Google Compete

I feel somewhat vindicated when reading this in CNet this past week as they highlighted the Microsoft effort to drown out Google Docs with their internal Google Compete team.  It was as if I had predicted this whole new threat, that no one at Microsoft seemed to be taking seriously.  I wrote about the threat of Google Docs last October based more on observations in the small business world than anything else.    However it seems as if Google Docs is gaining  traction and causing more and more heads to turn in Redmond. With this weeks announcement of Office 2013 it’s time to revisit this threat, the state of Office as a product, challenges, and the competitive landscape.

Office is king at Microsoft.  The amount of money it generates for the bottom line is enormous and with every release the money seems guaranteed.  If I have one issue with Office it is that by today’s standards it seems dull.   For you business school graduates Office is not just a cash cow.  It’s the purest definition of a cash cow.  Develop it and ship it and you have an instant $10 billion hit.  For those on very old versions all your support will be stopped until you upgrade.  Do not get me wrong, I have used every version since 1.0.  I have become pretty proficient in Powerpoint, Word and Excel.  The productivity increases it has enabled in corporate America should not be undermined.  However like many users I would be surprised if I use  ten percent of its capability.  With each upgrade over the years I found myself very rarely being wowed by new features and capabilities.  When I look back at significant changes many of the big new features are old.  Automatic spell check?  That was over 15 years ago.  True Type fonts?    Did you know you used to have to pay extra for them?  Grammar Checker…old but useful.  I actually did like the ribbon which was much more recent, turns out I am one of the few.  All the other things that got thrown in later such as Publisher, One Note, Access etc..were more than I needed.  I can say on a few occasions I did find Publisher helpful, not enough top say it was worth the additional cost, but a “glad I had it”  application for the time and crisis.

For so long the biggest competition that Microsoft Office has had been itself.  How do I get users to move off of  the previous version to the brand new version with shiny new features.  Most of which go unused and unnoticed.  That has been a big challenge.  But in the enterprise  that was handled by the renewal of large enterprise agreements.  In consumer’s it was through OEM agreements requiring manufacturers to ship the latest and the greatest through new desktops and laptops.  Now there is a whole host of free ware products out in the market such as OpenOffice, LibreOffice, ZoHo and Google Docs, to name a few.  It has taken a whole for these to become visible, but they are starting to come into focus.

Of these the biggest threat is Google Docs.  It is easy to understand why.  Unlike the other names on the list Google has two things.  A focus on this space and second Google has a lot of money on the bank to back this effort.  They were really the first to drive the idea of a cloud based solution for common Office functionality, moving items off of the desktop.  Ray Ozzie, when he was at Microsoft was the first person I saw write about this idea Google created.  The idea being Google using its ad revenues from search to drive software development in other areas.  I don’t think senior leadership paid much attention to Ray.  Not sure why they did not as Ray was a very sharp guy who ranks among the industry legends.  Wit time Google docs has become better.  When I worked at Limelight Networks it  was used by some group, all be it very simply such as lunch order form.  At school my sons teachers use Google Docs (as well as OpenOffice..no MS Office).  Therefore the kids use Google Docs.  A simple way to post homework (though at our house we had browser issues we had to muddle through).  In the cloud it is easy to access and it is cheap.  One thing I am sure Microsoft will have to deal with which they have not really had to do is drop prices based on competition.

Part of the article highlights that Microsoft has created a Google Compete team.  Not really a big deal.  In 1993 I was at Microsoft and part of the Borland compete team.  Microsoft has always created compete teams to meet whatever the current threat to the business was and I am sure they have had a Google compete team for years.  If I had a dream job it would be working on someone’s compete team in the technology industry.   In the  technology industry where the competition is dynamic and fierce and always evolving to a different space yet to be imagined.  However this compete team differs from previous compete team..remember WordPerfect Office?  Corel Office?  They were competitors in name only.  This time it seems much more real.  Unlike Corel and WordPerfect, Google is not a push over, just ask the Microsoft Bing team.

