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One More Thing: Steve Ballmer's Last Analyst Meeting

Manufacturer: Microsoft

If Microsoft was left to their own devices...

Microsoft's Financial Analyst Meeting 2013 set the stage, literally, for Steve Ballmer's last annual keynote to investors. The speech promoted Microsoft, its potential, and its unique position in the industry. He proclaims, firmly, their desire to be a devices and services company.

The explanation, however, does not befit either industry.

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Ballmer noted, early in the keynote, how Bing is the only notable competitor to Google Search. He wanted to make it clear, to investors, that Microsoft needs to remain in the search business to challenge Google. The implication is that Microsoft can fill the cracks where Google does not, or even cannot, and establish a business from that foothold. I agree. Proprietary products (which are not inherently bad by the way), as Google Search is, require one or more rivals to fill the overlooked or under-served niches. A legitimate business can be established from that basis.

It is the following, similar, statement which troubles me.

Ballmer later mentioned, along the same vein, how Microsoft is among the few making fundamental operating system investments. Like search, the implication is that operating systems are proprietary products which must compete against one another. This, albeit subtly, does not match their vision as a devices and services company. The point of a proprietary platform is to own the ecosystem, from end to end, and to derive your value from that control. The product is not a device; the product is not a service; the product is a platform. This makes sense to them because, from birth, they were a company which sold platforms.

A platform as a product is not a device nor is it service.

Keep reading to see what Microsoft... probably still cannot.

It is rare for companies in those industries to sell a platform and not eventually collapse. Gabe Newell mentioned it best at LinuxCon last week, "But, not too surprisingly, open systems were advancing faster than the proprietary systems had. There used to be these completely de novo graphics solutions for gaming consoles and they've all been replaced by PC-derived hardware. The openness of the PC as a hardware standard meant that the rate of innovation was way faster. So even though, you would think, that the console guys would have a huge incentive to invest in it, they were unable to be competitive."

Microsoft has already experienced losing utter dominance to an industry collaborating over an open standard. Internet Explorer was the web browser in use for the overwhelming majority; it was declared an unfair monopoly in both North America and Europe. The alternatives, few as they were, ate away at their dominance.

Microsoft lost to Web Standards before the browser ballot could even take effect.

Internet Explorer now embraces the open web and is a driving force behind these standards. They support the W3C and, recently, even WebGL from the Khronos Group. They accept the greater platform and contribute to it in ways which benefit their goals -- just like everyone else.

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If Microsoft would consider open platforms, elsewhere, then they would see there are not few left making "fundamental operating system investments" but hundreds and thousands, corporations and individuals. The vast majority, however, all invest in the same handful of operating systems. Samsung, building from contributions by LG and the rest of the open-source community, develops custom Linux distributions to integrate within their TVs. LG, building from contributions by Samsung and the rest of the open-source community, develop custom Linux distributions to integrate within their TVs.

These additions help those manufacturers sell devices. TVs companies help web server companies, and web server companies help Android.

The point is that none of these companies make fundamental operating system investments to own the platform end-to-end, not even Microsoft themselves. The PC platform was built upon competition between all hardware manufacturers. Windows was the open alternative where innovation flourished. Even Apple, after killing the clone market, needed to abandon IBM PowerPC because x86 processors, by competing against one another, crushed IBM.

Apple would not be where they are, today, without piggybacking on the innovation of the PC component manufacturers who, in turn, help their operating system remain competitive...

... and neither would Microsoft.

So I am troubled about Microsoft's future. They do not seem to acknowledge, not only the openness which created them, but the openness which drives their fiercest competitors. Their competitors will be fighting from the advantage of sharing everything but the devices and services they sell.

Owning the platform is a distraction from their products...

... and I am not convinced they realize that.

October 4, 2013 | 10:30 PM - Posted by Power666 (not verified)

Apple wouldn't be where it was today if they focused on computers as s a means of competing directly against Microsoft's dominance in the market. Apple no longer sees the Mac as a competitor to Windows, Apple sees the iPad/iPhone as a competitor to the PC as a platform.

And that's the problem MS having: they're viewing Windows as the PC platform and not a smaller component of it. They're busy trying to emulate Apple's vertical orientation strategy and only alienating OEM's.

Apple ditched PowerPC because of chipsets and the cost of developing those in-house. Performance of the G5 class of PowerPC's rivaled Intel's Pentium 4's and Athlon 64's of the time. The catch is that the G5's couldn't boot themselves: they needed an service processor to initialize them and setup the G5's front side bus during boot. Apple piggybacked on Opteron chipsets. The one chip Apple was responsible was the North bridge which contained two 32 bit wide GX buses, a dual channel memory controller and a 16 bit wide Hypertransport bus. IO like AGP or PCIe came from companies like Broadcom/Serverworks.

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