CNN Questions Microsoft and Consumer Brand Viability
October 29, 2010
When a newstainment outfit like CNN questions Microsoft, the funeral marchers are checking their schedules. “Microsoft Is a Dying Consumer Brand” makes a blunt assertion: “Consumers have turned their backs on Microsoft.” Anyone thinking about Microsoft as a super hot holiday gift will now associate Microsoft with a fish more than three days old. I would.
The article said:
Microsoft has been late to the game in crucial modern technologies like mobile, search, media, gaming and tablets. It has even fallen behind in Web browsing, a market it once ruled with an iron fist.
The author does not give Microsoft much credit for its investment in Facebook. Nope. Kick the Redmond giant when it is struggling with a sprained ankle or a tarsal fracture.
CNN is not sending Microsoft a get well card. Ouch. Image from Zazzle at http://www.zazzle.com/broken_foot_get_well_soon_funny_paper_card-137574681868607966.
For me, the key passage in the write up was:
And if Microsoft cedes consumer ground, it risks its enterprise stronghold. Businesses are becoming more willing to allow employees to use their personal devices for work purposes, and a growing number of those gizmos are Macs, iPads, iPhones and Android smartphones.
The problem is that big outfits take a long time to go away. My view is that Microsoft would generate more value for its stakeholders if it were chopped into three different entities.
What I find interesting, however, is not the plight of Microsoft. As I read the article, I thought about Microsoft’s trajectory over the last three decades. I see signs of Microsoftitis at Google. One could point to marketplace errors (Buzz), the brain drain of Googlers to Facebook, the mounting legal hassles, and a growing perception that Google’s ideas for coping with privacy are just plain Comedy Central material. But the 30 or 40 years it has taken Microsoft to run out of gas may be compressed for the Google.
CNN, however, is thinking Microsoft. I read the story and thought, “Google.”
Stephen E Arnold, October 29, 2010
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One Response to “CNN Questions Microsoft and Consumer Brand Viability”
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I completely agree with this assessment…. see my comments on your article regarding Bill Gate’s wife banning her children buying iPods…
The thing that has kept Microsoft at the forefront for so long was because it “owned” the infrastructure – the desktop. Because of this it did not need to write the best software on the marketplace.
Now, Microsoft is losing control of the infrastructure and will ultimately need to have the best products on the marketplace or it will lose out (or has already lost out).
Microsoft is not dead. Companies will still renew license agreements because organizations do not tend to change overnight. Is Microsoft capable of winning the card game when the cards being dealt are not in its favour?
Now to Google. The companies that are around for a long time are the ones that “own” infrastructure and/or entry to the marketplace is expensive for competitors. Manufacturers have factories, retailers have shops, electricity companies have the power network etc. Although these businesses can still go bust having the infrastructure in place reduces this risk and secondly makes them more resilient to shocks to the market.
However, internet companies do not own the internet “infrastructure”. Instead of comparing internet companies to the traditional companies listed on the stock market, a better analogy may be to look at internet companies as celebrities. Just in the same way as the Internet companies do not own the medium of the internet, celebrities do not own the infrastructure that supports them – the media.
And unlike traditional companies that own the infrastructure, the cost of entry to the Internet (or for that matter celebrity) is relatively small.
Just like celebrities, Internet companies, owe their fame to the general public.
Just like celebrities, the general public do not need to dislike you for you to lose – apathy towards an Internet company is just as bad.
Just like celebrities, over exposure can become your downfall.
Just like celebrities, Internet companies are always looking over their shoulders at the next “big” thing. (myspace, bebo etc. – all last years celebrities)
This is not the same for companies that own infrastructure.
Unlike celebrities who can amass a fortune and retire, companies tend not to retire. Therefore, in order to survive they need to either:
1) keep on coming up with new ideas that users will choose to use or
2) they invest in infrastructure.
Given that in such a competitive environment as the Internet that it would be almost impossible in the long term for a company to keep on coming up with the best new and innovative ideas I believe you will see the likes of Google investing more and more in infrastructures and traditional business models where investment is large. We tend to think of Google phones, Google TV and its investment in electricity infrastructure etc. as a side-show. In fact, I believe that these are examples of a fundamental strategy for their companies long term survival.