Admit It, Microsoft: You Suck at the Web

71 Comments

Microsoft (s msft) is many things, but one thing it’s not is a successful web company. And it’s time Redmond faced up to that.

For 15 years, Microsoft has tried time and again to become a major player on the web. It started by integrating an AOL-like (s aol) dial-up content service in Windows 95. It shifted to a Yahoo-like (s yhoo) web portal model three years later. In the search era, it designed search engine after search engine, culminating in an awkward bid to buy Yahoo that felt more like a divorce than a proposed merger. Despite having the most popular browser, however, Microsoft has never really monetized the web in a significant way.

And what does it have to show for all its effort? Years of losses. Since 2002, when Microsoft began breaking out MSN and online services as a separate category, the division has seen aggregate revenue of $20 billion but a total operating loss of nearly $7 billion. In the past 18 months, the losses in proportion to revenue have only grown larger. Microsoft now spends nearly two dollars on its online businesses for every dollar it makes in revenue. Major points for trying, but it’s time to call a failure a failure.

But what about Bing? Hasn’t Microsoft’s latest search engine been growing market share for seven straight months? Yes, it has: Bing’s search share grew to reach nearly 11 percent in January from 8 percent in May 2009, the month before Bing was launched. But look where it’s stolen its search business from — AOL and Bing’s own partner, Yahoo. Meanwhile, Google’s market share during that period inched up to 66 percent. Unless Bing can start eating away at Google’s share, its prospects for growth are limited.

And Google’s big challenge isn’t Bing, it’s the evolution of the web from a primarily search-oriented media to one driven by social dynamics and discovery. The time to start chipping away at Google’s dominance of the search market was five or 10 years ago. Now is the time to be hitting at Facebook and Twitter, but if Microsoft has a plan of attack on that front, it’s not evident what it is.

Does Microsoft not realize that all the spoils of the mobile web are going to the companies that control the front-end interface — that is, the big mobile OS players like Android and iPhone and not the fringe players like Windows Mobile? Maybe. It’s reportedly trying to make Bing the default search engine for the iPhone, but that move may be temporary, if it happens at all. Delay is costly. It released a Bing search app for the iPhone last December — more than six months after Bing debuted for PC browsers — and after a Google app had already been a staple on the iPhone for nearly two years. As of this week, the Google app remains the top reference app in the App Store. Bing trails in the seventh spot.

Which is too bad because in some small but interesting ways Bing is actually an innovative search engine. But Microsoft’s only choice appears to be to keep spending money and creating bigger losses. So there are lots of expensive deals, with Yahoo, with Twitter, with Verizon and maybe with Apple. Indeed, rather than letting its online offerings grow organically, Microsoft is forced to pay rent to companies that have more of a knack for monetizing the online world.

After 15 years, the evidence is pretty clear. The web is just not a part of Microsoft’s DNA. The quarterly results it released this week showed that Microsoft is still surprisingly good at what it does best: selling operating systems and software programs for PCs. There is a long-lived if diminishing market for that business. What Microsoft is not and may well never be is a web company. Mabye it’s time the company sold off its online division to a company that is just that – like Yahoo.

71 Comments

Rob

To call Microsoft’s web-related efforts a complete failure is to miss one of the primary intents. They may not have dominated the web, and they may not have killed it entirely, but Internet Explorer has been largely responsible for keeping the web experience so far behind the desktop experience, and for preventing the rise of robust web applications. Microsoft managed to put the web largely on hold for the better part of a decade while they continued to reap huge profits from desktop software. We’re only now reaching the point where an “internet tablet” could be a real replacement for a desktop PC.

In those terms, Microsoft’s biggest blunder could be their introduction of the XMLHTTP request, which paved the way for rich web apps. If IE had never supported that feature, it’s unclear whether complex client-side web apps would have ever become the norm.

slim

there are brilliant folks at MS, but they almost never focus on the end user. instead, they build SW to impress co-workers & friends. plus, there is no penalty for failure, b/c Uncle Steve will bail ’em out, like the Govt did with the banks.

it would be best to unleash the brain power in Redmond and spin off these units with some seed money. let them face reality like other co’s.

