June 29th 2007 – the day developers left Microsoft

There was a time when Microsoft owned the developer community. It could almost say or do anything it wanted, the developers would always follow. However loyalty in business relationships is fragile, it can span time but lacks the core depth of personal relationships. It is governed by the most shallow and transparent of currency the almighty dollar.  During my career the developer has always been at the forefront of jobs that I have had.  Developers were the key to Microsoft’s success and did more than anybody to drive the success of the Windows empire.  Developers were Microsoft royalty.  If you wanted to get lots of free swag attend a Microsoft developers conference.  Laptop bags, T-Shirts, Polo’s, Pens etc..Parties were key as they went late into the evening with lots of food and drink.  Developers were the royalty of Microsoft, treated better than anyone else.

When the world changed it happened quickly.  That change happened on June 29, 2007 when Apple launched the much anticipated iPhone.  It was a breakthrough event in terms of the user experience.  Catapulting what we had known of the mobile experience into a new dimension.  It happened on so many different levels, from touch screen to browsing the web.  But most importantly it fostered a new eco-system of mobile app developers.  Within months Objective C went from being a forgotten development language to a top 5 language.  All of a sudden Apple was the pace to be.  The iPod had been successful, but it was the iPhone that created the new Apple developer mantra.

Mobility would breed new competition.  The biggest threat to all being Google with its Android platform.  They understood that they would need developers and that developers were attracted to open source.  It was interesting that to head up this effort they picked a Microsoft guy, Vic Gudotra.  I had seen Vic speak several times and the word, “showman” would define his speaking style.  He was an acquired taste, a little over the top for some.  Seeing him on TV at an Android Developers Conference was interesting.  As he walked around the Partner booths (just like Microsoft in the old days) he talked each partner up, saying that Android’s success depended upon them.  Every thing he said was not something new he had invented, it was borrowed from a Microsoft past, except now Windows was no longer the platform being promoted.

Ballmer pleaded at the Microsoft Worldwide Partner Conference in 2012, to stick with the company.  We have not let you down in the past and we have a bright future.  This was leading up to the Windows 8 launch and having applications at launch was critical.  It was now a decades old Microsoft formula.  Not sure why he needed to beg and pander to his audience.   But I can tell when it happened.  When it became necessary.  The technology is driven by change and sometimes changes generates tidal waves, mass hysteria, a sense of I need to go there if I do not want to be swept under by the massive crash of thunderous waves.  This was the case when Steve Jobs had his moment where he eclipsed the sun.  It seemed just a matter of moments where developers left Windows and flooded to iOS.  Job postings all of a sudden begged for developers who could write mobile iOS applications.  When it comes to money loyalty is a fickle thing.

When you look at the Windows Phone and Surface the designs have come a long way from where they started, as has the OS.  But unlike Microsoft’s origins getting developers to write applications to the Microsoft platform has become much more difficult.  Since the launch of the Apple iPhone and the subsequent success of Android Microsoft has struggled to recreate the sense of nearly spiritual community it had before.  Developer’s have options, but more importantly, as has been said, they have options that can make them money.  The iPhone has created so many opportunities for developers that they dare not stop and go back to Windows development

It does not seem that long ago Microsoft owned the developer community.  That they could whisper anything and a developer movement would naturally coalesce around it  in an organic manner.   Every launch of the new Windows operating system began and was defined by the Microsoft developer community.  In the enterprise Microsoft still has a lot of pull with developers however in the consumer space it is a struggle for Microsoft to garner the attention of developers to write to the Windows OS.  Consumers, unlike enterprises, do not have deep roots with legacy systems.  They are governed by emotion.  Their gut.  Visual stimulation.  Things marketers talk about but only after they have already occurred.

The industry is driven by momentum, by big swings in the technological landscape.  When these sea changes happen it is best to be in front and on-board with the change otherwise you will be left behind in its wake.  Ballmer knew this but he just did not have the vision to see the road ahead.  Now what is left is a company trying to get developers to listen, when in the past they never had to do that.  Apple to its credit saw the move to mobility and enlarged the opportunity.  Once a company or companies develop momentum it is very hard to catch up. As for every one application developed on your platform, the competition gets ten.  To be a leader on the industry you must have developers, when they start migrating it puts your future into question.  For Microsoft that happened one summer day over six years ago.

Good Night and Good Luck

Hans Henrik Hoffmann December 31, 2013

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Google – threats and opportunities 2014

One of the more popular blogs that I have written was about Google.  It was written back in March of 2012 and because this industry moves so fast it seems like I am overdue for an update on where I see Google’s opportunities and threats today.  I have actually written a couple of blog posts about Google (Threats and Opportunities and The Google Decade) and they are already starting to look a little dated.  In the world or technology that is not surprising, we are moving from decades to half decades. I thought it a good time to update what I see at one of the world’s leading technology companies.  In the two years since I wrote my initial blog, Google has continued to create industry excitement with its work in wearable technology, Google Glass and in robotics, with its efforts around creating a robotic vehicle.   It is rumored to be creating its own watch to potentially compete with the iWatch.  I say potentially because nothing has been released yet by any major player.  When we review what I wrote and where we are there are  a few updates.  A few new opportunities and new threats.

