Microsoft held its annual Financial Analyst Meeting (FAM) this past week in Redmond. All its top executives — with the exception of Bill Gates, the company’s chairman, who was on vacation in Africa — were trotted out to persuade the analyst community and business journalists that Microsoft has a coherent strategic plan that will ensure long-term growth.
The problem is, when you strip away all the superficial sloganeering and vacuous oratory, nothing much has changed. Microsoft’s strategy remains all about putting Windows everywhere — on servers, on devices, as a mechanism for delivering Internet-based content and services, ad infinitum.
The problem is, Microsoft needs the Internet more than the Internet needs Microsoft. The company still doesn’t recognize that fact, thinking it retains the unprecedented power and influence it possessed when it possessed hegemonic control over the PC-era of computing.
Times have changed, though. Microsoft is still a powerful player in the constellation of networked computing, but it isn’t the only player that matters. In an new era of Internet-based services and software on demand, other players, recognizing that services aren’t tied to specific operating systems or client-based application suites, have embraced a standards-based paradigm that rewards relentless creativity, ingenuity, and innovation.
Microsoft, as evidenced by the more than five-year gap between the release of the last iteration of Windows and the forthcoming (eventually) Windows Vista, hasn’t been built on those foundations, and it’s doubtful it can ever metamorphose convincingly into that sort of company.
Owning established market franchises in operating systems and office-productivity suites has been great for Microsoft. Those cash cows continue to generate torrential rives of revenue to this day and beyond. The problem is, the old formula "embrace and extend" — typically through proprietary adjuncts and mutually reinforcing leverage from the monopoly power of earlier products — has greatly diminished influence in today’s world of Internet-based services, in which YouTube, Google, Yahoo, MySpace, and nearly every other popular web-based service is just as available on a Mac or a Linux-based PC as on a Windows-based computer — and where the fat-client Office suite has limited influence.
So, despite the news this week out of Redmond, it’s still the same old Microsoft, singing the same song with a few more notes added to the songsheet.
When you boil it to its essence, Microsoft’s goal is the ultimate walled garden, which is perhaps why they spent a good deal of time this week talking about mobile computing, which has been balkanized, bastardized, and hopelessly fragmented by mutually exclusive and ineffably rapacious wireless operators.
At the end of the day, Microsoft still is a software company, not a services company. It is looking for Windows to permeate all devices — mobiles, persona computers, gaming consoles, servers — and to have Windows-based applications and services running across all the them. Microsoft’s embrace of Internet services can never be unconditional, because that would mean putting OS-agnostic services first and Windows second.
That’s never going to happen, not as long as Windows, despite Steve Ballmer’s protestations to the contrary, remains the true core of Microsoft’s business empire.