Microsoft is Scared

The conference I'm attending isn't put on by Microsoft, but it is covering Microsoft tools and most of the speakers are drinking the Microsoft Kool-Aid. It struck me tonight the Microsoft is definitely scared. Scared of Apple and especially scared of Google. Microsoft has gone through the last three decades following a farely predictable and very successful model. They wait for someone to innovate in a particularly interesting way. They then either buy the company that performed the innovation, or take all of their ideas and make an even better product out of it. It has happened time and again, and with the incredible wealth of the company, both financially and intellectually, they have been able to continuously squash competitors and march forward. This model is very dependent on one thing, though, and that is the assumption that the initial innovators suck at getting the product to market. Microsoft is an absolute champ at getting 2nd-generation software to market in an easy to use, well packaged form. In most cases, the initial innovator comes up with an outstanding idea that is very useful and people will love it. Unfortunately, the initial innovator spends all of their effort in developing the idea itself, and not in how to properly deliver it in a form that people will find easy to use. In other cases, the product may be easy to use and perfectly implements the innovative idea, but it is horribly ugly. Whatever the case may be, the initial innovator rushes to market with this astounding new product but leaves open a huge gap for improvement. In swoops Microsoft with their second generation product which is either a) the same product because MS bought the company, b) better because Microsoft took the idea and took advantage of the room for improvement, or c) bundled into the operating system, negating the need to install the competitors product. This pattern has been seen in the word processing space, the groupware space, the browser space, and in just about any area where Microsoft invests.

Microsoft is scared though. They are scared of Apple and of Google because they are innovating at a rapid pace, and they aren't making those first run mistakes that Microsoft can capitalize on. The iPod is a good example. There isn't anything particularly special about the iPod from a technical perspective. It is functionally just like any other digital music player: flash or hard drive storage, plays a variety of formats, easy to carry around. The iPod has one very important thing going for it that Microsoft know that it can't beat: it is sexy! The iPod broke new ground in that it oozed style when it first appeared. First generation MP3 players were ugly, unfriendly, geek toys. The iPod was sleek, and dead simple with the introduction of the click-wheel. Apple beat Microsoft to the punch in getting the second generation product out, and left little if any room for improvement. And Apple didn't stop there. They released iTunes, a music store for purchasing and downloading music for your iPod. I consider iTunes a first generation music store, and in this case, it was innovative while leaving very little room for improvement. There was little room for Microsoft to improve upon with a second generation implementation, and add to that the headache of working with the music industry to try to get the product integrated into the OS. Microsoft lost the battle before it even started. So now, at this conference, the Microsoft cheerleaders are begrudgingly giving away iPod minis that were provided as prizes by one of the vendors. It was almost sad that pathetic little rant that one speaker went into before giving one away. It went something like, "This is a piece of junk! How many of you have bought more than one iPod? It's because it's junk!". No one in the croud was sympathizing with him, and there were great cheers when each iPod was put up for raffle.

Google is the other fear inducer for Microsoft. Once again, Google developed a tremendous innovation in the world of search, but left little room for improvement. The interface was clean and simple. The results were quick and accurate. Microsoft tried, and largely failed to beat Google at the search game with the MSN portal, and later the start.com website. Now Google is expanding into other areas, and they are doing such a great job with their first iteration innovations that Microsoft is getting left in the dust. Google Maps, Frugal, Google Dictionary, Google Desktop Search, Picasa, Google Groups... a string of well done features. Certainly not all of these applications are new, but Google has done a great job of turning Microsoft's own game plan against them in the web world. MapQuest had good maps, now Google has fantastic mapping. Microsoft had a hard drive search feature, now Google has a fantastic desktop search tool. Google looks poised to continue this type of innovation and I'm sure the execs at Microsoft are wringing their hands over how to combat it. During this conference, Microsoft's own developers admitted under their breath that they were more likely to use Google Groups and other Google search tools to assist in solving their development issues than the equivalent MSN sites.

All that said, I don't think there is any chance of Microsoft seeing a drop in their stock price anytime soon. Microsoft has the operating system market securely in the bag, and it would take a monumental foul up on their part to lose it. Microsoft also has the productivity suite (Word, Excel, PowerPoint) and GroupWare (Outlook, Great Plains, SharePoint) solidly handled. Now that I've been developing with Microsoft's programming tools, I have to admit that they are head and shoulders above the crowd of free tools on the market, and some commercial tools I've tried. Still, Microsoft has reason to be concerned because their once ever expanding future markets have hit a couple of walls. It will be very interesting to see how this all shakes out.