There is the obvious competitor and then the not s0 obvious co-opetition.  The obvious is Apple.  With the immensely popular iPhone it is the most direct competitor to Google’s Android platform and when we talk about consumers this is direct competition as we have come to know and love.  However this states the obvious, probably more relevant is the threat from its largest partner: Samsung.  When Google made its Android platform open-source and easy to license I imagine it saw a field similar to what Microsoft had created with its OEM platform, a huge ecosystem of partners competing with one another.  However an interesting thing happened along the way, Samsung took more than its fair share leaving the competition in the dust.  Unlike Microsoft’s ecosystems, in Google’s ecosystem one company has come to dominate.  Samsung will use it’s position as leverage against Google, that is for certain, otherwise they would not be a very wise in their future outlook.  How Google manages this relationship will be a big part of its future failure or success..

When we talk about consumers we quickly can get in the Social Media aspects of consumers lives.  Google’s foray into this space has not been an instant media darling as would have been hoped.  Google Plus launched and got some initial traction but has certainly seemed tp slow down to the point it is rarely even mentioned.  The two big threats to Google’s business are Facebook and Twitter.  Around a year ago, just after Facebook’s IPO, Mark Zuckerberg commented that Facebook was making a billion dollars in their search business, without even trying. Since that time Facebook has focused heavily on generating revenue from it’s mobile business.   Twitter is the pulse of the internet.  If you want to know what is happening right now in the world the best place to go is Twitter.  More than anything Twitter had become digital democracy.  With each revolution the main place to get news is on Twitter.  Google makes money on eyeballs on the internet, when another company comes along that takes those eyeballs they threaten revenues, which make Twiiter and Facebook two of Google’s prime competitors.

Robotics is an interesting area.  Google’s interest in Robotic vehicles is not a “humanitarian” act.  If you think about it the first things you do when you get in a robotic vehicle  is give it directions.  Let’s see, who does this better than anybody else?  Why of course it would be Google Maps, which is nicely tied in with Google search, and there you have it.  Google could make money every time you are in your car.  To me, though, Robotics is not just what we have come to now and love in film and books, it’s the new mobile future.  Despite the freedom we have with out tablets and smartphones, we are still in some shape or form physically clinging to our devices.  Robotics is the promise of removing the umbilical cord and providing us all we have today with out the need to be tied to a device. That vision will play out as hybrid of robotics and the cloud.  Google will play in both if it chooses.  That opportunity will dwarf everything we know.

In addition to robotic vehicles Google has what is known as Project Moonshot.  These are essentially where Google comes up with big ideas and then tries to figure out what it can do and if there is a future for Google in what ever Project Moonshot comes up with.  Robotic Vehicles and Google Glass are two such things that have come our of this en-devour.  Now Andy Rubin, of Android fame, has his own Project Moonshot underway focused on simply Robots.  I think what is best about Google and where it shines is with the efforts it places in Project Moonshot.  They come up with futuristic and really big idea and garner attention and admiration for what they do.  Having spent time at Microsoft and seen the billions put into research and development, it seems like the return has been very little, and I think a large part of it has been the inability to see new markets and to try to fund project that will fill the void.  The opportunity that Google envisions and creates in Project Moonshot can potentially yield huge financial upside for Google, while more importantly keeping Google a relevant technology company.

The browser war’s continue to tilt in Google’s favor as their share seems to have only increased since I wrote my original blog.  Google’s business depends on the internet.  The more eyeballs on the internet the more revenue for Google.  It only made sense for Google to invest heavily in the market that provides the windows to the internet.  The latest market share stats show a slow and fairly consistent trend upwards.  Google has launched Chrome based netbooks to challenge Microsoft’s traditional dominance in the PC Manufacturing space, should this take  off it would have a significant impact on the bottom line of Google and of Microsoft.  There are certainly other competitors in this space, such as Firefox and Apple’s Safari.  Firefox shows the limitations of open source as nothing speaks to pressure like an earnings report.  Something the folks at Mozilla seem to be missing, thus relying on the communities passion of the community, who can leave whenever they want.  Safari is too tied to Apple’s product line to be the “biggest” threat.  It will be relevant but in the short term I do not see it being the dominant player.

A lot of Google’s success can be tied to their indirect model of using cash revenues from search to fund other businesses at Google. One such beast is Google Docs.  It is still far behind the 800lb gorilla, Microsoft Office, but unlike previous competitors Google Docs is funded.  It is making headway with younger generations who do not need all that Microsoft Office has to offer.  My kids use GoogleDocs at school, in fact I rarely if ever see or hear about Microsoft software.  It may not hurt Microsoft today but if could tomorrow and considering the over ten billion in revenues it means to Microsoft I am sure Google has thought, “what if we get 20% of that market”?.  As usual Google is able to tie in Search and Chrome as part of the overall experience, thus increasing revenues and talking browser market share.  Cloud based productivity is here to stay and growing quickly and Google Docs will be a big part of that market.

The natural competitor to Google’s traditional search is Microsoft’s Bing search engine.  Despite its enormous financial resources and talent, Microsoft’s Bing has failed to become a serious threat to Google’s search business.  The fear Google should have here is not that Bing within a year or two will take serious market share from Google. A bigger concern is that they will go away all together.  Seems odd, but with the uncertainty at Microsoft these days around who the next CEO will be, some talk has begun that whomever takes over will either sell or kill off the business.  If that were to happen the competition for Google would shrink significantly.  We would have Yahoo, Baidu and a few other foreign competitors, but it would raise anti-trust fears and may make Google “lazy”, not having a competitor to wake up and focus on each working day.  Ironically you see rumblings by Microsoft about the anti-trust.  It seems human nature to hate the government until you need them.

