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Mix'08 Review: How Microsoft Is Fighting a War on Three Fronts

mix08.pngMicrosoft is fighting a war — one in which it’s being attacked on three sides. Cut through the flurry of announcements out of its Mix conference this week and what emerges is the Redmond giant’s three-pronged defense strategy: consumer, enterprise and developer. Only by understanding the battles Microsoft is fighting does it become clear where the company is headed. So we’ve broken it out for you here.

The consumer attack

The front: Desktops, handsets and consoles. Flanked by Apple’s cooler desktops and devices, Google’s insight into users, and the Nintendo/Sony console world, Microsoft is struggling. Windows Mobile isn’t a consumer handset like the iPhone. Live hasn’t really taken off. Vista flopped, with the company embroiled in claims that it overstated the number of machines on which it would run. And the Xbox, despite its success, has an alarmingly high recall rate. Perhaps most frighteningly, it’s becoming clear that when it comes to consumers, advertising is paying for it all (what Chris Anderson calls the “freeconomy”). But Microsoft isn’t plugged into that ad stream.

The defense: One OS to rule them all. Users have dozens of devices, and Ray Ozzie wants them all to work seamlessly together. Expect Danger, Zune, Xbox and Vista to share and synchronize automatically. Carriers and labels will love it. Consumers will settle for it. And once they’ve got a central identity, they’ll be able to carry their desktop applications (with varying degrees of functionality) from their desk, to their car, to their hip, to their sofa.

But how to pay for it? What Microsoft needs is an ad network like Yahoo, and media formats like Silverlight that lure advertisers. Ballmer’s clearly not resistant to the concept of advertising: In an on-stage Mix interview with Guy Kawasaki, he performed a mini-monkeyboy dance, only to demand of the person who had requested the jig: “If your buddy behind you just gave you a buck, I want 50 cents.” He knows where his consumer revenue’s coming from down the road.

The enterprise attack

The front: On-demand apps and a mobile workforce. has gone from a turnkey contact manager to a full-fledged ecosystem for developing CRM applications. Amazon lets hundreds of upstarts build project planning, accounting, word processing, messaging and more — apps that traditionally filled Microsoft’s coffers. Standards like OpenID give interoperability without buying a suite. As companies realize the inevitability of on-demand computing, Microsoft has to completely change its business model. And on the mobile front, Windows Mobile can’t hold a candle to the BlackBerry.

The defense: Connected productivity and an easy move into the cloud. Expect the firm to retrench on mobility. Exchange still holds the bulk of business users’ internal relationships. More and more, it’s focusing on workflows and business process. Moving those processes between the enterprise server, the mobile device and the web — seamlessly — would be a big win that companies will love. With Danger, Windows Mobile can stop being a tweener and go after Research In Motion. And Microsoft’s architecture is still the easiest way for its legions of developers to build online applications.

When companies are ready to port their data centers into the cloud, Microsoft will make the transition as painless and transparent as possible using Windows Live Storage, SQL Server Data Center Services, and other services with codenames like CloudDB, Horizon, and Live Core that execs are still tight-lipped about.

The developer attack

The front: Open source, web apps and video. The thing Bill’s always done right is focus on developers. He put in functions. He opened up APIs. He showered them with development resources. And it worked. But today, we have Sourceforge for snippets of code. Eclipse gives ActiveVisual Studio a run for its money. We built Web 2.0 with Flash, AJAX, Ruby, Python — the language of the web isn’t .net, and it hurts. When it comes to video, Microsoft’s Silverlight seduces content providers with tracking and ad support, but we’ve already built those things out of Flash ourselves. And Microsoft’s notoriously long release cycle for Longhorn impacted its ability to react to market changes.

The defense: New Lego. Remember old Lego, which only had a few pieces? You had to carefully build the front of a spaceship from thin rectangles and dozens of identical bricks. But new Lego is different. There’s a single piece for the front of the spaceship. And while old-school Lego types cry foul, now pretty much anyone can build a spaceship.

That’s Microsoft. New features in Internet Explorer 8, working in concert with the company’s web servers, will make it easy to drag-and-drop sex appeal into the application without needing much talent. And enterprise developers will embrace it, as they always do, because it’s easy. Things like Feedsync and Sliverlight will make it that way. Even the Popfly site makes anyone who can drag a mouse a coder, performance be damned. By breaking the software into services, there will be less delay between releases, which should fix the Longhorn drought.

How will the battle go?

Mix08 was an upbeat event.  But read between the lines, and it’s clear that the company is bracing for a fight from several sides at once. Don’t write off Microsoft: We were here once before, when Netscape was going to put the company out of business. But Gates issued an edict, the company turned on a dime, and a few years later IE was the dominant web browser.

But you never want to fight a war on multiple fronts, and that’s what Microsoft faces in battles for consumers, enterprises and developers. If it survives, the Microsoft of tomorrow will be a very different company.

