Is Microsoft Distracting Itself to Death?

There were just so many choices for this column. Eventually I went for the one you see above, semi-reminiscent of Neal Postman’s famous anti-TV Amusing Ourselves to Death. But “John Dvorak Writes Good Column; World’s Jaw Drops” was a real possibility.

Dvorak, of course, has been tilting at Macs for some time. Now, apparently, he’s advancing in reverse and shooting some of his outrageous slings and arrows at the second incarnation of the Borg.

To put it simply, Microsoft makes money on Windows and Office, and loses money on everything else. And now … Windows and Office have developed an annoying little cough, are sporting some nastly little red spots, and are complaining of pain in the glutes. Free software on the low end and Mac on the high end are eating their lunch and sticking out their tongue at the former playground bully.

But why the cracks in the giant’s armor? Dvorak, like others, highlights that Microsoft has for over a decade behaved like Hammy in Over the Hedge, a microencephalic squirrel who is distracted and distractible by anything shiny, round, black, white, hard, soft, fat, skinny, blue, or angular … in short, anything at all.

Dvorak’s list is possibly the best-laid-out that I’ve seen, however, and funny besides – it’s certainly worth a read …

Here’s just a few on the money pits he mentions:

  • Years ago in the pre-Internet era, AOL was the talk of the town, so Microsoft had to copy it with MSN. No money was made; no strategic advantage was gained.
  • Netscape was the rage for a while, so Microsoft threw together a browser and got in that business. The browser was given away for free. No money was made; the strategy got the company in trouble with government trustbusters.
  • During the early days of the Internet, new online publications appeared. Microsoft decided to become a publisher too, rolling out a slew of online properties including a computer magazine and a women’s magazine. They were all folded.
  • Computer books became popular; Microsoft began Microsoft Press. After an early splash and success, the company soon lost interest and the division now languishes.
  • Teddy Ruxpin became a hot toy. Microsoft rolled out a couple of robotic plush toys, including the creepy Barney the Dinosaur who sang “I love you and you love me.” The company soon lost interest and dropped the whole thing.

A valid point that might be made is that many big companies start hundreds of projects. Just like start-ups, most fail, but the ones that hit, hit big, and finance future growth.

I’m not sure that Microsoft, however, has hit anything out of the park other than its big core franchises. Which might make Microsoft the next bird to cross Randy Johnson’s path.

3 CommentsLeave a comment

  • “To put it simply, Microsoft makes money on Windows and Office, and loses money on everything else.”

    Not true. MS is also making piles of money from their development tools (SQL, Visual Studio, Exchange Server, etc).

  • You say: “I’m not sure that Microsoft has hit anything out of the park other than its big core franchises”

    Well, that depends on how you define “hit anything out of the park” and “big core franchises.”

    According to Robert Scoble not too long ago, Microsoft has 14 businesses that make a billion-dollars or more a year in revenue.
    These include an email server, a database server, developer tools, a game console, a document server, office productivty applications, a desktop client operating system, a server operating system, CRM software, and others.

    Or maybe you define “hit it out of the park” by the number of users? Microsoft has a consumer email product with 400 million users, and an instant messaging product with 300 million users (“MSN” is a verb in some countries, meaning to instant-message someone). It has a sold more than 25 million game consoles (not counting the original XBox). Halo 3 sold enough product in a single day to beat the opening weekend of any movie every made.

    Ultimately, this a company that, in the midst of a massive economic recession, pulled in $58 *billion* in revenue this year. That’s down from over $60 billion last year, but is still greater than the GDP of all but the top 65 countries in the world, and greater than the entire national annual budget of countries like New Zealand.

    Half of that was due to the “traditional” franchises of Windows and Office, but there rest…

    Anyway, you’re entitled to your opinion.

  • Great points.

    But revenue does not equal profit. That gaming division – how profitable is it? I’m not certain about the others, but I do know that the vast majority of Microsoft’s profits derive from Office and Windows.

    The reality is, and will continue to be for some time, that MS is huge, makes a ton of money, and is a major force in technology.

    But I don’t think anyone in technology would argue that they hold anything like the power position they did 5 or 10 years ago.

    And while one down quarter doesn’t mean everything, it does mean something.