Information everywhere is a powerful driver of revenue and in the end that means we are always connected.  Google drives its revenue from the internet, and despite its already enormous size it continues to grow, foster new innovations and by default new opportunities.  Despite the recent hype around the “cloud”, we have always thought of the internet as being  in some virtual non-physical location.  It is digital, not real.  Google has been at the forefront.  But looking to the future that ethereal environment is about to take on a more physical appearance as that information stored in the cloud will be relayed to communicate with a whole host smart and robotic devices.  There are plenty of great opportunities, not just for Google but the industry to capitalize on.  Perhaps it will be one or more of the existing players and likely their will be several new entries into the market who will become big fast.  The only thing for sure right now at Google is the future has never looked brighter or more ominous.

Good Night and Good Luck

Hans Henrik Hoffmann December 6, 2013

Tidal Waves create Innovation

In my last blog I talked about innovation. Which got me thinking again. I apologize that I again will reference Microsoft, but as it is my heritage and a relevant point of reference I shall go there again.  When we look at the big misses at Microsoft over the last decade it’s easy to say they got clocked by Apple and the iPhone. That they missed on the tablet.  But as I alluded to innovation is not often in the product unless you are there first.  Ballmer said his biggest regret was Vista. But in my humble opinion the bigger miss was not understanding a technology movement that was under way and envisioning how big the possibilities could be.   More than anything it was the inability to truly understand mobility that killed Microsoft,. In short they never did think big enough.

In any big shift there is a movement that occurs and then there are the innovators who take advantage of the movement.  In the early phases of the PC industry, the movement was the idea of a personal computer.  There where may companies who innovated based on this movement.  Intel created the microprocessor that powered the PC.  Microsoft jumped on the operating system with DOS and then Windows.  More than any company Microsoft understood the value of the software that created the experience for the PC.  Give Intuit credit for changing how we did our taxes. There where hardware manufacturers that popped up all over the place, like Gateway, Dell and Compaq.  There was a lot going on in the space and the competition was brutal.  It created a lot of wealth and a very affluent younger generation, who profited on this tidal wave.

These grand movements would continue with the birth (or maybe re-birth) of the internet.  As companies moved in force to get online and establish a presence in a global virtual real estate play with the creation of a website.  This again would drive innovators to start creating new opportunities along with new business models.  A second movement that coincided with the internet was the rise of mobility.  More accurately mobility was about freedom.  The ability to have access to our technology but not be connected to a wall.  Underlying all this was digital convergence as everything we had known from our music tour television and film, books, catalogs etc….  was being digitized.  I could access all this content from my PC, laptop or smartphone.  A new are is the cloud, which  in my opinion is not a new tidal wave, but more innovation built on the back of the internet.  All in all, these movements have fundamentally changed how we all lived and worked.

The list of examples of companies who rode these grand movements to success is a list of small companies who have become tech giants, with the exception of Apple, which made a grand comeback.  In the internet Google, Facebook, Twitter, Amazon, Netflix etc.. are but a few examples of companies that leveraged this new medium.  In many instance mobility created an expanded market and new opportunities.  In the case of Twitter it helped them become a global beacon of democracy and human rights.  Mobility projected Google and Apple to new heights as they drove new devices to new sales models.  For Google they used Android (and iOS) to extend the reach of their search engine.  There were companies that burned brightly only to fade, i.e. RIM and Nokia

If I look around the industry and try to predict the next industry movement, my eyes and ears always gaze to robotics.  There is a lot of work being done today that is far more advanced than anything we have seen before and in some cases hearkens to our favorite science fiction novels, film and television series.  If you take Google’s foray into robotic vehicles, it is visionary while making sense.  If you have a robotic car and you need to go somewhere, what is the first thing you will need to do? You will need to give it directions, “Bing” (not intended use of Bing but funny in any case), who makes great mapping technology?  More importantly it takes the most dangerous piece of driving out the equation, humans.  This is but one example of something that will come to pass.  Prosthetic’s will move from plastics and metals to having intelligence and a more human like appearance.  Anyone remember Steve Austin, aka the Six Million Dollar Man? I think robotics will combine all three of the previous tidal waves while creating a new one that removes humans from a number of traditional equations.  These movements do not happen without consequences.  It will be interesting as robotics evolves to see how it will impact the movement of labor.  If a robot is picking our apples will we have need of cheap labor?  Robotics will take off and have a bigger impact than mobility or the internet, as it is physical in nature, not virtual.

The excitement and disaster of these “big” movements is they are like tidal waves.  If you catch the wave early on you can ride the wave to extreme success.  However if you are late the wave you risk catching it as it crests and comes thundering down on you.  For the start-up these sometimes seem obvious as many gamble on the next big thing. Youth Is rampant in this area and like so many young generations they are more idealistic and dream of a bigger and brighter world, ignorant of the consequences, but driven none the less. For the incumbents that challenge is often much more daunting.  They may have been part of an earlier movement that still drives big revenues but makes them blind to the future, until they find themselves on the crest of the wave, looking down in horror at what has befallen them.

