veryard projects - innovation for demanding change

notes on microsoft

on this page

newIs Microsoft becoming MiddleAged?
> Microsoft's 3 strengths
> US Government
> press comments
> how many Microsofts?
> Microsoft and quality
> Microsoft and maturity
> Microsoft and authenticity
home page contact us

This page contains notes on Microsoft as a business organization. See separate page for notes on Microsoft as a technology vendor.

Microsoft dominates the IT industry as no other company

Use of Microsoft products is often the easy option - and it sometimes takes a conscious effort to use a different browser, a different word processor, let alone a different operating system. In many domains, Microsoft aims to be the defacto industry standard - and in some domains, it seems to have won this position.

Meanwhile, executives of other companies look enviously at Microsoft's record of profitable growth. Nerds and sultans alike look enviously at Bill Gates and his ever-growing personal wealth.

But beyond this, Microsoft has a visible presence, a corporate personality. For this reason, it serves as a useful benchmark for several topics. This is one of the purposes of this page.

veryard projects - innovation for demanding change

Is Microsoft Becoming Middle-Aged?

veryard projects > business > microsoft > middleaged

Microsoft is quietly turning itself into a utility company. The vision being presented by many computer industry leaders, including Bill Gates of Microsoft, is of computing services being piped into businesses and homes like electricity, delivered across some kind of grid, and billed according to usage. Utility computing is not just a technological move, but represents a business departure for Microsoft, leading it away from its high-tech alliance with Intel.

Many years ago, Gordon Moore of Intel declared that computer hardware power would double every eighteen months. The hardware industry continues to track this principle – known as Moore’s Law – fairly closely. Meanwhile, the software industry has benefited hugely from Moore’s Law and the exponential growth of computer hardware power. A constant supply of bigger and faster machines has meant a continual demand for new software licences. Meanwhile the software industry has returned the favour by producing feature-laden power-hungry software that helps stimulate the demand for bigger and faster machines.

Moore’s Law appears to offer a vision of ever-cheaper computing – but this is a mirage. Since total production costs, including R&D, are constantly increasing, unit costs can only fall if the total production volumes grow to achieve ever-larger economies of scale. Without rapid growth in IT spending, Moore’s law is not economically viable. Influential computer users, such as Eric Schmidt of Google, are turning their back on Moore’s Law, and using older, cheaper technology. Corporate IT budgets are being squeezed, and purchase of hardware and software is much harder to cost-justify. A dedicated minority of users may want the latest products with the most advanced features, but most users will be focused on more basic aspects of software value, such as reliability and total cost of ownership.

In January 2002 Bill Gates responded to this challenge by declaring a goal of Trustworthy Computing, both for Microsoft and across the industry. Against a background of poor software security, with Microsoft’s own organization frequently falling victim to Internet attack (most recently the Slammer virus), Microsoft promised to improve the reliability and security of its products. Instead of pushing out new features at all costs, Microsoft would devote more effort to testing, and to weeding out vulnerabilities. Some industry observers have seen this initiative as purely a technical one, and have noted Microsoft’s struggle to adopt this consistently across its organization. Others have dismissed it as marketing spin.

But the strategic potential of trustworthy computing goes much further than technical quality. Utility computing requires Microsoft to adopt a different culture, perhaps more grown-up and responsible, less technically exciting. It is a bold strategic move, with no certainty of outcome. Microsoft could simply have chosen to sit through the current downturn in IT spending, waiting for previous spending patterns to be resumed, knowing it would survive where many of its competitors wouldn’t. But if the move is successful, Microsoft becomes a value stock, producing a fat dividend yield from a secure industry position. Safe computing.

Richard Veryard, March 2003

veryard projects - innovation for demanding change

Microsoft's 3 Strengths

veryard projects > business > microsoft > 3 strengths

Peter Martin, writing in the Financial Times, identifies three strengths of Microsoft.
Entry into the operating systems market (MS-DOS). Collaboration with IBM over the second generation, but willingness to go it alone if the collaboration failed. Entry into the internet revolution.
Dominance of Windows, backwards compatibility.
Persistence "Microsoft's critics joke that you should always wait until there is a Version 3.0 of a Microsoft product - because that is the first one that works properly. ... But with Microsoft, there almost always is a Version 3.0. And that is the third of Microsoft's achievements, its relentless corporate persistence. It just keeps plugging on."
source: Peter Martin, Financial Times, 16 October 2001.

veryard projects - innovation for demanding change

US Government versus Microsoft

veryard projects > business > microsoft > US govt

  • harmed consumers
  • suppressed competition
  • protected its monopoly
  • protected its market power
Back in November 1999, Judge Thomas Jackson found that Microsoft had "engaged in a concerted series of actions". Goodness gracious, whatever next.

Obviously every large company wants to protect its market power. Microsoft's lawyers and apologists argue that Microsoft is doing exactly the same as everyone else, but just happens to be more successful at it. Is it a crime to be consistent and effective?

One of the options considered by the Justice Department was breaking Microsoft into two companies. Such a demerger would presumably be intended to eliminate, or at least reduce, coordination between the two halves.

We see two main objections to this option.
It seems to concede the point, that the main crime of Microsoft is not what they're doing, but the success with which they're coordinating it.
It seems to be based on the popular myth that coordination between separate companies is much more difficult than coordination within one company.


veryard projects - innovation for demanding change

Press Comments on Microsoft

veryard projects > business > microsoft > press

Wired Magazine

A good source of commentary on all aspects of the antitrust case - including some robust criticism of all sides, and some wry humour.  I particularly liked an attack by Jon Rochmis on Microsoft Word..

Senile ... Tortured and Internally Incoherent? Cynical Abuse of Power?