Craig S

I knew a lot of this site’s content is driven by bias, but this here is inane. It’s crap. Ignoring the main point about whether Microsoft has made a lot of profit off the web (an area where Ballmer has only recently said they’re getting serious in — things happen when Microsoft shifts resources), the details are presented with clear bias.

“the big mobile OS players like Android and iPhone and not the fringe players like Windows Mobile?”
Typed with a straight face? What is Android’s market share compared to Windows Mobile? Windows Mobile is fringe? Are you serious?

mike

“If I were Microsoft, I’d embrace the up-and-coming standards and practices for web-based apps (like JQuery and other technologies that allow one to develop platform-agnostic apps), instead of pretending to ‘adopt’ them but with the intent to subvert and weaken them. I’d be the biggest purveyor of JQuery and/or Dojo apps and libraries, picking up revenue with high-end applications and consulting. Play to your strengths!”

Actually, Ed, jQuery ships with Visual Studio and is by default included in new ASP.net MVC projects. The ASP.net MVC team heavily advocates using jQuery. Plus, many of Microsoft’s more successful web ventures (like msnbc.com) make heavy use of jQuery.

I’d say they are embracing the technology.

Daniel White

This is quite both sad and entertaining to see. Sad because Microsoft has failed time and time again, yet continue to dish out money they are losing in order to fail again.

And it’s entertaining to see a company so desperately trying to become the monopoly on the internet that they are digging themselves into a financial graveyard.

Just give it up Microsoft, and go back to your main work: Microsoft Windows. Leave the internet to companies like Google to dominate.

jbelkin

It is amazing that because MS throws off so much money from the enterprise software that very few notice that it has FAILED in every venture in the past 11 year since WINDOWS ’98. Think about – this is why MS is the GM of technology. People think of it has such a huge behemoth but really, it’s NOTHING. In the car industry, Gm started failing in the early 60’s and it took about 45 years but everything is speeded up in technology – so 10 more years for MS? Before it becomes like RCA, Westinghouse or Polaroid – just a random company name to sell expendables?

Including the $32 billion spent on its buyback and the giant $18 BILLION the Xbox Division is in the red, that’s what $70-80 BILLION spent in the past 11 years for ZERO revenue gain? MS has spent $200 million just on ADVERTISING for the Zune in the past 2 years? What do Ms shareholders think? Really? Does ANYONE on planet Earth think sinking $200 million in ZUNe ads ALONE was worth it? Not to mention the hardware and software – so maybe a billion spent on Zune for how many in sales – maybe a million after 2 years? WebTV, MSN MSn search, live search? Tablet PC’s, Home Media, WINCE, hell – they LOST MONEY and marketshare to AOL & PALM in competing as a ISP and as a mobile OS … two of the least smartest companies on Earth – what does that tell you about who’s left at MS? 11 YEARS – nothing? What company has a track record like that?

MS is an enterprise software company like Oracle that has NO BUSINESS other than an b2b ecommerce site on the internet. They should stick to what they know. MS shareholders have to ask for their 80-100 BILLION dollars back.

Rob

I would go further and say that innovation and quality isn’t in Microsoft’s DNA. I’ve worked in the tech field as a sysadmin and developer for the last twenty years and most of their products are crap (especially Windows which they’ve been trying to get right since 1990). Microsoft products have caused me no end of headaches over the years. They have a couple of good technologies… I like the C# language, Visual Studio is cool, SQL Server is easier to work with than Oracle, but other than those products, it’s pretty much crap for as far as the eye can see. Microsoft will continue to have a lock on the enterprise for at least the next decade and they’ll continue to sell computers to the less tech-savvy and most price-sensitive consumers, but that’s about it. For me, Microsoft is irrelevant.

Andy Carnegie

Heck, Microsoft sucks at EVERYTHING, but makes a boatload of money where they’ve finagled a monopoly market.

