All Things Computing to All People

In trying to do everything, Microsoft ends up doing nothing really well.

The lead story in the Sunday New York Times Business section this week takes a hard look at the future of Microsoft. The piece included interesting quotes from various Microsoft executives discussing how cloud computing – the ability to use data from anywhere on the web – fits into their overall strategy and how they differentiate themselves. This paragraph caught my attention:

[Microsoft CEO] Steve Ballmer contends that Microsoft is the only company prepared and positioned to merge computing from both ends – the desktop and the cloud. "We're just investing more broadly than everybody else," he says, adding that when it comes to software, "I want us to invent everything that's important on the planet."

How's that for a mandate? Do everything.

Microsoft is one of the few vendors out there trying to simultaneously serve both the business and consumer markets. While it's true they have huge resources, even big companies run the risk of being spread too thin. On the surface, Microsoft's $10-billion budget for research and development seems large enough to tackle "everything" until you start looking down a list that includes desktop software, data centre software, developer tools, health care systems, video games and consoles, music players, phones, and phone software, web properties, and office collaboration products.

Offering customers a broad set of products and services is, according to Microsoft, one of its great strengths. Being able to offer solutions spanning PCs, browsers, and a proliferating set of hand-held devices (aspects of what Ray Ozzie, chief software architect at Microsoft, calls "the gizmo revolution"), is valuable and part of what sets Microsoft apart from its competitors.

But the strategy isn't without risks. At smaller companies, not being able to clearly answer the question "What do we do?" results in unfocused products that partially solve many customer problems but fail to offer a compelling value proposition in any one particular domain. For a company the size of Microsoft, the risk of a "we do everything" strategy is that customers, who automatically think of Apple for music players or cell phones, and HP or IBM for data centre software, might not know what Microsoft does well anymore.

Then there is the issue of whether or not all of these areas get the focus and freedom needed to innovate. When I started my career working with software start-ups there was an accepted wisdom that if Microsoft moved into your space, your company was finished. Once Microsoft pointed their arsenal of resources at your market, they would easily produce something better and more quickly than any team in a garage could. Today there are start-ups thriving in markets where Microsoft plays. These start-ups have the luxury of being able to focus deeply on doing a single thing well without the overhead of worrying about how their stuff interacts with a massive list of other products and services from different divisions. In fact the goal of many of these companies is to eventually be acquired by Microsoft.

Perhaps that's just as it should be. Companies like Cisco and even IBM have been using acquisitions as a successful innovation strategy for years, and Microsoft has no shortage of money to invest in any market it wants to. In both cases, however, I can easily tell you what those companies do well. For Microsoft, I think they may need to articulate what it is that they're selling more precisely than "everything."