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Can Microsoft Change? Part 2

On Tuesday I wrote about my personal cynicism regarding Microsoft's prospects, as it transforms from a shrink-wrap software outfit into a company committed to hybrid open and close-source software and services.

It drew some interesting responses:

"Microsoft has a troubled future ahead of it. The only way it can compete with cloud computing is to adopt the Google business model -- why do you think it so desperately needs Yahoo?" wrote RedDevNews reader Mike. "It knows that a large majority of the shrink-wrapped software's days are numbered. And if it loses the Office cash cow, it's gonna hit the bottom line hard."

Another reader compared present-day Microsoft to a struggling mastodon caught in a tar pit, implying that the company is doomed to sink to the bottom, much the way Digital Equipment Corp. did in the late 1980s and early 1990s.

Reader Shea Riley said Microsoft has mastered the model for staying on top: Win the hearts and minds of developers. But that challenge is getting tougher.

"Developer assimilation has always been the driving strategy of Microsoft and it'll have to stay ahead of the game to succeed in a semi-open configuration, so that other developers don't create replacements for the non-open parts that support the open parts or formats," Riley wrote.

A blog reader who goes by the handle "smehaffie" said past results should predict future performance.

"Microsoft has a history of changing with the times, otherwise they would not have been so successful for almost three decades," smehaffie wrote. "For example: VB6 was the greatest thing since sliced bread. Then Java came along with J2EE and it was the Microsoft killer. As we all know, J2EE was way too hard to use and thus never really adopted to its fullest extent. [Microsoft's] .NET is J2EE done right."

As smehaffie put it, Microsoft can afford to bide its time to fully address issues related to cloud computing, and then swoop in with a solution that is superior to its competition. "Suddenly, Microsoft will have a better offering with millions of developers ready to jump on and with very little learning curve get the full benefits of cloud computing. Never count out Microsoft."

I disagree with smehaffie's stance, largely because of the unique scope and scale of the challenge facing Microsoft today. Also, the management team seems ill-equipped to pull a solution out of a hat. The ongoing car chase that is the Microsoft-Yahoo merger conversation offers a glimpse of the problem.

More to the point, there's a growing drumbeat around the performance of Microsoft CEO Steve Ballmer. For all its success, Microsoft has been more or less treading water for years. The company's efforts to establish an online presence (MSN), to break into media (MSNBC) and to counter Google in the search and consumer Web portal space (Windows Live) have all fallen flat. The troubled Vista product launch offered a stark look into an organization that had calcified badly since XP rolled out 2001.

Not that Microsoft is without weapons in the fight. Strategically, .NET has emerged as the successor to Windows, providing the crucial pivot point against which Microsoft can leverage other products and technologies. Visual Studio is an incredibly broad and deep IDE that does a marvelous job of keeping developers close to home. The Expression Suite is opening a flank on Adobe and Apple. And, hey, there's always Office.

Make no mistake: Microsoft is a development powerhouse that is only getting stronger over time. But Redmond has struggled to advance its position in far too many markets. Despite the strategic advantages of .NET, Windows, Office and development tools like Visual Studio, I remain skeptical that Microsoft as it looks today will be able to sit atop a services-centric software market.

My question is: What needs to change to get Microsoft from here to there? E-mail me at [email protected].

Posted by Michael Desmond on 07/10/2008 at 1:15 PM

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