Leslie Grandy

I completely agree Microsoft is not a web company, for almost all the reasons you mention. However, I think there’s an underlying reason why this is true that perhaps you didn’t consider. I believe that Microsoft has lost empathy for the individual consumer. Besides the Xbox division, which has developed a different cultural and organizational model than the rest of the company, Microsoft is an enterprise focused machine. An indirect channel strategy that has provided them most of their revenue from licensing to OEMs, VARs and corporations has caused them to unsuccessfully manage a direct to consumer business that can co-exist and thrive, but not cause friction for the core enterprise business model.

barkleyfan

Too funny. PC’s are on the way to becoming a niche market. Microsoft has to keep a foot in the pool or the public will not remember their scent.Fanbois moght do well to recallthat Apple was obsolete for over a decade, yet became relevant again because of marketing dominance with an inferior mp3 player that cost much more than competing products that actually offered more value. They then did something similar in the smartphone market.
If Microsoft gives up in the web market, they are done. PC’s wont continue their relevance much longer with the shift to mobility and the cloud.I’m no expert but all this seems self-evident. microsoft isn’t the best at anything, but they do everything reasonably well.Including knowing when to take a loss in revenue to buy time in a lucrative market

Kevin

It’s not a web company. So maybe it should cut its losses and get out of the online business.

But it’s also not a mobile company. Its ‘Windows Mobile’ platform is in ruin (developers and OEMs walking away). There has been more than one analyst to say that Microsoft should get out of mobile (“get out of Dodge”, as one said).

Microsoft’s profits come from the area where it holds its monopoly. Desktop OS and Office software. That’s it.

Trax

Maybe you’ve heard of the steps they’re taking win WinMo 7? Or whatever it will be called…

They realize the current Windows Mobile platform isn’t going anywhere and are trying to revamp it.

Xbox being another area where profits are starting to come in. That look like an area where they have a monopoly?

When you try to write such a broad-based article, try to put in some analysis. Or start off by saying it’s a fanboi article. I know you are a blogger/journalist wannabe, but try… :)

rktect

Its true MS’s strategy on the web is different than others – and yes anti-standards in many ways. Whats also different that most people tend to forget their operating systems and software has a majority user base for a reason – for the most part it meets the needs of most users, and is intuitive enough that people can get the job done.

The most critical point is that people tend to compare Google to MS – although their spaces overlap this is really apples and oranges. Google’s strategy is 95% consumer focused, whereas MS is 95% enterprise.

Yes ActiveX was proprietary to MS and locked you in to one vendor, but do you have any idea how many billions of dollars that made MS over the years? All major enterprise players from SAP to IBM WANT you locked into them as a vendor – its crucial to retain those customers for the longest possible sales cycles – cost of acquisition is HIGH. If you’ve worked in the enterprise space, perhaps you would understand MS’s business decisions a little more (not that some weren’t bad).

No one would say one strategy is better than the other, and that there isn’t a middle ground… just remember just how successful MS is in the enterprise space, and how successful Google is in the consumer space. Its all well thought out and done on purpose.

xico

Microsoft may find some footing with Azure. It seems to follow traditional RDBMS/web development much more closely than Google App Engine and without the overhead of having to manage your own instances in AWS. It also will let the tons of developers already familiar with MS tools offer services to the cloud.

For enterprise mobility solutions I’d use Azure back end w/ Android or iPhone clients.

Anonymous coward

Such a short sighted and narrow view of things. Making such broad statements about the web without using the word server once is quite amazing for example.

xymor

That’s the web. When you can switch providers as easy as typing a new address in the navigation bar, one must compete with excelency over the flock, which is simply not the microsoft way.

Once cloud 2.0 arrives and we host everthing in the internets, Microsoft cash cows, Windows and Office will fade and they will go out like Yahoo, with a whimper.

Ed Carp

What’s even clearer is that what Microsoft can’t dominate, it tries to destroy. What it can’t dominate or destroy it is baffled by, and so lumbers around like a bull in a china shop.

I can see Ballmer and Gates having that kind of discussion – “But Bill, we have to have that sort of ‘finger in the pie’ on the Web, no matter how much we lose!” That’s also understandable, but I think Microsoft will come to a point where it will have to play to its strengths – Windows, Office, SQL Server, and related – and minimize their losses in other areas. With the way the economy isn’t recovering, that point may come sooner rather than later – but there’s a better way.