I have to laugh a bit when I hear Microsoft COO Kevin Turner says he will personally get involved with any customer threatening to move away from Microsoft Office to Google Docs.  As a former Microsoft sales rep I am not sure what I would do in this situation.  Would I:

  • A) Not tell KT and risk losing the business, which would result in me being terminated
  • B) Bring KT in knowing he will slash prices to keep the business, while still expecting me to meet quota (no relief help either) thus causing me to miss my numbers and be terminated – KT would then highlight this as his big win at the Microsoft Sales Conference

I think the real interesting data point will be how many sales calls will he have to make?  If it’s a few then the threat from Google Docs may not be too great.  If it is a lot and beyond his physical capacity to make all the sales calls, then we could start getting a sense of a change in the industry.  Maybe some happy Microsoft field reps as well.

Is this threat real?  Can someone hurt Microsoft in a way it has never been hurt before?  Nothing lasts forever.  With that being said society is changing quickly.  At Starbucks the other day I saw a woman with her laptop open and wondered what was on her desktop.  Surprisingly she had OpenOffice and Opera loaded.  Though I see cloud based office application for the future versus large apps installed on the desktop (OpenOffice is not much different from MS Office).  Microsoft has released Office365 as its cloud based version of Microsoft Office.  However this goes back to a blog I wrote over two-years ago (Microsoft Licensing History and Challenges), how do you transition form a perpetual licensing model to a subscription based service without hurting your bottom line?  When you are talking over $10 billion in revenue, it’s hard to go to Wall Street and say our new subscription model will generate less that amount.  This transformation to the cloud presents Microsoft with one of the biggest challenges in its history, namely because it takes them away from selling what is comfortable.  For Google this transformation is all greenfield opportunity as they have no legacy in the Office productivity suite space.  I can see a future where there will be spots with ad space so I can see what beer I want to drink while I write a whitepaper (maybe while I am writing the whitepaper I shall get that beer, just  a thought, actually a very good thought).  This is a battle that has been a long time coming.  In the end consumers will benefit as will corporate america.  Ultimately with cheaper prices but also better products as competition always fosters innovation, not stagnation.  Microsoft Office needs this.  Rather than giving us new features we need a new paradigm.  The cloud will take us there and at least in the area of traditional office productivity applications I think we all stand to benefit.

Good Night and Good Luck

Hans Henrik Hoffmann July 26, 2012

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Gates gushing over the Tablet

Bill Gates was on Charlie Rose recently and could not hide his giddiness over the forthcoming Microsoft Surface Tablet, going so far as to say now Apple will be chasing Microsoft. From a man who knows what game changing technology is all about I guess we should pay heed to what he says. That being said the comment just did not seem to sit right with me.  In fact as much as I have enjoyed Bill’s clarity of the future through the years I wonder of late if he is not really that connected with the state of consumer technology.  Don’t get me wrong I believe that the work the Bill and Melinda Gates foundation will actually be more valuable for mankind in the long run than the PC revolution that Bill Gates helped pioneer.  The efforts around eradicating diseases like malaria and making birth control available for the third world(which would not only help with population control but help slow the pace of AIDS) our vitally important to the human race.  But back to te surface tablet,  I guess Bill I am just not seeing or hearing it yet.  There are a lot of great things to take notice, but is it a great leap ahead?  Lets have a closer look.

Bill Gates has always been big on the tablet device as one of the next big things in the computing industry.  This goes all the way back to the days of Pen for Windows, back in the early nineties.  Around that time Apple had its own flavor of tab;let computing  the Newton.  They were to be honest, not good.  But given where we were in the industry it was the kind of effort which could only make the industry and the products better as time moved on.  When the next decade came around Microsoft tried again with a much better effort, with what was called the Windows Tablet.  What got Microsoft in trouble and caused its lack of success was the device itself, though slick-looking at the time, was kind of cumbersome.  All the things we take for granted in todays tablet just were not that good in the turn of the century tablet.  Good battery life? Not.  Did I use One Note to take all my meeting notes?  I tried but if your conversation got side tracked then the tablet went into sleep mode ut caused me to have to log back in, only to have the conversation revert back to casual mode and then..well you get the point.  Handwriting recognition?  Turns out it was never that important.