31 Responses to “Mix'08 Review: How Microsoft Is Fighting a War on Three Fronts”

  1. No matter what you think of Microsoft, They are still a giant company moving tons of product, the amount of software it move sin one day is immense.

    weather they are the 100 best or not at anything is a mute issue

    But yes technology moves fast and you can make or break a company with one bad move. But the giant can lose a lot of fat before it dies.

    It will be a cold day before i ever use a mac or iphone

    Well im going to go buy windows 7 have a nice day Free Candle Catalog

  2. I too agree that the main point of the article was overlooked, however, some interesting comments developed as a result!

    First, Microsoft is extremely tenacious. They will sit through 10+ years and several major releases of a product to get it right. Look at Exchange and Sharepoint. They just get better and better over time. They can afford to do this because their Office and platform products are huge cash cows.

    Will this “hold out until it works” strategy continue if they lose enough market share to free apps provided by Google and others?! Time will tell…

    Also, there’s a tool for every purpose (and person). While some may prefer the Blackberry OS, others prefer Windows Mobile. fight amongst yourselves, just keep in mind that they both have advantages and disadvantages. They are both the best solution depending on the intended use.

    Some advantages of the Blackberry are image manipulation and added communication features (ever sent a message to another BB user via their PIN?!). Some advantages of Windows Mobile are familiarity of the OS and the Microsoft “feel” etc…

    ActiveSync is the second part of the Microsoft mobile computing solution. Previous versions “worked”, but the latest version has some interesting improvements that compete directly against the Blackberry. Push technology, for instance.

    I think the gap is closing between the two worlds. Once again, it appears as though Microsoft has stuck to their guns. They’ve pushed out a product that works and is ideal for many people.

    To add to the mix, Apple has announced that it will provide a licensed ActiveSync feature that will allow the iPhone to connect directly to Exchange via ActiveSync. So… if you don’t like Windows Mobile, and if you find the Blackberry just doesn’t cut it for you, pick up an iPhone! You’ll need to wait until June though.

    So, while Microsoft may be a complete mess internally (in terms of the org structure and efficiency etc…), they seem to have developed a way of dealing with that in such a way that makes them appear more nimble to the general public.

    Perhaps this has to do with the fact that they fling three or four competing products against each other, internally, and wait to see which one wins. Worst case, they can always switch internal camps and “go with the flow” :). It’s easy when you already own the alternative!

    Choose the right tool for the job. Take into account ALL the factors and hidden costs, and don’t get suckered into someone else’s camp by flashy marketing or idealism. Most of the time, a hybrid of two competing products is the best answer anyway; even if this means running Linux and Windows, or providing Blackberry and iPhone options to your user base.

  3. Even if Microsoft wins these battles, it will be different company–one which is finally broken up by the DOJ for the extensive monopoly it would hold.

  4. Alistair, can you clarify what you mean by ‘Windows Mobile doesn’t hold a candle to the Blackberry’ ? I have been using Windows Mobile synced up with Exchange ActiveSync for years now, and I fail to see what the BLackberry does that this combination doesn’t do. I have seen some horrific problems with Blackberry Enterprise Server being implemented on Windows Server in order to deploy push messaging, when native Exchange 2003 will do the same thing.


  5. I think Microsoft is really only fighting one major war, its own corporate culture. For years MS seems to have had a need (read that as obsession) to be into everything, as in Microsoft everywhere. Rather than concentrating on their core markets and maybe one or two other areas at a time, they have acted like an octopus, with tentacles going in every direction. Some have been hits, but too many have been abject failures. When MS is not wiling to truly focus on a given project, they end up with disasters like Plays for Sure and Zune. Even their new core OS, Vista already seems slated to be replaced by Windows 7. Has MS already lost focus on Vista?

  6. elllroy

    “And the Xbox, despite its success, has an alarmingly high recall rate.”

    the myth of the xbox success. how come every jounalist repeats it? wait, i know: because they have no idea what they are writing about.

    microsoft burned billions on the xbox in the last 7 years (only recently they posted a tiny profit in their consumer division), the xbox is nr. 3 on a market of 3 after nintendo and sony (PS3/PS2 combined) and the number of consoles sold fell more than 30% from 2006 to 2007. you call that success?

  7. A lot of people seemed to miss the point of the article entirely, which was that this is run down of the points made by Microsoft’s higher ups at MIX. I thought this was a pretty good wrap up on some of the points made at MIX.

    Microsoft is not perfect, but to completely ignore their influence in the world of tech is just idiotic. They release products, some with really bad results others with great result. The whole .Net concept has been throughly successful, but “We built Web 2.0 with Flash, AJAX, Ruby, Python — the language of the web isn’t .net, and it hurts” is an extremely true statement, albeit slightly flawed. Most of Web 2.0 is built on top of PHP, MySQL, and Apache. Because these technologies have a low entry cost. That’s not to say Microsoft does not have its share of the market, but Web 2.0 was NOT built on IIS and .Net, it just simply is not the case.