These changes are what makes the world today so exciting as when these “tidal waves” occur it has a material and social impact across the globe.  If you think about how internet has brought us all closer together and made communications across boards easier than they ever have been through out the history of mankind.  When these changes occur, for companies in the tech space and across other industries it is important to bet early and often, if one is to survive.  They come very fast and with great velocity, that those who do not anticipate quickly, they become a legacy to history, they become yesterday’s news.

Good Night and Good Luck

Hans Henrik Hoffmann October 24, 2013

Bing-ality

Microsoft Bing since its launch has been considered the primary competitor to the behemoth known as Google search. It is a valiant effort in a very lucrative market space. However despite the immense opportunity,the term success has so far eluded Microsoft Bing.  When you look at Search Engine market share the numbers continue to improve for Bing as it hit over 17% in April, however the revenues have so far failed to materialize.  In Q2 of Fy13 for Microsoft’s Online Services Division lost money, $283 million.  In Q1 Google generated over $11 billion in revenue.  Granted Microsoft’s OSD is not just Bing, but all the other online services such as MSN and Outlook Mail.  The flip side of course is we really don’t know how Bing as a stand alone business is doing, despite the market share increases.

The history of Bing some may say is one of failed opportunity.  I am not so sure it is so much that as it is understanding online reality.  Bill Gates and Steve Ballmer often have said they blew it on search and I have often said they would never have figured it out.  Even if they had I am not so sure they would have been willing to take the financial risk to challenge Google at the time (remember we are going back to the 2002/2003 time frame) .  In his short stint at Microsoft Ray Ozzie provided the best analysis of Google.  He stated that they were using their immense revenues to fund software development projects that would compete against Microsoft. It was an indirect model, where ad revenues funded software engineering.  As has been shown Google has a lot of revenue to fund these projects.  It was difficult for Microsoft to grasp as they for so long have lived off of volume license revenues.

In the past decade it took a long time for Bing to come to the forefront.  First Microsoft toyed around with  Live search.  It was not a well named product.  Certainly not as fun as saying, “Google”.  But globally it did ok and when you looked at the top 100 websites, Live did appear in the top twenty.  It just did not have an ad word business model set up that could compete with what Google was doing.  Microsoft was slow in understanding the competitive threat that Google posed, if not holistically, at least opportunistically.  My view is Microsoft viewed it as another software market to conquer rather than the threat it was to existing businesses, namely Microsoft Office and Microsoft Windows.   This is just another market space in which we are entitled to own.

As things progressed so did Microsoft’s desperation ending in an audacious bid to acquire its competitor Yahoo.  Luckily for Microsoft and many grad schools across America this would end in the ego of Yahoo founder Jerry Yang as he made every attempt to kill  the deal. In the end this may have worked out for the benefit of Microsoft as they entered onto a partnership rather than spending $40 billion on an acquisition that may have been doomed to fail. While Jerry Yang seemingly failed business 101 which is to increase shareholder value, not decrease it.  He is now a case study for business graduate school history.

What has happened as these events have unfolded  is that Google has systematically found other business opportunities to augment and promote its search business and increase revenues.  Namely using the mobile phenomena to launch Android.  This has led to great headway in the mobile phone business and the tablet.  In 2013 it is projected that there will be 800 million Android devices sold.  None of these devices will have Bing as the default search engine.  In addition there will be 300 million iOS devices sold in 2013, again none will have Bung as the default search engine.  I only wrote this to share with Steve  as he seems to be unaware of this fact, but hey, he is a numbers guy.

So what does Bing do?  For starters that Apple iOS number is key.  One of Steve Jobs last talks to the Apple faithful at their corporate headquarters was about the evils of its key competitor Google.  There is no question that there is no love lost between the two.  Apple has tried to compete with Google head to head.  The failed Apple Maps comes to mind.  In my opinion a rare case of me saying, “Whose stupid idea at Apple was this?”  Google owns that space and barring some catastrophe, I do not see them losing in that space.  So with all that hate and failure what if Bing was the default search engine for Apple iOS?  Instantly Bing would have access to 300 million users.  Granted this would be a bizarre twist of fate, but Microsoft is not in a position of power in this space and Apple would like nothing better than to hurt Google.  If Bing can meet Apple’s high quality standards they could have a very compelling play in this space and be considered attractive to Apple.

There is also a bigger question of “if Not Microsoft than who?”.  Competition  that is not challenged is a threat to the greater benefit of society.  They can dictate terms, which is never a good thing.  When we look at companies that are able to challenge Google there are few with the cash reserves to do it.  One of the few would be Microsoft.  And frankly they owe it to us all.  Fundamentally competition is a good thing and maybe Bing is competing, it’s just that Google is pushing their game to a higher place.  If that is true than Bing needs to set a higher bar, not just compete at parity.  Faster more accurate search is nice, but we are reaching a point where for the end-user it is becoming increasingly difficult. to distinguish in milliseconds.

Another factor is much of Bing’s success is tied to other products like Windows 8, Surface and Windows Phone.  To successfully get people to switch alla Coke versus Pepsi, is not so easy as there is a lot more tied to it than just switching a can. The effort Microsoft must put in will take years, which in technology is worlds away.    So far it has been slow in coming and market share has increased at a snail’s pace.  This may drain Microsoft’s cash reserves but the reward is high Once yo have been great there is always a thirst to be great again and I think that more than anything drives Microsoft.  To get there search will be a key cog in the engine.  Information rules the world and if Bing is not successful Google very well could rule that world.  Bing is in a tough place but it is a fight worth fighting.