Apple’s iPad changed the dynamic.  The big thing touch screen.  Unlike earlier attempts it was not really a business device, but a consumer device.  That was a big change from the previous attempts.  That was also a big reason Microsoft’s earlier attempts failed. Since the late nineties Microsoft had moved away from its consumer roots to the point that the belief was that cutting edge innovation occurred in the enterprise.  Enterprises viewed the tablet, which could easily be swizzled and turned into a laptop as just another hardware expense.  With the iPad all of a sudden it seemed like everyone had one.  Unlike the earlier tablets, which as far as I cold tell were for taking notes in a meeting, the iPad was fun.

Even though he had left Microsoft around the time of the release of the iPad I can only imagine it riled Bill Gates a little to see Steve Jobs get credit for creating the market when during my 18 years at Microsoft Bill Gates had always been personally involved in trying to sculpt the tablet market space with Microsoft software.  Only to discover it was not a stylus pen people wanted it was their finger. First Apple introduced the mouse and then the finger, the pointing finger, just to be clear to those who might be thinking of another finger.  I can see Bill would be super excited that Microsoft could come back with what is perceived in his eyes to be a better product and a revolutionary keyboard.

The issue of hardware will also be interesting.  Initial reviews of eth device is Microsoft has done a good job engineering a very cool device.  The key test of how good will be when they hit the market.  When consumers can start banging away at the device in day-to-day use.  My experience with any device I have ever had is it is not the first few months that count, but how is it performing after four to six months.  My first Toshiba tablet was cool the first month but after some time together we began to loathe one another.  My iPad 2 after over a year is still running very well and my kids and wife have used it a lot.  It has been well-tested.

My one word of caution is Bill’s track record of knowing and understanding what users want has not been good of late.  Bill is really good at seeing the bigger picture of what technology can provide the industry, but when it came to the details of how to make and manufacture  those game changing technologies, Steve Jobs was king.  This was evident when he was reviewing Microsoft tablet designs, such as the Courier, but seemed fixated on the email client for the device as opposed to what was the optimal; user experience both from functionality and style.  Unlike Steve Jobs who had his jeans and black turtle neck, Bill never has had a sense of style.

Which brings us back to the Surface Tablet.  The device looks cool, it’s in multiple colors, it leverages the new metro interface, it has a magnetic keyboard to flip and attach to the device.  It may even be better than the iPad.  However that is not enough.  As far as I can tell from what I have read this is a cool device, but it is not break through technology.  It will not reshape  the tablet industry and it is still dependent on getting developers to focus on Windows 8 devices and stopping the developer momentum that Apple and Google have created.  We still do not have a ship[ date, but speculation is that it is coming this fall.  More importantly we do not have a price, which is one of those little things that can make or break the product.  In my view it needs to be below the iPad and slightly above the Kindle.  It would be interesting if Microsoft leverage all it’s cash and came out really aggressive in the market place with a $99 tablet, but I do not see that happening.  That would appear desperate.

Finally I think for Bill Gates, even though he is not involved in day to day Microsoft operations, it would be a validation of his vision for a Microsoft leading tablet.  After all he had dreamed of this for decades only to watch Apple walk away with the market.  Even worse Google has been very successful.   All the while the industries leading software company has stood on the sidelines biding its time, waiting for its chance.  It is now or never for Microsoft in the tablet space.

Good Night and Good Luck

Hans Henrik Hoffmann July 20, 2012

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The Stack Ranked People of Microsoft

Recently Vanity Fair writer Ken Eichenwald, wrote a fairly scathing article about the Microsoft bureaucracy and the current review system.  It discussed the Microsoft failures through the course of the Steve Ballmer led regime.  It’s a fairly decent article however I think somethings simplify the reasons for the problems Microsoft has had post – Bill Gates.  The article makes some good observations but is fairly short in retrospect and I think misses some key points.  I wrote a little about this last October in my blog post “The Walking Dead” . It’s been nearly three years since my departure from Microsoft, but since I live near Redmond and still have friends there I hear plenty about the mood and spirits of people come review time.  I will agree with Vanity Fair that the system is pretty hurtful to the company.  It was a long time coming so let’s get my take on this controversial system.