    MIX is a Microsoft event so there is going to be some level of self promotion. And while I’m glad that not everyone drinks the MS kool-aid, some folks need to understand that Microsoft has a place in technology. You don’t have to like it, it is just simply the case.

  8. “I will give Redmond credit for turning faster than most big companies. When it became clear that the Internet was a big deal and they’d missed the boat, the company urged its coders to put hyperlinks everywhere, across every application”
    * Sun Microsystem missed the boat, I can remember the days in 90’s “java means internet”, Whats their revenue now?
    * Yahoo missed the boat many times, they are the first one showed me search, directory, email , messenger etc. what is their revenue ?
    * Google missed the boat, still they are showing 99% revenue in Advertisement.

    Microsoft actually pushed internet services so early (2000), for example – .Net myservices (if I remember correctly its around 14+ services). If I see the history, Mr.Gates prediction has mixed results, few times they released in wrong time (so early or late). I believe that they are doing good job with live services at right time, but I am not sure about their search engine strategy/success.

  9. These are really exciting times. I am really happy for Microsoft, it seems like they are really getting things right this time.

    Microsoft is my team!

  10. Thanks for the comments; there was a lot of noise and news coming out of Mesh and the three-pronged attack idea helped to organize it all. Clearly this is going to be an interesting dialogue.

    I’d like to make it clear that I’m not saying MS will succeed in defending any or all of these three attacks — I’ll leave that one for the history books. And yes, that explains the “absurdly optimistic” outlook. ;-) But I do feel that these are the three defensive postures the company is adopting, for better or worse.

    I will give Redmond credit for turning faster than most big companies. When it became clear that the Internet was a big deal and they’d missed the boat, the company urged its coders to put hyperlinks everywhere, across every application. It resulted in a lot of silly features, but it also made Windows and Office Internet-capable very quickly.

    It’s true that many of Microsoft’s previous tactics may not be re-usable. But it also has new bedfellows (Microsoft and Ford’s Sync partnership for cars; the tight embrace of DRM with Vista’s encrypted video path requirements, and so on.) While these may not be the same as the Netscape fight, they’re places where Microsoft has a significant market share and partners with deep pockets and lobbyists, both of which it can use to its advantage.

    (oh, and mea culpa, it should be Active Studio and not Visual Studio, and we’ll go correct that.)

  11. Excellent write-up. The three front war overview is spot on.

    But I think you should be more explicit in saying that this is MSFT’s proposed response for each of the three “attacks”. That would explain the absurdly optimistic outlook for each. The proposed outcome for the consumer front with Danger/Zune/xbox/Vista is especially laughable. You (or is it Microsoft) says, “carriers and labels will love it, consumers will settle for it”. Isn’t it obvious how flawed that statement is ?

    And then using the Netscape browser case to prove MSFT’s ability to execute. You don’t put that in context that MSFT used their monopoly power to force the adoption. This can not be repeated.

  12. Blad_Rnr

    The company turned on a dime? More like they used monopolistic tactics, got caught, and caught and caught again, and have not been the same company. Why does everyone act like MSFT is this great company when they leave a trail of lawsuits everywhere they go? Are you that quick to forget why Netscape is no longer around? And they are still fudging their attempts at becoming the de facto standard for text documents in Europe, and just got hit with another record fine.

    When are you going to realize that MSFT only wins when there is no competition? When they have to compete, they lose. The Xbox and the Zune will hang on for maybe another year or two. How long can you expect them to take on the losses from these devices? Xbox sales are down 33% in 2007 compared to 2006. The Zune is a joke. Too little, too late. WinCE may have the capabilities but has poor UI and a buggy OS. Eight years and it’s the best they could come up with?

    MSFT has a difficult problem: they can’t find anywhere new to put their time and resources. When you have 90%+ market share on the desktop and the office suite, what’s left? Google has the ad market. Apple has the music market, and slowly will probably end up with the video market. Now they are going to own the smart phone market come June. Until someone in Redmond comes up with new markets, they will flounder. Buying Yahoo! will be the death knell for them. They will no longer have their cash horde and they will spend even more to get something relevant to come out of it. Then they have to make money from it to pay back their investment. Good luck with that.

    MSFT is a typical corporate company. There is nothing special about them, other than they have cornered the desktop and office markets using monopolistic tactics. They can easily pay off the fines from the money they are making from them. Everything else is suspect. The numbers don’t lie.

  13. This might just be the worst article I’ve read on GigaOm. You couldn’t even be bothered to research the correct name of MS’ development environment? It’s Visual Studio not ActiveStudio. And you’d have to have your head in the sand to believe .Net is somehow struggling against the technologies you listed.