Good Night and Good Luck

Hans Henrik Hoffmann July 10, 2013

Microsoft’s ultimate threat – Google

When I first joined Microsoft in 1991 we were a company rapidly ascending to the top of the mountain.  We were a company trying to fulfill our destiny, “A PC on every desktop and in every home”.  To climb that mountain required laser focus.  To have people day in and day out committed to accomplishing that goal.  To do this required Microsoft to build a  great set of products.  It also required focus on what was happening  in the industry.  We needed to know at all times what our competition was doing and how it was impacting the market. The potential threat to the Microsoft bottom line.  This was driven into every employee  from the top, from the top man, the founder and chairman, Bill Gates.  Time and time again he would hammer home his fear that a company that was younger and hungrier would come along and clean Microsoft’s clock.  That Microsoft would fall behind in the game.  Every employee understood that and worked hard to prevent it.  But time and growth can be cruel lessons of missed opportunities and so what Bill feared has happened.  It did not happen overnight, but slowly and surely it happened.  A silicon valley sweet heart, named Google came along and slowly they have increasingly encroached on everything Microsoft thought was their birthright.

When Novell CEO Eric Schmidt announced he was leaving his post in Provo, UT.  It was in many ways welcomed.  Eric was well known from his days at Sun Microsystems.  Eric was highly regarded, it was actually more  surprising he took the helm at Novell to begin with as they were rapidly sinking at the time he took over. During a meeting with Bill Gates, while he was commenting on Novell, he felt they were in very capable hands with Eric at the helm.  Google was known, but nowhere near where it has ended up.    In tech circles it was viewed as a interesting and exciting move.  Schmidt was a talented guy who was leaving a dying company to go somewhere where their was a future.  It was good to see him land somewhere worthy of his talents.  He would also serve as a capable mentor to Google founders, Larry Page and Sergey Brin. There were a lot of search engine players in those days (Yahoo, Alta Vista, Lycos etc..).

Google would rise as they changed the computing paradigm with the web search engine.  It was this new business revenue model Ray Ozzie would reference in his landmark memo while he was at Microsoft.  Google was using their incredible ad revenues from search to fuel software development in other areas, among them Google Docs.  This should have served as a great warning to Microsoft executives, but instead they seemed to just read the search revenue piece and seemed to miss what else was going on and focused on the obvious.  They focused on search, not heeding Ray’s words about the funding “other stuff”.  Those being Google Maps, Android, Google Docs, Google Cloud, Robotics, Google Glass  etc..In the end what we  got was Bing.  Google has used search to be a disruptive technology company, one that changes the playing field and in doing so change the balance of power. To simply follow their lead is to risk certain death.

Microsoft has released with some success their cloud based version of Microsoft Office with Office 365 .  In the meantime Google Docs has slowly plodded along improving its feature sets and capturing the low hanging fruit. start ups who do not want to pay a few for Microsoft Office.  They are also starting to make headway into larger enterprise accounts.  With a simple flat fee structure of $50 per desktop, enterprises are talking notice and either considering Google Docs or going to Google Docs.  Companies like Office Depot, Roche and Dillards have already signed on.  Keep in mind if Google takes 10% market share that is over $1 billion to Microsoft bottom line that they lose.  It is no wonder Kevin Turner issued a ultimatum of no losing to Google Docs.  It will be interesting to see how that goes.  Corporate CIO’s would be foolish not to consider Google Docs.  It is the first true contender to Microsoft with a sales force and money to back product development.  Worst case for a CIO is they knock the price of MS Office down.  I cannot think of an instance these days where a CIO is not being asked to do more with less.

The Chrome book has been an interesting development.  It really takes us back to the early days of the internet and what Netscape founder Marc Andreessen said about Windows, “Netscape will soon reduce Windows to a poorly debugged set of device drivers”.  The problem was at the time was not the vision necessarily, but launching an attack against a competitor who had billions when Netscape only had millions.  A second point was ubiquitous bandwidth was not available yet.  Most people at the time did not have DSL services let alone wi-fi in their house.    It was still  28.8kb modem.  Fast forward to today and a couple of developments have changed that has created a new landscape.  The first is we are always connected.  It does not matter if we are in our favorite cafe, at home, at work or at the beach.  We can access the web, we can call our friends, text them, post what we are doing to Facebook, tell people what we are thinking via Twitter.  What device do we use?  Laptop? Tablet? Smartphone? Chromebook?  It is about price and convenience.  The second is Microsoft has decided to compete against its traditional OEM partners with the  launch of SurfaceRT and SurfacePro lines of hardware.  One thing Netscape struggled with in their day was access to Microsoft’s OEM channel.  Give these recent strategic decisions by Microsoft, Google will not find it as hard to gain access to this channel.  They will arrive in a much stronger negotiating position.

