Monday, May 24, 2010

Microsoft, innovation, and Competitiveness

Bill Gates and Steve Ballmer are famous for not letting members of their families use Apple products. Since taking over the reigns at Microsoft, Ballmer's stance seems to be that guts and determination will beat innovation, even though he claims the mantel of innovation every chance he gets. In the press, Apple is held up as the paragon of innovation, and Microsoft is tagged as the follower who's always a step or two behind. This has certainly been true in operating systems, where Vista and now Windows 7 have basically been clones of the concurrent version of OS X.

The thing is, Microsoft had a nice, fast, light, and highly functional smartphone OS, Windows CE, ten years ago. Third party developers could write applications for that platform and sell them in something like an app store (like Handango). And Bill Gates has been stating for almost that same amount of time that tablet PCs would be the future of computing. Despite its reputation for innovation, Apple is merely refining product categories that Microsoft has been developing for years.

Despite the advantages of an eight year market lead (at the time of iPhone 1.0), a huge installed base, and a clear and accurate vision of the future, Microsoft failed to capitalize, and is now an also-ran in mobile devices (see here and here). Microsoft could have, and should have, owned this space. Why didn't they?

Despite Ballmer's public displays of determination and competitiveness, the bottom line is that Microsoft failed to compete. After winning the browser war with Netscape, they stopped advancing IE until Firefox matured into a viable threat. After developing the smartphone market, they sat on that platform while Apple and Google developed more modern mobile OSs. Perhaps Microsoft's problem is that they declared victory in a competition that never really ends. And perhaps the lesson from that, one that Apple certainly embodies, is that you never sit on a lead.