Saturday, May 30, 2009

Microsoft twofer

Over the past week, Microsoft seems to have made public the major strides they have made in two product/market segments: search, and personal media players. During the 1980's and 1990's, Microsoft had become accustomed to routinely coming in from behind and then completely owning product/market segments created by others. It happened with operating systems, word processors, spreadsheets, DBMS, presentation software, internet browsers, application development languages and systems ... the list is long. Even with PDAs, Microsoft worked their way through about four versions until they finally came to dominate the market with the Windows CE and now Windows Mobile products. For Microsoft, victory was always just a matter of time and persistence.

But somehow that 'magic' has not worked in the areas of search and personal media players. Both Microsoft Live Search and Microsoft Zune have been dogs in their respective segments, with market shares below 10% (Google: 64% to MS LiveSearch 9.9% - Nielsen). But that *may* change with the introduction of the new Bing search service and the Zune HD player, both of which have received unusually favorable reviews (as compared with Google and the iPod, respectively) by a typically skeptical media. I don't know about Bing since it's not been made available to the rabble yet, but the Zune HD looks pretty sweet. And it plays even better, from the video that was posted at one of the above links.

Which brings to: is all this a sign of Microsoft's capacity for innovation? Microsoft has usually received a bad rap, usually for good reason. Despite having one of the best-stocked in-house R&D labs in the world, as a policy and strategy, it seems to fight shy of demonstrating leadership in the introduction of entirely new technology paradigms (with the occasional exception, such as Microsoft Surface, whose principal role seems to be to build and maintain a positive image for Microsoft rather than to actually transform the technology use landscape. Companies that are serious about innovation, such as Apple, typically bet-the-barn on their leading edge products, rather than flash and wave them at an adoring journalistic class in order to create buzz. The bulk of Microsoft's sales and profits appear to come from products and services that it did not pioneer, and in markets that it did not create. Perhaps it's because MS is not into innovation for its own sake, and maybe that is a good thing.

A lot of corporations -- and individuals -- look upon innovation for recreation as fluff: discretionary activity that does not add to the bottom line: there is work, and then, based on goals and objectives, there is innovation. But there is a problem here: in order for an organization to survive in a fast-changing environment, it needs to constantly innovate. And constant innovation occurs only in an organizational culture in which innovation institutionalized, and becomes the air that everybody breathes. In such a culture, innovation becomes a way of life, not an optional other activity that a group of designated innovators engages in for a predetermined purpose. When innovation becomes a way of life, it becomes hard to distinguish innovation for its own sake from innovation directed towards a purpose. It is hard to tell from where the Next Big Thing will come -- it might well emerge during the course of employees engaging in a playful interlude. Indeed, play is the way children learn, and play is an opportunity to look at issues from entirely new -- even heretical -- perspectives.

Perhaps whatever MS does works for them -- given their size, they must be doing something right. There is no guarantee that they will remain large and powerful, though. Corporations become large by refining a few successful things they do and repeating those actions relentlessly. But when the ground shifts under them, none of that helps, and they come crashing down to the ground. Perhaps MS ought to use its heft to go out there and actually build entirely new markets. And then they might deserve the label of true innovators.

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