Android which is a huge success poses two problems: 1) The mobile OS 2) The developer.  On the first front projections are that in 2013 800 million devices will ship with Android.  How many will ship with Windows 8?  Microsoft will not catch this juggernaut anytime soon.  The mistakes made by Microsoft are many in mobility.  They got hit by Apple’s iPhone, were slow to react, watched as Google ran past them, and fundamentally did not understand what was happening in the market place.  Google in the meantime has been laser focused on building a Android ecosystem that rivals that of Apple.  They have more importantly focused on consumers mobile lifestyles,  To the point, as far as competition goes in the mobility space consumers and industry analysts do not think about Microsoft.  I sometimes wonder if my old friends in Redmond realize what an insult that last statement was.  There was a time everybody thought of Microsoft when competing in a market.  Now Microsoft is just trying to get noticed.  The biggest announcement over the past couple of years has been their exclusive partnership with Nokia, another fading star.  As Google Exec, Vic Gudotra said when this partnership was announced, “Two turkeys does not make an eagle”.  It kind of sums up Microsoft mobility.

On the developer front, Google is a huge hit with the dev community.  Google’s premier dev conference, Google I/O sold out in under an hour this year.  Last year it was twenty minutes.  As I wrote in last July’s blog post “Google I/O and the giveaways“, Google knows how to treat developers.  Like royalty.  They have the advantage of being an internet company who knows that the internet is the development platform.  That sounds obvious but it seems some are slow to learn. Microsoft is still intent on promoting and protecting its “Windows Paradise”.  That was the refrain used back in the day when Microsoft was competing against Netscape, but tat world no longer exists.  The numbers I have heard around applications written for Windows 8 for that launch are horrifying – less than 5000.  The events Microsoft holds for developer are designed to reduce costs and treat developers more like welfare recipients.  As noted Google treats developers with all the care and feeding they could possibly want and it is noticed in the community.

Then there is the area of taking risks.  Despite the billions of dollars spent by Microsoft on Research and Development, there seems little to show for it.  In a group that is funded to take risks it seems little are being taken.  Google seems to be doing nutty kinds of thing all over the place.  At South by Southwest they showed a prototype of the digital shoe.  Their Google Glass, though expensive seems to be getting lots of press.  In the bay area you can see Google’s experiments with robotic vehicles.  Google has ventured into the world of wi-fi attempting to connect cities via wi-fi service, in such cities as Kansas City.  Will any of these tie into Google’s revenue model?  As long as each has internet access you can bet that Google will figure out how to monetize.  A lot of Microsoft’s struggles in this area is cultural as it looks to protect today’s revenues while forfeiting the futures.  Steve Ballmer’s love of the Jack Welch GE model, though a legendary business lesson, does not play so well in the world of innovation.  It has become a quagmire, sort of Steve’s personally built Vietnam. Google at the same time despite their growing size, seem to have remained nimble and agile in how they go about their business.

Finally there is User Interface Design.  Yes the ever present UI – how we interact with the world of technology.  Google’s search engine has been applauded for the simplicity and elegance of its search interface.  For a long time it seemed Microsoft owned the ideas of interaction with the device.  But Microsoft became complacent and did not seem to update or change basic user functions.  With the launch of Windows 8 Microsoft finally killed the Windows 95 interface.  In the meantime we saw not only Google, but Apple and Facebook present us with much more elegant and friendly user interfaces.  Once you lose the advantage it has hard to catch up and in this case the defeat is generational.

Technology is in the end about survival.  To foresee the future and not just react to it, but shape and create the future.  The ability to stay relevant.  To push the boundaries of what is possible.  The easiest way to lose focus on what made you relevant.  Microsoft seemingly has tried to be everything to everyone over the past 15 years.  In the meantime those small start-ups who are young and crave success day in and day out have emerged.  Google seems to have the vision for what the future will be and their role that they will play in it.  Microsoft unfortunately treats Google as one of many competitors.  Google meantime has kept their eye on the prize…Microsoft billions in unchallenged revenue..Windows and Office.  Microsoft now finds itself in the precarious position of having to defend those empires.  More importantly since Ballmer has taken over the reigns from Bill Gates the desire to innovate has been lost and replaced with a culture of old school corporate politics. More concerned with maintaining existing empires rather than creating new ones.

Microsoft needs to refocus, starting by turning its sights to its most immediate threat: Google.  It needs Google more than it realizes.  It needs them to help focus the company.  To energize the companies employees, to rally them from product development to sales behind a common cause.  That was the way it was in the early days.  In those days the companies who lacked resolve faded quickly as Microsoft always looked 3-5 years out.  Companies like Lotus 123, WordPerfect, Borland, Novell etc..Microsoft was thinking ahead of the game visa vi the competition. But maybe I am asking too much of today’s Microsoft.  Maybe I am harping back to a day and a time that will never return again. Just maybe Microsoft is about to become another celebrated company that is more a part of history, rather than making history.

Good Night and Good Luck

Hans Henrik Hoffmann March 25, 2013

Technology History Mistakes and Opportunities

In 20 years in the technology sector I have seen a lot of both good and bad strategic decisions. At Microsoft I was with a company that was on the good side and then was on the bad side. I saw many competitors make what were poor strategic decisions. Decisions that in the end would either sink them or put them in a place of constant struggle for success or viability.  I thought it would be good to look back on some of my favorite “stupid” decisions made by companies in the industry.

