Recently, Jay Galbraith wrote an article on Fortune Brainstorm Tech asking “Will Microsoft become the General Motors of software”. He was pointing out to the complex politics inside the software giant, especially the middle managers in the desktop division. It is a great article to read. He even doubts whether the Azure efforts will get punctured by the desktop people inside Microsoft.
Microsoft also suffers from the incumbent’s curse during a technological transition. The curse is well described in Clayton Christensen’s research. Cloud computing, in which software and other applications are housed in a central location and delivered over networks to end users, could lead to a shift away from desktop-based computing and from complicated operating systems. As Microsoft adapts to it, will it promote cloud computing or protect Windows? Will the team leading Microsoft’s Azure cloud computing business have the freedom to cannibalize the desktop? Or will it be integrated into Windows, where the desktop mafia will slow, modify and dilute the efforts to convert to a new business model?
I have always pointed out in this space that Microsoft is important for the very proliferation of cloud computing, especially for pushing the public cloud concept to the enterprises. Let me make it clear that even though I was against Microsoft as a company in the desktop era due to my allegiance to open source and everything open, I am in favor of Microsoft playing a fair game in the Cloud marketplace. I don’t want Microsoft to fail. If I have to use a parlance that is going around in the political world, Microsoft is too big to fail. Having said that, my answer to the question posed by Mr. Galbraith is
Yes, Microsoft can become the general motors of software.
It is not the (lack of) technology that will fail them. It is their attitude that could harm them in the long term. They are not playing the cloud game sincerely. They are still hoping that they can have their way in the IT industry even after the level of success we are seeing in the cloud. Let us see how two IT giants from the previous era are approaching the cloud. Both of them had too much to lose due to cloud computing. Both of them were reluctant to enter the Cloud game and did their best to resist it. Both of them jumped in when they realized that there is no going back in the cloud market. Where they differ is how they approach (PR or otherwise) the cloud game. Let us check out the story of the two giants and make some speculations that could stir up passions on both sides.
IBM, the reluctant giant, embraced the Cloud eventually and, now, they are trying everything possible to put themselves as the face of Cloud Computing. Starting from their private cloud offering to SaaS applications to public cloud offerings in the future, IBM is trying to be at all places. Even their support for the doomed Open Cloud Manifesto shows that they are very keen to be the major player in the Cloud marketplace. Even though IBM critics will point out that this as plain PR, IBM CEO Sam Palmisano gave a rare interview to Bob Evans of Information week, in which he went on to portray as if their moves in Cloud Computing and Business Analytics were well thought out long term strategy. I don’t want to go into whether he is right or he is just spinning out some PR but I am pretty impressed by how strongly they have embraced and accepted the shift in computing from the traditional world to the current era of Cloud Computing.
“We’ve been very conscious of the value of information, and we knew the market behavior was going to shift from the bad economy and budget pressure,” Palmisano said in an exchange at IBM headquarters in Armonk. “So we sold things because we knew the old model was going to end, and we turned around and made acquisitions where things were going to grow and you know the numbers—100 acquisitions for $20 billion.
Again, as I told above, this may not mean much beyond PR soundbites but he makes it pretty clear that they are ready for the cloud game and they intend to compete for a long time to come.
Compare this attitude with that of Microsoft. Whether it is their “hang on, we are coming” attitude or their recent dismissal of Google and Zoho (disclaimer: Zoho is the sole sponsor of this blog) as Fake Office Suites, it is pretty clear that Microsoft doesn’t want the cloud game and they will be happy if the whole concept of Cloud Computing crumbles big time. Their reluctance to leave the cash cow of today for cash in the future is pretty obvious in their moves. Recently, Microsoft released a position paper titled “Privacy in the Cloud Computing era: a Microsoft perspective”. It is a very good document and their emphasis on the new privacy paradigms and governance models are very important (something we have highlighted here at Cloud Ave on different posts). However, Dave Rosenberg of CNET points out to a section which I also noticed. He talks about how Microsoft is taking a hand waving approach on privacy of business users.
Unlike our consumer business, in which Microsoft has a direct relationship with consumers and directly controls the policies that govern their data, our cloud services for business customers defer to the policies of those customers. In this case, Microsoft has no direct relationship with the business’s employees or the customers to whom the hosted data may pertain. Policies relating to the business’s handling of this data in the cloud environment are controlled and set by that business rather than by Microsoft. Our role is to handle and process the data on behalf of the business, much like third-party telephone call centers process customer inquiries, orders, and data for their business customers.
Dave Rosenberg raises a very valid point here. I tend to agree with him on this. It is true that business customers want to have more control on the privacy issues but, instead of reassuring them on how they will work with them to implement their policies, Microsoft takes a hand waving approach and positions their cloud service as something like third-party telephone call centers process customer inquiries, orders, and data. If you dig deeply, I wouldn’t say such a comparison is entirely wrong. However, when you are trying to enter a new market, an approach like what Microsoft has right now is not a sensible one. Trying to portray the emerging model as something that is inherently weak makes me wonder if Microsoft is really serious about the Cloud business. Now if you add the absence of an offering equivalent to the “private cloud” into the equation, it is pretty evident that Microsoft is not ready for serious cloud business. They are still holding on to the hope that the status quo will stand.
If I were the CEO of Microsoft, I would be making noises like Mr. Sam Palmisano. In fact, Microsoft is better positioned to make bigger noises with their leverage on consumer segments and mobile. Instead, Microsoft is taking a “let us see how far can we go” approach. If they continue with this attitude,
yes they will
become the General Motors of software.