Virginia Postrel and Jeff Taylor, writing in Reason Express (dateline November 8th), wonder how to account for the Jackson judgement. Their conclusion is that "American jurisprudence will begin the new century with a stain that may take decades to wash out".

This abuse of the judge comes on top of a series of mostly pro-Microsoft articles, by Postrel and others, published by Reason Magazine or reproduced on its website.

Will Windows Crash?

asks William Saletan, writing in Slate Magazine (dateline November 8th). He poses the fear, perhaps common within Microsoft, that the company might suffer a loss of momentum and confidence triggered by the judgement, adverse press comment, and stock market reversals. This might lead to free-fall and complete disintegration of the company. Yielding victory to Microsoft's worst enemies - Netscape and Sun, and of course IBM.

Slate Magazine, it should be remembered, is owned by Microsoft.

veryard projects - innovation for demanding change

How many Microsofts

veryard projects > business > microsoft > how many?

Microsoft has a unity, an integrity, that many other large companies lack.

IBM in its heyday, even when under investigation from the same US departments that are now challenging Microsoft, never displayed this degree of integrity. Different divisions often followed conflicting commercial strategies, and the mutual incompatibility of IBM's products was an industry joke. Some IBM apologists claim that this lack of integrity was itself caused by the US Government investigations, perhaps because IBM lost the will or senior management attention or resources to remain unified.

If Microsoft had been split into two or more baby Microsofts, what would the real effect have been? How effective would a split have been, in eliminating or reducing coordination between the parts, and how soon would any effect have been visible? Formal links might have been severed fairly quickly, although there would have been problems disentangling alliances and commitments to third parties, but informal links might have taken a lot longer.

There are several problems with any such split.
Who would own the shares? Presumably there would have been some share splitting scheme, whereby shareholders of Microsoft would have become shareholders in both new companies.

But besides Bill Gates, many Microsoft employees possess significant shareholdings. If lots of the shares in Microsoft Alpha were owned by employees of Microsoft Beta, and vice versa, this would have created a strong common interest between the two companies. Or would employees of Microsoft Alpha have been forced to sell their shares in Microsoft Beta?

Where would the baby companies have been headquartered? All in Redmond? Previous break-ups (Standard Oil, Bell) were managed on a regional basis, but this might not have been so easy to apply to Microsoft. Geographical proximity would have meant that informal links might have been easier to preserve.
Would Bill Gates (or any other senior manager) have been permitted to play an active role in more than one company?
Who would have owned the Microsoft brand name? Would any overall management of the Microsoft brand name have been permitted?

There are many important issues of corporate identity, coordination and organizational change here, which we frequently encounter in our consultancy work. In particular, we are engaged in improving coordination between independent business partners. Please contact us for more details.

veryard projects - innovation for demanding change

Microsoft and Quality

veryard projects > business > microsoft > quality

When teaching courses on software quality, I can always provoke an energetic discussion by mentioning Microsoft.
Do Microsoft products possess quality?
How would we measure the quality of Microsoft products?
On what basis should Bill Gates reward his software developers?
Where would you position Microsoft on the SEI Capability Maturity Model?

Everybody seems to have a strong opinion on these questions, especially the first, and the opinions differ widely.

Much of the difference can be traced to different notions of quality, and different ways of ranking heterogeneous claims:

"The most popular software of its class in the world, enabling easy exchange of documents - and viruses."
"Software that crashes my computer several times a day."
"Rich software, containing everything I might ever need."
"Baroque software, top-heavy with features that nobody wants."
"Familiar interface, easy to get started."
"But not as good as Apple/Linux."
"Software that is beta-tested by millions of IT professionals around the world."
"Software that is released before all the bugs are fixed."

veryard projects - innovation for demanding change

Microsoft and Authenticity

veryard projects > business > microsoft > authenticity

In the heyday of its power, IBM was widely regarded as an unfair competitor, using its dominance "in the customer's interest".  But I sense that it somehow always lacked the raw something that Microsoft currently manifests.

Some people describe Microsoft's business tactics as a form of ruthlessness.  Obviously you don't get to dominate the world without making a few enemies along the way, and some people speak quite bitterly about Microsoft.

But there is no necessary connection between authenticity and niceness.  So I have no problem with the fact that authenticity can go together with ruthlessness.  But there's no necessary connection between authenticity and ruthlessness either.

I certainly don't believe that Microsoft is the most authentic organization in the world.  But it seems to have some, not all, of the characteristics of authenticity - certainly more than many of its competitors.

It has very pronounced strengths and weaknesses.  It has a strong corporate "personality" or "presence".  You can loathe it, but you can't ignore it.

That's not ruthlessness, it's a form of authenticity.


veryard projects - innovation for demanding change

Microsoft and Maturity

veryard projects > business > microsoft > maturity

Microsoft currently behaves like an aggressive adolescent.  In a decade or two, as its corporate testosterone drops to more socially acceptable levels, it will behave more maturely, as IBM does today.

Microsoft lacks maturity, not just in the SEI CMM sense, but in a common-sense sense.  Perhaps this is related to
the characteristics of authenticity that we perceive it to lack.

What about Microsoft products?

Over ten years ago, I bought a copy of Microsoft Word for my Macintosh. The program fitted on a single floppy disk. (At that time, many Mac users didn't have a hard disk.) There was a second floppy disk containing, as I recall, various utilities and templates. When I bought a new laptop recently, it came with a free copy of Microsoft Word. Needless to say, on CD-ROM. It takes 250 megabytes.

more - by Jon Rochmis
This growth seems uncontrolled. Is this compatible with maturity?


home page

contact us

This page last updated on March 26th, 2003
Copyright © 1999-2003 Veryard Projects Ltd