Lets head to Utah for bad decision number one: WordPerfect.  This was a company that when the personal computer first came onto the scene quickly became the number one player in Word Processing.  Competing against other notable companies like Wordstar, Wang, and Microsoft Word.  If one thing killed them off quickly it can be summed up in the acronym GUI (Graphical User Interface).  When Apple launched the Mac, Microsoft used it as an opportunity to learn about creating software for the GUI.  WordPerfect on the other hand dipped their toes in the water and when they did not see the sales they wanted on the Mac, killed it.  As Microsoft became more enamored with something called Windows, WordPerfect dug their heels in and supported DOS, where they were a leader.  The problem being Microsoft owned both DOS and Windows and had more or less stated Windows was the future.  Towards the end the only thing WordPerfect had going for it was free technical support.  Sounds nice from a  customer perspective, but if you looked at the costs, not sustainable.  WordPerfect over time just seemed to disappear.

Apple actually makes the list.  During the period where there was no Steve Jobs.  Early learning here is Steve Jobs killed  himself off when he hired Pepsi executive, John Sculley.  Steve’s pitch to John was, “Do you want to change the world or sell sugared water”.  As Steve learned people who sell sugared water don’t change the world.  However they are master politicians which led to Steve’s ouster.  Apple would go through several CEO’s  before Steve returned.  Some like, Micheal Spindler would start to pursue a OEM model where they license the software, like Microsoft.  A nice form of flattery, but not in the Apple DNA.  Steve would come back, kill this plan, and we know the rest.

Next up we return to Utah and Novell Netware.  When the computer network first became popular, Novell was the dominant player for our file and print services.  However one stupid decision killed the company.  Why just a file and print server and not a app server to?  I remember I was in a meeting with Bill Gates and he went off about why Novell did not do this.  He was stunned that they did not have the foresight to see what was coming in the industry. In his view had they just added application services, Windows Server would never have garnered the market share it did.  A second more technical item was Novell had a proprietary protocol called IPX/SPX.  They did not support the dominant internet standard called TCP/IP. Eric Schmidt, when he was at Novell worked on fixing this, but then this startup called Google came knocking and he left for greener pastures (much greener as it turned out). As I am sure you all know this internet thing became rather large and Novell played themselves out of the market.  Oops.

As we entered a new millennium things would change.  My old company, Microsoft, which seemed to do no wrong would make plenty of mistakes in the new century’s beginning.  They might say search was a big mistake, but as I have said they never would have figured it out.  Google developed a new software business model.  They did a classic Sun Tzu, when faced with greater numbers change the playing field.  Probably the first blunder was the mobile phone space.  Though they might say they were successful prior to the iPhone I never saw it that way.  THe Microsoft strategy was a smartphone was a business phone and they went head on after RIM.  I never saw it that way.  I saw smartphone’s just a natural evolution of mobile phones and as more intelligence was put in the phone, the smartphone would be a consumer phone.  Then the iPhone launched and that was the end of the Microsoft mobile story.  I know they have this Nokia thing going on, but as good as the phone is, everything I am reading is it is too late.

Going back to search the big loser was Yahoo.  Jerry Yang had a dotcom success story, but was really just pushed aside by a competitor with a better search engine and a better business model.  Google ate everybody up in this space.  They proved the age-old business adage, revenue is king.  It was not long before Yahoo was on the defensive in everything they did.  Google was the tech darling and Yahoo had fallen into the worst place in the industry:  Yesterdays News.  Even when they got a get out of jail free card in the form of a massive Microsoft takeover offer they blew it.  Jerry Yang managed to convince everyone they had a future.  With the recent news of a massive layoff and reorganization, all is but lost. Jerry Yang will be a case study in graduate school, and it will not be flattering.  It will be along the lines on increasing shareholder value.  But then Mr. Yang is an engineer not a finance guy.

Amazon was not a likely candidate to be the early leader in cloud computing.  Next thing you know everyone was left standing with their pants of the ground.  Some rode the wave very well, companies like VMWare.  But across the lake the from Amazon’s Seattle headquarters a  Redmond based power was scrambling.  Google was also behind in this space.  When I look at Cloud based posting these days I see many references for people with experience in Amazon Web Services.  I am not sure I have seen one for Azure (Microsoft’s cloud service). VMWare is always in the conversation with its virtualization software, it is always a good place to be, “in the conversation”.  Most companies building out cloud services usually have either Amazon or VMWare, if not both, as part of their cloud offering

Finally there was the tablet phenom.  When Apple founder Steve Jobs announced Apples plans to make and sell the iPad, Microsoft CEO Steve Ballmer was quoted as saying, “They will never sell those things”.  As it turns out they can sell those tablets.  In the last quarter they sold over 15 million of these items Steve said they could not sell.  In the meantime a slew of Android based tablets have hit the market and as for Microsoft, we wait for Windows 8.  Why do I feel like this will be the Windows Phone all over again?  When the new tablets hit the market will it be revolutionary or just another Tablet?  The market is already 3 years down the road and the company that changed people’s lives sitting on the couch and watching TV was Apple.  That is what technology has always been about, changing people’s lives.

In all the examples I have given one thing is clear.  To create these industry and societal changes it takes a leader who see’s beyond today and looks to tomorrow.  When we look at what I provided in each case we have visionaries that we all know Gates, Jobs, Bezos, Maritz, to name but a few.  In the also ran category you see companies always flat-footed and never embracing the future, but reacting to a race that has already began.  If you are racing Usain Bolt and you are slow off the starting blocks do you think you will win?  Even if you were that fast and physically fit you cannot make up a half a second in a sprint.  That is how today’s tech sector works.  Even if you were to catch up the industry has moved on to a new race.  To win you need to jump the gun otherwise you will be but a  distant reflection in the rear view mirror.

