After my experience at Microsoft, though I was quite impressed by what they had achieved up to date, however, the future seemed less promising. Microsoft seems to be stretched too thin. Microsoft has over 80 products stretched over many markets from mobile device software, to RFID, to MSN services, to desktop applications to video games. But you can start to see signs from the Microsoft culture that the company is beginning to no longer be as cohesive as it once was. For example, when other employees working on XXXXXX would use the pronoun “we”, it would refer to the XXXXXX group or occasionally the entire YYYYYYY. The pronoun “they” would be used when referring to other product groups. Though this may seem insignificant, it shows that employees at Microsoft feel a sense of belonging and loyalty towards their own product rather than the company as a whole. As Microsoft becomes a larger and more mature company, they will always continue to struggle to find the balance of performing with the strength of a large company while maintaining the efficiency of a small one.
Instead of diversifying software products, Microsoft can instead simplify their existing products to provide a more secure and stable user experience. This can be seen from the recent resurgence of Netscape’s Firefox browser in the software market. In the Business of Software, it is mentioned that the Netscape Navigator code base grew from “100,000 lines in 1994 to 3 millions lines in 1994”. Netscape’s inability to add new features while maintaining stability in the product was one of the major reasons for their loss in the browser wars. From personal experience, I can see a similar trend emerging from the Microsoft Office code base and would not be surprised to see similar trends. For example, it would sometimes take one week just to check-in code and resolve dependencies – often more time than it would take to write the new code itself. On the other hand, Netscape is beginning to turn around with the release of their latest open-source browser Firefox which has accumulated over 3 million downloads. What makes Firefox so attractive is its lightweight design, fast load times and stability – all traits which Internet Explorer once beat Navigator with but now lacks. As Microsoft product cycles approach 4-5 years, for Microsoft to retain their dominance over other applications and operating systems, they should instead follow the Firefox model and build lightweight, secure and stable software rather than continuing to bloat their existing code base.
As software begins to commoditize in the existing markets, as the industry leader, Microsoft needs to find news ways for the software industry to grow as a whole. This summer I attended a guest talk by Dr. C.K. Prahalad, a world-renowned Professor of Business Administration, Corporate Strategy and International Business at the University of Michigan, who spoke about his “bottom of the pyramid” theory, which may allow Microsoft to do just that. Prahalad’s theory basically claim’s that 90% of the world technology and commercial products are targeting the richest 2 billion people in the world. This in turn has left the 4 billion people who earn less than $4 per day out of the world’s markets. But he thinks that is can all change, because now the “bottom of the pyramid” has reached such a critical mass that companies can still large profits despite smaller profit margins per sale. One example that Prahalad gave of was how Hindustan-Lever, the Indian division of Unilever, now makes 90% of their profits by selling shampoo in small single use sachets, which are more to the poor than large bottles. At the end of the talk, Prahalad asked Microsoft to consider developing products geared to impoverished populations of the world. Not only would this allow Microsoft to enter previously untapped markets but it would also allow the poor to reap the benefits of software technology as well. Prahalad speculated that Microsoft might be able to even double their profits if they were able to successfully target these markets.
It seems that Microsoft may have bought Dr. Prahalad’s theory. A few weeks ago, Microsoft announced they would be releasing stripped down Hindi version of Windows XP to the India market for $70 as a pilot program. In addition, they plan to introduce the same product in local languages to Russia, Indonesia, Malaysia, Thailand and other parts of India. Though Microsoft has claimed they are introducing this product as a response to rampant piracy, it is important to notice that the Indian version is in Hindi and not English. This may also be an attempt to reach out to the general public sector of India rather than the corporate and upper-class sectors where English is generally accepted as a standard.
During a talk, that Microsoft CEO Steve Ballmer gave to employees and new hires this summer, he said that if Microsoft were to reduce China’s piracy level to those of Italy, which are still quite high, then Microsoft would instantly add an additional $2 billion dollars of revenue annually. He added that China will only crackdown on piracy when they have a local software industry of their own. The low cost software initiative may be an attempt to do exactly this: provide an opportunity for developers, particularly in India and Russia, to purchase Microsoft products so that they can begin develop on it on their own. Furthermore, this is also allows Microsoft to “evangelize” these developing countries that do not have preferences yet for Linux or Windows.
In conclusion, I feel that in order for Microsoft to maintain their market dominance, they need to focus as a company. They not only need to question whether their new product lines are actually viable and worth pursuing but they also need to streamline their existing flagship products. And finally as software commoditizes, they need to find new ways for the entire software market to grow.