Subba’s Serendipitous moments

October 26, 2010

Ray Ozzie’s new memo to Microsoft

Filed under: Business,Model,Strategy — Subbaraman Iyer @ 3:58 pm
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Ray Ozzie is a legend. Bill Gates rated him as one of the five best programmers in the world. Ray created Lotus Notes – the popular email and collaborative workspace solutions in the world. Ray succeeded Bill Gates as the Chief Software Architect when Bill decided to leave Microsoft. He is truly a visionary and I had found his earlier memo The Internet services disruption very interesting

Now as Ray prepares to leave Microsoft, he has penned a farewell memo titled Dawn of a new Day. It makes interested reading as he explains several new shifts about where the “post PC world” is headed.

When I read both the memos I get a feeling that despite the 5 years that he spent there and his exhortation for changing, he hasn’t been effective enough. After his routine praise of Microsoft, he makes a subtle but pointed criticism of Microsoft’s business model when he says:

Yet, for all our great progress, some of the opportunities I laid out in my memo five years ago remain elusive and are yet to be realized.

Certain of our competitors’ products and their rapid advancement & refinement of new usage scenarios have been quite noteworthy. Our early and clear vision notwithstanding, their execution has surpassed our own in mobile experiences, in the seamless fusion of hardware & software & services, and in social networking & myriad new forms of internet-centric social interaction.

There is also a veiled pointer to Microsoft’s seemingly glaring weakness of not being able to conceive the future when he says:

In our industry, if you can imagine something, you can build it.  We at Microsoft know from our common past – even the past five years – that if we know what needs to be done, and if we act decisively, any challenge can be transformed into a significant opportunity.  And so, the first step for each of us is to imagine fearlessly; to dream.

The one irrefutable truth is that in any large organization, any transformation that is to ‘stick’ must emerge from within.  Those on the outside can strongly influence, particularly with their wallets.  Those above are responsible for developing and articulating a compelling vision, eliminating obstacles, prioritizing resources, and generally setting the stage with a principled approach.

But the power and responsibility to truly effect transformation exists in no small part at the edge.  Within those who, led or inspired, feel personally and collectively motivated to make; to act; to do.

In taking the time to read this, most likely it’s you.

At times, it almost seems that he is endorsing Google’s strategy and technology approach.

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August 28, 2010

Will the future search be “social” or “action”?

Filed under: Business,Innovation,Perspective — Subbaraman Iyer @ 12:15 pm
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The world of search is clearly at an inflexion point. Google has dominated search for so long that it has become synonymous with search.

Yet the search world will be transformed in a radical way even before we realize it. Social search powered by Facebook will be a reality because of social plug-ins. I have absolutely no doubts on that account and wrote about its impact in my blog post here.

There is another aspect of vertical search which surprisingly was ushered in by Microsoft’s Bing. However Google seems to be muscling its way here with its recent acquisitions like ITA software. I think this will be a bigger market and it remains to be seen how Google will integrate the vertical search into its current offerings. This will be an interesting development to watch.

“Action” search will perhaps be a new phenomenon. Esther Dyson in a very thought provoking piece describes the need for action search. I was surprised to learn that “action search” was actually an idea that Bill Gates proposed when he said  “The future of search is verbs.” But he said it at a private dinner and it never spread. How did Microsoft miss this profound idea? This as Esther beautifully describes  represents the world more accurately. And that means better, more meaningful responses when we search.

July 6, 2010

Heard of Kin? Microsoft’s phone launch and quick withdrawal

Filed under: Business,Competition,Uncategorized — Subbaraman Iyer @ 9:48 am
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Has anyone heard about Kin? Microsoft launched 2 mobile phones Kin One and Kin Two in an uncharacteristic low key manner and before even the word got out, it quickly withdrew the product barely 6 weeks after launch.

In the 6 weeks that the product existed, it sold 500 phones. Has anyone seen Microsoft do this with any of their products? Never !

The Kin failure is yet again one additional piece of evidence that Microsoft just doesn’t get it when it comes to consumer products other than the XBox. At least with Vista and Zune, Microsoft made some marketing efforts, but Kin got a quick burial.The courier PC which has been in development didn’t even make it to the store stupefied by iPad’s success.

Kin has an interesting past: In 2008, Microsoft had acquired a startup Danger  who has built a mobile phone software business. Around the same time, Google also acquired another mobile phone startup called Android. Incidentally both Danger and Android was founded by the same founder – Andy Rubin. While Microsoft floundered, Google’s Android sells more than 130,000 units per day.

This should lead Microsoft to make do some deep soul searching.

It is time that Microsoft wakes up to a new era. It continues to comfortably extract rent from the Windows/office franchise. I think the successes of the past is proving to be the brimstone around its neck. It also seems to have lost the war for talent and developers.

