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.

A Technology Tipping Point

Let's think about technology, for a few minutes, in terms of supply and demand. Not in the economic sense, though. In the sense that demand represents what users want from technology and supply is what technology can provide. Until now, we've clearly been in a state where supply hasn't quite met demand. Now, we may be at the point where the two are balanced, and supply is about to overtake demand. What happens then?

I used to have a Yamaha DX-7 synthesizer. It used FM synthesis to produce a wide range of sounds, based on the combinations of six sine wave generators. The sound you got depended on how you configured the generators to either sound independently or modulate each other, and what output levels, frequencies, amplitude envelopes, and other attributes you assigned to each generator. The number of possible combinations made a tremendous range of sounds possible, but the synthesizer had several obvious limitations: a relatively small keyboard (not full piano range), an inability to produce the very complex waveforms of natural instruments, and no onboard effects. It also used 12-bit signal processing, so it couldn't produce sounds at full fidelity. Although it was a wonderful instrument, and its limitations inspired a lot of edge-pushing exploration, it was easy to imagine what a better instrument might be like. In other words, there was still more demand than supply.

The synthesizer I have today is capable of full fidelity output, has a full weighted keyboard, contains a massive library of both sampled natural instruments and synthetic ones, and has an onboard sequencer, mixer, and effects. If the sound you want isn't in the built-in library, it also has sampling capabilities so you can add your own. You can dissect a sound to its essential waveforms and edit them to your heart's content, making it possible to both tweak existing sounds and come up with entirely new ones. It's so capable that it's hard for me to see, from a musical perspective, how it could be improved on. In this case, supply is exceeding demand, because I haven't come close to any of its limits, and I probably never will.

So what happens? In my case, there's no compelling reason to explore the limits of the machine any more, so my music has become more focused on the composition than on the sounds. And I think that this may become a common reaction as supply surpasses demand.

Consider movie special effects, for example. Over the past thirty years or so, special effects have played a prominent role in driving movie development and audience interest. People would flock to movies with awe-inspiring special effects and stunts. Now, however, we're reaching the point where an average audience can't distinguish between effect and reality, and effects that used to inspire awe are now routine. Again, supply is starting to exceed demand. Is it possible that, when special effects are no longer special, movies will have to re-focus on compelling stories and characters?

I think this is a universal phenomenon. Digital cameras are reaching the resolution of film. Web access is becoming ubiquitous. Video games and TV are reaching naturalistic fidelity. Social networking and wireless technologies are dissolving the separation of geographic distance. So, again, what happens next?

First, I think we'll see more and more evidence that people don't know how to make the most effective use of the technology supply. The TV coverage of last week's Super Tuesday primaries provided at least two wonderful examples: CNN's Anderson Cooper holding a platter with a mark that allowed the network to super-impose a standing pie chart that moved with the platter, and Fox News showing a collection of bar graphs that stood on a rotating platter like salt shakers on a lazy Susan. In both cases, the technology was clearly an unnecessary distraction; not only did it add nothing of value, it actually made it harder to interpret the information that was supposedly being presented. I'm sure it made Edward Tufte's head spin.

More seriously, I wonder if we may see a slow-down in the technology market within the next five years or so. I've written before about feature saturation - what incentive do people have to buy new products when they don't use all the features of the ones they already own? We may be at that point, with technology supply exceeding demand, where new product improvements aren't compelling enough to drive sales any more.

This is less true, though, of wireless technology. I think that's the one place where the limitations of today's technology are still so visible, and where improvements are still so easy to imagine and their benefits so apparent, that demand still exceeds supply. I think this is intensified by the growing awareness of technology and its benefits in the general population - with more users becoming more interested in technology in general, demand for improvements in wireless devices will continue to increase rapidly, so it may be many years before supply catches up to demand.

There are two other places where opportunities for improvements still exist: reliability and usability. Again, I've written about usability as a market discriminator before, and the iPhone is clearly demonstrating that theme. The less obvious one, though, is reliability. As technology becomes more complex, its potential failure modes become more numerous and more obscure. Couple that with the security vulnerabilities of networked devices, and the potential for technology to become more of a hindrance than a help is clear. Perhaps this suggests a maturity path for technology: features, then usability, then reliability. With the exception of wireless technologies, I think we're almost through the features stage and partway through the usability phase for most technologies. Someday, I hope that everything I might buy will be both usable and reliable. At that point, supply will truly meet demand.