Microsoft is a software company. For nigh on three decades, Windows and Office have been the bread and butter of the Redmond-based company. However, the last decade has seen increasing success and competition from both Apple and Google. Now, it seems as if the mammoth software business just isn’t enough to keep Microsoft at the top of the game. With the Xbox, and now Surface, we’ve seen Microsoft go further and further down the rabbit hole of hardware products, and it is becoming clear that Microsoft’s future isn’t just that of a software company.
As we reported at the end of last week, the Wall Street Journal published an article outing Microsoft as actively working with Asian suppliers to manufacture a homemade smartphone. While this is very far from an announcement, the intent is clearly there. Apple is making an obscene amount of money by selling its own hardware, and it’s clear that Microsoft wants in on that. The problem remains that Microsoft is dedicated to having both desktop and mobile operating systems available for licensing by third parties. These moves into the hardware market clearly put Microsoft in the awkward position of competing with its partners.
Instead of trying to have its cake and eat it, Microsoft needs to decide what it’s going to be. Is it a software and hardware company like Apple, or is it a software company like it has been all of these previous decades? Its previous software-only endeavours in the mobile market have been less than successful. Windows Phone 7 and Windows Mobile didn’t launch Microsoft back into market domination (indeed, they barely made much of an impact at all). If it wants to make world-class devices, it needs to leave the previous model behind.
Microsoft’s most well-known and successful hardware venture would undoubtedly be the Xbox line of game consoles. Originally launched in 2001, the original Xbox did okay in the US market, but it didn’t set the world on fire. Launched just four years later, the Xbox 360 has done extremely well in every major market with the notable exception of Japan. It’s safe to say that this is a successful product line, but Microsoft doesn’t license the Xbox 360 software to hardware companies. The Xbox 360 is a hardware and software combination owned and controlled solely by Microsoft. Its success doesn’t logically transition into success in the phone and tablet market as Microsoft is currently playing the game.
If Microsoft wants to be competitive with Apple and Google in the mobile market, it needs to stop pussyfooting around. With Steve Ballmer at the helm, Microsoft just doesn’t seem to be able to make a decision – just look at the Surface. It’s an ARM-based tablet that runs a new GUI – except when it runs the old Desktop. There is an Intel version on the way, and Microsoft is hoping developers will release both Metro (new-style) and Desktop apps. Even the attachable keyboards aren’t consistent. Microsoft couldn’t decide to make it using touch-based technology or traditional key-based technology, so they did both. How can Microsoft expect consumers to know which Surface they want if Microsoft itself can’t even decide what the Surface is?
The Xbox was successful because it was a distinct product with a clear vision driving it. The Surface is not, and that is why it has an uphill battle to fight. If Microsoft continues this trend in the phone market, it will have the exact same problems.
Follow the leader
There is also the curious case of the Zune. Launched back in 2006, it was too little too late. The iPod was incredibly dominant, and Microsoft wanted a nice big chunk of that pie. Sadly, the iPhone was announced just a few months later, and that rendered the dedicated portable media player a niche market. Last year, Microsoft announced that it would be discontinuing the Zune brand. Microsoft was, very sadly, reacting to the market instead of being the leading force it has the brains and money to actually be. If Microsoft isn’t careful, it could very easily fall into this same trap again by following a template designed by someone else.
Going forward, Microsoft needs to decide what it wants, and then execute that plan in a clear and decisive manner. Playing the “me too” game hasn’t worked. Instead of creating products that are designed to compete with popular products made by Apple, it should be focusing on creating the next big thing – and then knocking it out of the ball park.