September 1, 2009

Microsoft Windows under siege.

Operating systems wars have been skirmishes. They haven’t produced any major upsets. Microsoft dominates the OS completely and despite the Linux aficionados, Microsoft’s strong hold remained unchallenged especially at the low to medium end servers and in desktops. It is a different story in the mobile space though.

But things are slowly changing and my sense is that in the next couple of years, Microsoft will face more heat compared to anything that it has ever faced on the server front.

Microsoft will have to increasingly contend with VMWare which has bolstered its arsenal with its acquisition of Springsource – maker of open-source software development tools which can analyze and optimize the application performance. This could allow VMWare to undermine the Windows operating system.

Despite all the talk about the huge growth of virtualization, the untapped market is still large. Currently virtualization has been done mostly at the data centers (which is where the complexity is and where the cost savings are) and even there the current estimate is that less than 25% of the servers are virtualized. This creates a big opportunity. It is no surprise that Cisco wants a piece of this market and it is targeting them with its Unified Computing system.

Well, there’s a desktop market and a notebook market and it will require a different approach to tackle this market. Currently the focus seems to be on the servers.

Microsoft cannot afford to ignore this market. In fact it announced Hyper V Virtual machine as part of its Windows Server 2008 and it is likely that it will offer several enhancements in time to come. Moreover, Microsoft can afford to give its Hyper V free. With other contenders like Citrix Xen, Virtual Iron remaining in the fringes, it is going to be a battle between Microsoft and VMWare. And again, this battle is not just one of functionality or product features, but increasingly fought on a business model.

In some way, it could very well resemble the browser wars of the nineties.

But from Microsoft’s standpoint the battle for the OS has another contender. Google with its web based software for office and productivity applications is also undermining the Windows operating system.

The early impact on Microsoft is here to see. However it is too early to announce the demise of Windows.

So, the skirmishes are over and the battle is being fought on many fronts.

August 4, 2009

Google and Apple are now confirmed rivals

If there was any doubt about the relationship between Google and Apple, the abrupt resignation of Eric Schmidt — Google CEO from the Apple Board should lay it to rest.

I wonder whether the FCC’s investigation of Apple yanking out Google Voice has something to do it. I wrote about their possible rivalry here, but before I could even conceive of possible actions, the resignation was announced. Coming to think of it, Google and Apple are bracing to compete with each other. Google’s Android which will soon be adopted by many device vendors will be in direct competition with Apple’s iPhone. And the Chrome OS will be competing with the Mac OSX.

But is this new? These moves have been going on for the past few years and while the conflict of interest wasn’t that sharp the yanking of Google Voice seems to have brought all that into the open.

I admire both companies. Both Steve and Eric are respected Valley veterans. They have been role models for me. Nonetheless I have to say they always had antithetical approaches to shaping the future of the consumer experience. Some day there was bound to be a conflict.

Apple believes in creating cool products, but being a walled garden. It has fans, not customers. Even though the iPhone is supposed to be open, every application must be approved by Apple. I had talked about the walled garden approach here and it seems to have worked very well for Apple.

Google has adherents. It believed in openness and its whole purpose (even for its Chrome OS) was to reduce the significance of devices in favor of applications that will reside in the cloud. And once the cloud becomes the organizing system, the devices — be it the phones or the laptops do not matter.

Google crowdsourced its innovation. Apple built an innovation value chain in-house. Both models were successful. Yet I think at the core there is a deep philosophical conflict which manifests as a fight between the open and proprietary approaches.  I wrote about it in the mobile phone industry here and hence am not surprised that a rivalry has come about.

The Google Voice episode is just the beginning. The FCC enquiry may reveal more.

And if the Google-Microsoft war and the Apple-Microsoft war, wasn’t interesting enough, we will see a third war — the Google-Apple war.

July 6, 2009

Understanding competition — the Bill Gates way

I thought that I had analyzed the levels and degrees of competition fairly comprehensively. In fact, I have used that as an organizing framework to understand competitive advantage.

Recently a friend of mine sent me an excerpts of an interview with Bill Gates when he was still the CEO of Microsoft which makes interesting reading.

Flying on the Delta Shuttle with Bill Gates 12 years ago, Richard Karlgaard– the Editor of Forbes asked Bill, “What Microsoft competitor worries you most?”

“Goldman Sachs.” Richard gave Gates a startled look. Was Microsoft about to try the investment banking business? “Software,” he said, “is an IQ business. Microsoft must win the IQ war, or we won’t have a future. I don’t worry about Lotus or IBM, because the smartest guys would rather come to work for Microsoft. Our competitors for IQ are investment banks such as Goldman Sachs and Morgan Stanley.”

Getting the brightest bulbs to work at Microsoft has always been his obsession. It’s paid off. But what about now?