If I were Microsoft, I’d embrace the up-and-coming standards and practices for web-based apps (like JQuery and other technologies that allow one to develop platform-agnostic apps), instead of pretending to “adopt” them but with the intent to subvert and weaken them. I’d be the biggest purveyor of JQuery and/or Dojo apps and libraries, picking up revenue with high-end applications and consulting. Play to your strengths!

It’s sad that with Microsoft’s size, they could be *The dominant player in the market, but because of short-sightedness and egoism, wastes enormous amounts of time and money trying to duke it out with the likes of Yahoo and Google, when they could be playing to their strengths.

jackson p.

I love Bing so I have no idea what you are talking about. Web search is a commodity and finally someone is standing up to Google and actually producing a more beautiful interface. 99.9% of my searches, whether done on Bing or Google come out the same. But, at the experience is now becoming richer when using Bing.

timjones17

my my my the Apple fanboiesphere’s all in a tizzy after the epic iTampon fail, lashing out in their pathetic dispair. sorry, Kevin “John-Gruber-wanna-be” Kelleher, Microsoft continues to be on 90 percent of machines out there partly by looking at the big picture- they may not number one in the consumer web, but it keeps their name out there, and comes into play when a PC buyer comes into Wal-Mart to pick up one. hmm, why don’t you go back sulking into the corner now.

Tofino

it’s a little early to write off the iPad, isn’t it? let’s wait and see how it sells, shall we?

in the meantime, let’s discuss the Zune, 1 BILLION dollars spent on XBOX failures, Origami, the Sidekick fiasco, and for fun – let’s wait a little longer for WinMo 7 and then talk… mmmkay?

PK

Thanks v. much. Your article succinctly outlines the continued blinkered arrogance of MS’s perpetual inability to innovate. I think it’s time they got rid of Balmer – his mutant obsession with finding a competitor is a sad inditement of a narrowminded outlook. The only thing MS was ever good at was forcing through quasi-monopolistic contracts. That’s it fullstop. They don’t have anything original to offer. (I do like Win7 though)

tbrander

Funny I just came across this as I am preparing to get all my content off the MS Live service which I mistakenly signed up for when Microsoft was offering Guaranteed for for life Domain registration, and hosting. A promise they abrogated. They cancelled my wifes account, rather than suspending it, and wiped the e-mail accounts off the servers.. I can’t tell you the problems getting the domain moved to go-daddy.. The chances of my ever using another MS hosted service (including Azure) are nil.. I can only recommend to clients and others stay as far away from these dishonest people as possible, The poor business ethics seem to be baked into the culture..Another small example,, I recently received a PPTX powerpoint from a client who doesn’t know better,, and I opened it with the compatibility pack on Office 2003, I went to save it as 2003 to be told that it was “forbidden” by my registry settings,, whose machine is this anyway??? I converted it on my Wife’s office 2007.. There are plenty of other examples….. Now lets see,, where was I .. Ok export contacts,, followed by set gmail e-mail to suck up hotmail, then change domain registrar,, painful but less so then staying… I agree they don’t get the web.. The ill will they engender will never be overcome.

Jeff Dickey

How many oxymorons are there in the phrase “Microsoft business ethics”?

Don’t give oxy to morons. Microsoft really wishes they were the Bibi Netanyahu of the Web, instead of the Sheik Ahmed Yassin.

Rakesh waghela @Webiyo.com

To be honest Microsoft has always remained a Follower in Internet and Web Based Consumer Centric Technologies !

I can’t recall any of the web service which is being actively used globally around the WWW for longer period of time with considerable volumes to assume the dominance of Microsoft at Web front in general !

Moreover their web systems are so complex and poorly designed that average users gets frustrated after initial experience of their web based services !

Kevin Cantu

Aaron makes a good point. Look at how Google has handled the Google Voice + iPhone rejection: they found another way to FORCE their tool to work on that platform. Microsoft still hasn’t even made a Bing application for Android!

