Last week, former Microsoft VP Dick Brass wrote a very
thought-provoking op-ed in the New York Times entitled Microsoft’s
Creative Destruction which sparked some interesting
commentary from media, industry insiders and observers, and so I
thought I’d toss my two cents into the mix as well. Where should I
begin? Since the dotcom boom, people have been predicting
Microsoft’s doom in almost every market that it’s in, from browsers
to search engines, smartphones to music players. Around  2002
or 2003, when I was an analyst at Summit Strategies, one of our
annual predictions was something along the lines of
 “Microsoft–Still Relevant, But No Longer Dominant”. Okay, we
were probably a little ahead of our time. But I think that the
times have now caught up with this prediction, and it sums up
Microsoft’s market position fairly well today. As the Brass article
states, Microsoft’s biggest coup was to make desktop computing and
personal productivity software ubiquitous and affordable. But
in recent years, the company has not been an innovator. Like so
many other companies in our industry, Microsoft has found that it’s
original, game-changing innovation can be a tough act to follow.
Seibel Systems (which invented CRM), Digital Equipment (which
revolutionized the industry with mini-computers) and Wang
Laboratories (which invented word processing) leap to mind. In
each case, the paradigm shifted, but they were exceedingly
reluctant and slow to follow. Seibel didn’t believe customers would
ever buy  CRM in a software-as-a-service (SaaS) model, but
eventually launched a SaaS offering after watching Salesforce.com
eat its lunch. Digital and Wang both resisted PCs–in the eyes of
their CEOs, no one would want a PC when they could have a dumb
terminal hooked up to a mini-computer, or a computer that just did
word processing. While I don’t think Microsoft is on a path to
extinction, it is does appear to be suffering from a similar
mindset that led to these dinosaurs’ eventual irrelevance and/or
demise. Over the years, I’ve observed a pattern that when other
companies build better mousetraps, Microsoft often dismisses their
relevance and importance until the market demands that it pay
attention. As a result, it has become more of an imitator than an
innovator, with companies like Google, Apple and Amazon beating it
to market to create the new categories that can really spike
growth. So far, Microsoft’s dominance in the operating system and
desktop productivity markets has funded it’s catch up game in new
areas, and it continues to hold a huge market share advantage in
these spaces. However, as profitable as these areas still are
for Microsoft, competitors are whittling away, even in these
strongholds. Not only are Linux, open source and Apple making
headway, but Google is intent on making the traditional desktop
operating system irrelevant for the average user. I agree with Dick
Brass–Microsoft has a lot of creative, talented people but has
lost much of its original, innovative spark. Is this due to
internal politics and bickering, as Brass contends? It’s probably
best left to Microsoft insiders to determine the exact cause. But
 from the outside in, it looks to me like Microsoft needs some
new leadership that will change the current climate and re-orient
the business so that Microsoft can regain its creative edge and
start shaping the future with it’s own innovations.