The best and the brightest want to work for companies like Google and Facebook. Microsoft seems to be losing the talent war. And does that explain why Microsoft has not made any ground shifting move in recent years yielding that terrain to Google and others?

Microsoft is caught in a classic dilemma of its own making. Its major revenue and profit streams continue to be Windows and Office which needs to be defended at all costs against young new attackers. Now will the smartest guys want to work for a organization where they would have to defend legacy or want to take a crack at changing the world?

The answer is obvious.

Unless you are a Singapore government scholar who has no choice but to work in the Singapore civil service because of the scholarship bond that you sign when you are 18 years old.

May 17, 2009

Management tips from Steve Ballmer of Microsoft

Steve Ballmer has changed considerably since he became the CEO of Microsoft. Not the impatient, belligerent Steve, but becoming a more balanced Steve.

The interview here gives an inkling of some of the changes that Steve wants to bring within himself. I have to say that while they seem trivial, both listening deeply and keeping the fine balance between positive thinking and realism is very important. Listening changes the level of trust, confidence and chemistry in a team work and the balance keeps one better focused.

April 26, 2009

Will Apple overtake Microsoft?

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Though some may argue that market capitalization is not a strong indicator, but it still remains a proxy for market success. Apple had been having a lot of product successes, while Microsoft continues to flounder.

For one, Apple’s iPod and iPhone have been stellar success creating the halo effect for other Mac products. Microsoft Vista has clearly failed, and XP users will switch to Microsoft’s new OS — System 7 due for release this year.

A comparative assessment of Microsoft and Apple can be found here.

The last quarter — Apple surges, but Microsoft declines

There is enough literature comparing these 2 companies. Apple has finally managed to steal the thunder from Microsoft not just for products but financial results as well.

The quarter ending March 2009 is significant both for Apple and Microsoft and may be the real inflection point.

Here’s news about Microsoft:

Microsoft reported the first ever drop in quarterly profits in its history.

Revenues in Windows software was down 15% and this can be attributed to a number of reasons:

The traditional purchases of PCs and laptops were weak due to the slowdown in the economy.

Netbooks the new category that has seen the biggest surge in 2008 uses Windows XP (a stripped down version of Windows XP Professional) contributing to lesser revenues. It is clear that Vista is a failure and Microsoft will have to wait till System 7 to create customer interest.

The Microsoft Office is rarely deployed on Netbooks further eroding Microsoft’s revenue base. Microsoft’s Office 2007 has again received only lukewarm response. In fact, most users are happy with Windows 2003.

The Microsoft online business continues to lose money and it is unlikely that they will see any turnaround, notwithstanding how the alliance with Yahoo pans out. While the explanation is weak ad spending, Google has not been impacted much.

Still Microsoft sits on a cash hoard of $ 25 billion despite the fact that net cash from operations in the quarter declined by 16% this quarter.

Microsoft has begun retrenching. It has already laid off 5000 workers and based on the rumor mill, this may double in the next 2 quarters.

The same calendar quarter, but Apple produces the best non-holiday quarter in its history

A 3% decline in Mac sales, and that too in the high end “Pro” line because of reduced spending by the US education sector due to economic slowdown. The consumer spend for Mac seems to be not affected at all.

The iPod continued to grow at 3% with a 70% market share in the U.S and also a dominant market share in all other countries.

The iPhone had a stellar quarter with a 121% growth.The iPhone is now sold in over 80 countries and 21 million units have been shipped.

Apple’s remarkable achievement was the AppStore with over 35,000 apps and surpassing the 1 billion downloads in about 6 months time.

Apple sits on a cash hoard of $29 billion and clearly has no specific plans with the cash.

Well, the lesson is Apple continued to innovate not just around products and technology, but around business models. Its App Store is now the benchmark for software applications that can be downloaded.


March 13, 2009

Play, not persistence drives innovation

Filed under: Business,Innovation,Model — Subbaraman Iyer @ 5:03 pm
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The spirit driving innovation is undoubtedly complex. And these drivers vary depending a lot on the individual’s motivations, the overall context of the problem. Some innovations happen through painstaking effort, some occur due to serendipity and some occur due to a certain “fun process”.

If you analyze the major breakthroughs that we have seen and some of the significant innovations that led to great products, it has been because there was an interesting and intertwined relationship between passion and play. There was persistence, but in the absence of passion and the element of play, the dogged persistence served little purpose.

In an interesting article, Microsoft Research Principal Scientist Bill Buxton suggests some important ways to innovate.

He suggests that it is always better to be a beginner at something and always be in love with the thing that you are beginning.

The energy to be passionate can be addictive, and you need the balance.

When you get good in a skill, make room for a new passion.

You can learn from anyone.

And finally innovation comes about by sustaining the passion, curiosity, delight, energy and enthusiasm of the beginner with the wisdom and experience of the expert.

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