Larry L

One theme I see with MS, is they falter when they can not dictate the space. The Web will always be their downfall so long as they keep acting like they control every bit of it, i.e Silverlight, that new JPG standard a few years ago, their own PDF standard, and most of the IEs. I thought they had something going on with the picked up Ozzie but I have yet to see anything there.

Maybe MS’s web division should be spun off to think and act like a start up without the disabling crutches of their legacy OS and Office suite businesses. Let them innovate and succeed without having to buy their page views.

ronald

I think the web is to dynamic, or they are using the wrong math.

Microsoft is highly data driven, so to pick up a new direction they need data to support it.

This is pretty obvious in display ads versus search in the early days. Data pointed to portal as the success to the Web, Yahoo, Netscape … So Microsoft went into that direction. Before the data picked up to show Google’s success, that was already over.

Now we have Apple, Google, Facebook, all going into different directions. Try to put that into a data model. As long as there are companies not listing or model their business on existing data and still be successful, because they follow their vision, good luck to Microsoft. It was highly unlikely that somebody could break into the carrier,mobile phone business. Data just didn’t support that, hence Steve’s B. comments on the early iPhone.

I mean Win 7 is so data driven that my 9 year old son could figure that out (the math). In other words they function best in a stable environment, like Business SW.

Aaron Von Gauss

Microsoft has nobody to blame but Microsoft in this case, I haven’t had enough coffee yet to do a lengthy reply but here is one example. Microsoft started Bing Maps, they appear to put in a lot of effort and resources to make it successful, then they tie new features to Silverlight to try and increase Silverlight’s penetration. That’s not going to convince me to install Silverlight and the popup is probably going to just annoy me leading me to use another site if there is one available – such as maybe Google Maps?

heath

Good post. Microsoft’s an inward-looking company from the top leadership all the way down, but the essence of the web is outward-looking. This is why they keep missing on this one, imho.

p.s. Suggest a second set of eyes to do a final read-through of every post in this blog group, to catch times when a spellchecker passes “my” and an author means “by”.

Kevin Kelleher

Microsoft’s culture was forged before anyone knew of the web, let alone sensed its potential. Maybe that’s why they’re inward looking.

Thanks for catching the typo. I’ll make sure it’s fixed.

Grokodile

Microsoft has had an inept, controlling and anti-standards belligerence since the beginning.

While I might not like any one company taking over everything I’m find with any and all aspects of Microsoft failure.

Jamie

@Grokodile – As an MS employee I’m sorry that we have disappointed you so much. It is true that we haven’t always done a great job of supporting web standards, but things have changed quite a bit. For example, IE8 is much more compliant than IE6, and MS is a major participant on many of the standards comittees.

Da

@Jamie thanks for the heads up on IE8. I’ve been meaning to try it out, and just downloaded it after reading your post and so far so good, certainly as snappy as Chrome and Firefox. I was @ Bing’s San Francico’s event a while back and if you know that South African guy on that team, tell him keep up the good work. I’m definately getting Windows 7 machines when I upgrade from XP. Thanks for being around the web.

Rev

@Jamie: It’s not that MS hasn’t ‘always done a great job of supporting web standards’, it’s that they actively tried to undermine and replace them.

ActiveX was to cement MS dominance on the web. Real support for standards didn’t emerge until FireFox started chipping away at IE share. Which also brought about the first update to IE in years. It’s become clear to even non-geek users that MS cares about its users only if it’s forced to.

BTW, going back a little farther in history: MS at first (dis)missed the Internet completely. Bill Gates finally realized that the Intertubes might just be something worth investigating and changed Microsoft’s course 180 degrees.

Kevin Kelleher

@Jamie. Thanks for your comment. I do think Microsoft has been changing its approach recently and putting a stronger focus on innovation in general. It’s resonating with Windows, but it’s not really making a difference on the Web, judging by the financials.

Tim F.

Jamie, unfortunately, Microsoft doesn’t get to make its own comparison versus their own old, non-compliant product. There are now 4 high quality competitors which IE8 still compares poorly with.

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