Good Night and Good Luck

Hans Henrik Hoffmann April 9, 2012

Google – threats and opportunities for the Future

I was having coffee with a contract recruiter for Microsoft recently and he mentioned he had just been in New York meeting with some of the Microsoft Advertising folks. He mentioned they were kind of down as when they went looking for business (I can only assume for Bing), things were not going so well. As it turns out the ad agencies only wanted to talk with one company: Facebook.  It makes total sense.  If I were wanting to place ads I would much prefer Facebook to search providers such as Google or Microsoft.  The reason being simple, unlike a search engine where I do my search and click my link.  In Facebook I log on and stay.  And judging by some of my friends they are on Facebook a whole lot.  This is a big threat to both Google and Microsoft, but primarily Google.  Microsoft has a lot of other business groups that generate revenue (Windows, Office, Server and Tools etc..), and Bing frankly has been a cost sink hole.  However for Google the avenues are not as plentiful. Facebook poses a challenge to the future of the company, that is well worth getting excited about.

There is no doubt the traditional Google business is under threat.  The very business landscape that Google pioneered is shifting as companies look to spend their ad dollars in places where the perceived monetary return is greater than ad words.  Facebook will be a big test to that business, as will Twitter.  Don’t get me wrong Google has been nothing short of amazing.  It’s end of year statement in December showed a company with over $37 billion in revenue.    This from a company that was incorporated in 1998.  When I started at Microsoft it was already 16 years old and talking of its business units in terms of its first billion.  The fear for Google, from the start has been, is Google a one trick pony?  Can it take sits enormous revenues and invest those in other web-based services to generate new streams of revenue.  There is some hope on the horizon in this area.

The good news for Google lies in the success of its mobile platform, namely Android and the mobile search business.  In our increasingly on the go and mobile society the opportunity for new revenue streams in the mobile search business is immense.  If you go by one Gartner report mobile search revenue will grow worldwide to over $20 billion by 2015.  Based on last years earnings Google already generates $2.5 billion in mobile ad revenue.  Google has been very successful in getting mobile handset providers to adopt their Android platform as the mobile OS.  Premier providers like HTC and Samsung have been major advocates of Android both for the smartphone, and in the case of Samsung its tablet offering.  If there is one note of fear, it is the amount of mobile ad revenue generated from Apple’s iOS platform.  Apple and Google are direct competitors in the handset space, so how long Apple chooses to ship Google’s search as a part of its standard offering of apps with both the phone and tablet is open to debate.  I am sure Microsoft just waits in the wings waiting to provide Bing as the default search offering for the iPhone.

The other bets will be the continued growth of Chrome as a browser and internet platform.  Chrome continues to increase market share ( Use Chrome as my default browser).  This is significant as the browser war is the battle fr the internet OS.  Today we have four to five players: Chrome, Internet Explorer, Firefox, Safari and Opera.  In my view it will come down to three as we are already seeing Mozilla people leave the Firefox camp and Opera is still very small in market share.  The other three combined have close to $200 billion in the bank, so I feel safe in choosing them to fight the last battle.  This is an area where I feel Google is well positioned as they don’t have a PC OS.  Apple has its MacOS and Microsoft Windows.   It can be a big advantage to not have a legacy mindset in the industry.  Hardware manufacturers have introduced a “PC” without Microsoft Windows.  A Chrome Netbook was released.  The reviews were mixed as it is a bit different to have a Netbook with no hard drive.  Thus your experience is dependent upon connectivity.  It is too soon for this device, but if you envision a world where we have ubiquitous connectivity you can see the writing on the wall.

As you see, primarily, Apple has taken the lion share of the tablet market place a new thing is happening.  The Windows growth rate over in Redmond is slowing and in some quarters shrinking.  The big concern here is not just Windows, but down the road Microsoft Office.  Luckily for Google they have been investing in the desktop productivity space with Google Docs.  It is not a bad bet on their part as when you are competing against a product with 90 percent market share the only way is up.  Given the large cash hoard that Google has they can commit to this space for the long-term and with the rise of tablets and, if we believe, the disk less netbook then the outlook for Google Docs long-term is fairly bright (I wrote about Google Docs in a previous post).  They can charge far less than Microsoft and still make billions.  It will not be an easy task however we can see the paradigms for the  future of how we consume technology changing.  One thing for certain in the information age is nothing is forever.

This is the new paradigm we have entered into as the web seems to build up companies overnight into social phenomena’s.  Especially with web-based services like a Google, Facebook, Twitter or Groupon where nothing is manufactured.  There is no physical output.  No handheld device.  No PC.  Just a bunch of services out in cyber space.  The fact that Google has become a $37 billion business in a little over 13 years is truly amazing.  Facebook pre-IPO already is generating $3.7 billion in revenue.  The internet is creating a velocity of business we have not seen before.  The ability to communicate and spread the word of whatever is new and cool is what makes the technology space the most exciting industry on the planet.  For a company like Google to continue its path of success it will constantly have to adjust and seek new business opportunities.  As long as you have smart people envisioning the future, you can determine your own destiny.  Ball is in your court Google.

Good Night and Good Luck

Hans Henrik Hoffmann March 20, 2012