Mr Eichenwald was also on CBS Morning with Charlie Rose and company discussing his column.  One thing he got right and definitely had done his homework was where did this all begin?  It really began following the DOJ trial when Steve Balmer took over the reigns as CEO of the company.  AT the time Microsoft was struggling with growth as it had exceeded 20,000 employees and was seeing the first signs of bureaucracy creep into the corporate culture.  Steve had met and gotten to know GE CEO Jack Welch and got enamored with how Jack managed GE, a very large company.  The GE mindset was the bottom ten percent of employee performers would be better served by being let go than hanging on and collecting a paycheck at GE.  Even then though I thought a lot of the GE principles though nice would not seem relevant to a technology company.  The GE model was basically manage a portfolio of separate companies.  Bill Gates vision of integrated innovation went against that model as that requires cross organizational collaboration.  In my honest opinion it is very difficult to take models that were successful in one industry and try to apply them in another.  In technology where things move at an electric pace the result has been to make Microsoft into a very slow-moving company, which has been partly responsible for it being late to market time and time again.

The second thing is though Steve was looking at GE’s model over a decade ago the idea of stack ranking actually is fairly new.  Though it was there when I was let go, the hard lined 1-5 system of ranking employees was not implemented until after I was gone in early 2010. Prior to that there was a system of “exceeded expectations”, “met expectations” and “under performed”. However I never heard of any type of mandate where you must give x percent a high mark and x percent a low mark.  The current system essentially tells every group that there will be winner and losers.  In talking with many people at Microsoft, you almost do not want to work for a high performing group.  For example a group like XBox may seem cool, but since they are on a role, you could do outstanding work and exceed all your metrics, but if you are still less than your co-workers  (or at least perceived to be by your manager), you could get a review score of 5.  This means as HR begins to analyze who needs to be let go on the next round of layoffs (150 were laid off this past week at Microsoft), you already have one foot out the door.  No severance package either, why should you get one?  You area poor performer, your review says so.

This led to my next point which is Microsoft moral.  Given all the recent Windows 8, tablet, smartphone, etc..moral should be sky-high.  However it is not.  Part is unrelated to the review system.  The fact is Microsoft is no longer a young company and with age comes the trial and responsibilities of life.  Marriages, children, divorce, death, financial ups and downs, in short a lot of pressure.  That being said the work environment is no safe haven from those outside responsibilities.  You could probably argue it is only making things worse.  My wife is angry at me,my boss is putting pressure on me to out perform, and my co-worker who I like is also my competitor to keep my job.    No wonder people are not happy.

Finally the question is why? As stated earlier the GE (Jack Welch) mindset was the bottom 10% need to go.  For the companies benefit and for the benefit for the employee. An understandable concept, but I think a bit flawed.   A lot of people who I witnessed get let go were loyal and fanatical supporters of Microsoft products and Microsoft the company.  However that loyalty was not of value to the company.  No longer could you come to work and do the best you can and be happy.  You needed to aspire to go higher otherwise your worth was just not that great.  Plus every manager needs to give a 4 or 5 so after a while if you are in the same role your turn comes up.   I view some of these people as the core of what made Microsoft a great place to work. Their enthusiasm put a smile on people’s face.  Maybe I am a simpleton in my views, but smiles are better than placing fear in people’s hearts.

In the long run I don’t think the kind of culture being created at Microsoft is healthy nor can it succeed.  It will reduce the talent pool to a very specific type of individual who has the political chops to survive.  To those who are driven more by the process of success as an individual rather than as a company (former Sr Exec Bob Muglia mentioned this in his farewell email).  In many ways operating more like a military organization (which in many industries can be a successful model). But the technology world is driven by dedication and inspiration.  To not accept today, but to create tomorrow.  To look not towards the next year but to envision life in the next decade.  In many ways what is done in technology originates in man kinds dreams for the future and as the future evolves those dreams begin to take shape.  Science than leads us to a new frontier.  As George Bernard Shaw once said, “Some people see things as they are and ask why?  I dream of things that never were and ask, why not?”.  Microsoft needs to loosen up a bit and begin to envision the dream of the future, otherwise it will be a relic of the past.  In order to do that  people need to feel valued and liked. Today when I visit campus everyone seems to be looking over their shoulder, in some sort of paranoid state of mind. People are your most valued asset.  Treat them well.  You cannot innovate and lead without them.

