Microsoft at the crossroads

Microsoft is probably standing at its most important crossroads ever, just when Bill Gates is waving goodbye.

Well, actually, Microsoft has been missing Gates for a long time.

Something happened after the 2004 anti-trust ruling, both to the company and to its longtime visionary — call it a loss of focus. You have to wonder now whether Microsoft can get back to its old confident ways without its founder’s guidance.

It’s not that Gates was a brilliant programmer or even an uncanny tech prognosticator. His genius combined adherence to Microsoft’s “own the platform” strategy, a fine appreciation of business and technical opportunities, impressive customer focus, and an unflinching willingness to own up to strategic mistakes and swiftly rectify them. For the most part, Gates’ instincts and talents, along with excellent timing, have served Microsoft very well.

But somewhere along the way, something changed. After the anti-trust ruling, Microsoft took a new tack, focusing mostly on larger IT customers at the expense of smaller companies and corporate end users. The company reeled through the Windows Vista development cycle and dropped the ball on its Internet search effort, MSN. It became something it had never been: a company focused on conserving its base and making short-term profits, with no attention paid to charting a long-term strategy.

It’s become stylish to bash Microsoft. But 15 years ago, it was one of the best companies in tech. Write its success off to anticompetitive tactics if you like, but I was there. What was equally true was that many of Microsoft’s big competitors — such as IBM, Lotus and WordPerfect — missed the boat. Microsoft stayed focused on what customers wanted, and it continued to update its products with that in mind. Microsoft made products easier and more fun to use (or what passed for fun in those days).

Today, the company has allowed that winning formula to fall away. The search business passed Microsoft by, and Gates missed his cue to rectify the error.

Instead, Microsoft’s decisions have been shortsighted: It has turned software antipiracy measures into a strategic initiative; it has delivered Web-based “Live” products that require a program installed on the client; and its CEO, Steve Ballmer, has asserted that Linux infringed on Microsoft’s intellectual property. These are not the hallmarks of a company leading the technology industry with strategic vision.

So now Microsoft wants to buy Yahoo, badly?

Where was that kind of conviction in 2005? Deep-pocketed Google has already won that war. (It’s not by chance that it did so by iteratively refining its products to make them easier and more fun to use.) In the words of Ken Mingis, Computerworld’s managing news editor, Yahoo is becoming Moby Dick to Microsoft’s Ahab. While Ballmer and team are obsessed by the fish that got away — Internet search and ad sales — Google is slowly plotting its way into Microsoft’s enterprise business.

Microsoft needs to get its mojo back — to regain its customer focus. But it’s not alone in failing to do so. The entire IT industry could use inspiration. Tweaking your software license to increase profits is not innovation. And leadership isn’t putting a stake in the ground with a promise of delivering a key new enterprise technology to box out smaller competitors. That’s the very essence of shriveled, short-term thinking.

IT customers expect an industry leader to do more than rest on its laurels. It’s time for Microsoft and other big IT vendors to ante up some big-time vision and R&D that delivers significant innovation. Anything less is just minding the store until the next leader arrives.

Scot Finnie is Computerworld’s editor in chief. You can contact him at

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