spreadsheet customers etc..Microsoft looked at the workspace holistically.  Chances are the worker who crunched numbers had to write documents, had to provide presentations and Microsoft provided it all.  I often thought during the nineties Microsoft’s success was due to a couple of things:

  1. Microsoft’s vision and patience
  2. Microsoft’s competitors incompetence

 I think those two things played out time and time again.  The first point was pure Billg.  He had the ability to say this is the way the world will be and everyone in the company would just follow.  And I mean everybody, from Steve Ballmer down to the bottom.  I mean me when I am referring to the bottom.  On the second point I think our competitors viewed this as a business, which was true, but in doing so they were missing the bigger picture.  I remember a quote from a famous venture capitol guy in Silicon Valley which was to potential venture capitalists, “When you invest in companies look at the technology and not the revenue, that is implied”.  That quote was post Dotcom, but I think it applied to where Microsoft was when I started.  Come up withh great ideas we will think about the revenue later.  That simply is how the tech business has to work.  Great idea will lead to revenue even if at first it is not apparent (there were a lot of search engines before Google).  That is how Microsoft operated in the early days and in the process we were defining how money would be made in the software business.  In the end it led to enterprise licensing scenarios, OEM licensing etc..all of which included Microsoft Office.  With each new licensing vehicle Office grew.  Heck Microsoft even was making tens of millions, hundreds and eventually billions on Microsoft Office for the Macintosh.  Before the end of eth decade Microsoft was a multi-billion dollar empire.  In an ever-changing environment I vie wit as Microsoft’s Achilles heal today, but then it was pure gold.  It was the easiest call I took as a customer service rep “Your looking at a spreadsheet?  You are looking at a word processor too?  Well then buy Office for less than what you pay for WordPerfect and Lotus we will throw in Microsoft PowerPoint”.   The beauty of that type of dialog is I did not view it as sales, it was just common sense.  Innocence is a great way to sell.  Good night everyone.

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