Good Night and Good Luck

Hans Henrik Hoffmann July 14, 2012

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Google I/O and the giveaways

Good old-fashioned developer conferences used to be lots of fun. It was a week to learn about the next wave of cool stuff and party. With the recent economic downturn and many companies trying to reduce carbon emissions, traveling to fun destinations has almost become a thing of yesteryear.    At the recent Google I/O conference, the premier event for Google developers it seemed it was like turn back the clock to the old days. One of the keys to a great developer conference was (and still is) coming away with a lot of cool gifts.  Not just any gift but “be the first kid on the block  to have gift”.  We all remember those rare moments when we were really cool for a week until everyone else got the cool new toy or sneakers.  Now did Google I/O provide the same cool stuff that the gift bag at the Academy Awards does? Not quite, but underneath the covers I have to admit the loot these developers got was not bad.

Here is a list of what developers who attended Google I/O received.  It is not a bad list of things.  As I mentioned in my Apple article from a couple of weeks ago, a key is providing cool new hardware..  That is exactly what developers who attended Google I/O  received.

The goods Retail price
Nexus 7 tablet $199
Nexus Q $299
Galaxy Nexus phone $349
Chromebox $329
Total $1,176

Is the cost significant?  It was estimated that Google spend $5.5 million on gadgets.  In my view it is simply the cost of doing business.  At a time when every company seems intent on cutting costs, Google invested.  And I think this is a small sum for a company with $50 billion in the bank.  Not to mention the mobile market (smartphones and tablets) is about as intense as it gets in the industry right now.  You need developers for your platform to be successful.  Giving developers toys to thrash is just smart business, though it seems more and more tech companies are becoming reluctant to do it.  This will provide Google valuable feedback regarding both its hardware and software.  Because this is a very technical community some feedback may offer technical solutions.  It will give Google some of that “outside the box” thinking from a group of people nit at Google HQ, but literally people “outside of the box”.  More importantly it makes developers loyal to your platform and at the end of the day, these are the people who will create cool applications that make your platform viable moving into the future.

I know cutting costs is big to most companies these days but I will be the first to say sometimes I think it goes too far and misses key business points.  I am specifically targeting companies using “virtual” conferences in place of in person conferences.  My old company Microsoft has gone down this path with their Professional Developers Conference (PDC).  The actual event is at the Redmond campus, but most can log in and view from their home or work desk.  The spin to shareholders is they are saving the company money.  In my view this has gone far enough.  You can continue to increase margins, but when you are talking about $40 billion or $50 billion in the bank and growing with a small return in dividends, I am lost as to what is the gain.  Not the stock price.  I pick on Microsoft but it seems an industry wide trend.  Conferences are just not as big as they used to be.

Another problem with virtual environments is it may say you have 100,000 people viewing but in reality you actually don’t know.  They may be taking a lunch break.  A co-worker may have stopped by to discuss a customer issue or the vacation they just got back from.  I may not be keeping pace with the new world of Facebook (though I am active on FB) and the creation of virtual friendships.  But in my view there is still something to be said for getting together and meeting face to face.  Being in a crowd and feeling  the energy grow and fill you up inside.  As that enthusiasm wells up inside it causes people to act.  At the end of the day technology developers are about getting developer to act.  To create the next wave of great innovation.  My desk is my desk, the energy does not change a lot day-to-day, nor do the people I hear and see.

It’s human nature to like to be wined and dined.  The old-fashioned developers conference was like that.  It was there to make developers feel special, to feel important.  When I see an event like Google I/O where developers were treated like royalty it makes me think that there is something to be said for the old ways.  Sam Walton the founder of Wal-Mart used to sat about economic downturns “There are those who react to market climates and there are those who do nothing, the latter always gain market share”.  There is frankly no reason for companies with billions in the bank to react and cut like they do when a gigantic piece of the market is open to conquest and lays before them.  It’s simple advice but no one seemed to follow it.  Google seems to be “gambling”..not really.  They, probably not intentionally, are not being shy and investing in the market so they can grab market share.  They are seeing what is before them and realizing the best way to get there is to try to get as many developers on board as possible.  I for one would have loved to be invited (not that I can code a single line of C#, Jave or SmallTalk) and get my hands on a Nexus Tablet.

Good Night and Good Luck

Hans Henrik Hoffmann July 3, 2012

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