Memoranda

Monday, 11 August 2008

Apple and Microsoft, as ever, offer a study in contrasts. Take, for example, two recent company-wide memos from CEOs Steve Jobs and Steve Ballmer. Jobs’s, leaked last week, regarded the botched launch of MobileMe. Ballmer’s, from two weeks ago, outlined Microsoft’s strategic goals for the next year.

The difference in their leadership styles is evident simply from studying the differences in their writing styles. Jobs’s memo is brief, humble, and focused. (That’s not to say Jobs is humble, only that the memo is.) Ballmer’s is long, full of bluster, and more or less describes Microsoft as being in competition with every other company in the entire software industry.

Let’s be clear, Microsoft is making a boatload of money under Ballmer’s leadership: $15.8 billion in revenue, $4.3 billion in net profit for the just-ended quarter. Apple, in the same quarter, reported $7.4 billion in revenue and $1 billion in net profit, and Google reported $5.4 billion in revenue and $1.2 billion in net profit — which means Microsoft had more revenue and nearly twice the net profit of Apple and Google combined. And of course a strategic outline for the entire year is going to be a longer, less focused memo than one that’s focused just on MobileMe.

So take my criticism of Ballmer and his style with a few billion dollars worth of salt. But, still.

There are some similarities between Ballmer and Jobs. For one, they both sign their memos, simply, “Steve”. For another, they’re both non-engineers leading engineering companies. Engineers, in general, crave facts and detest bullshit. My sense is that by and large, engineers at Apple are often frustrated by Jobs’s (relative) lack of technical acumen, but in terms of overall leadership and company strategy, they believe what he says.

Ballmer, however, has the demeanor of a successful car salesman. He’s so full of bluster that he comes across as being either delusional or full of shit.

Example. Ballmer, in his memo, on Apple:

Apple: In the competition between PCs and Macs, we outsell Apple 30-to-1. But there is no doubt that Apple is thriving. Why? Because they are good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience. Today, we’re changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises. We’ll do the same with phones — providing choice as we work to create great end-to-end experiences.

Engineering and design are all about trade-offs. With Windows — and before it, DOS — Microsoft has made trade-offs in the interests of ubiquity. Do what it takes to get it everywhere. Apple’s trade-offs for the Mac have been in the interests of the cohesiveness and quality of the overall experience. Apple’s recent gains in computer market share have been a huge deal for Apple — but they’re a drop in the bucket for Microsoft. Microsoft’s still-growing profits show that Windows doesn’t necessarily lose as the Mac wins. What Ballmer is arguing is that Microsoft plans to somehow have its cake and eat it too — “absolutely no compromises” is not possible. Everything involves compromises.

Likewise with Ballmer on Google:

Google: We continue to compete with Google on two fronts — in the enterprise, where we lead; and in search, where we trail. In search, our technology has come a long way in a very short time and it’s an area where we’ll continue to invest to be a market leader. Why? Because search is the key to unlocking the enormous market opportunities in advertising, and it is an area that is ripe for innovation. In the coming years, we’ll make progress against Google in search first by upping the ante in R&D through organic innovation and strategic acquisitions. Second, we will out-innovate Google in key areas — we’re already seeing this in our maps and news search. Third, we are going to reinvent the search category through user experience and business model innovation. We’ll introduce new approaches that move beyond a white page with 10 blue links to provide customers with a customized view of their world. This is a long-term battle for our company — and it’s one we’ll continue to fight with persistence and tenacity.

The inherent bravado in Ballmer’s statement-as-fact that Microsoft “will out-innovate Google in key areas” sets off alarm bells. That’s a goal, not a fact. And his mockery of Google’s search as “a white page with 10 blue links” indicates that he has no idea why Google has been so successful. I’d wager that if anyone is ever going to gain on Google in search, it will be by presenting even more focused results — less clutter, fewer distractions, more emphasis on making the results easily scanned. The old Microsoft could recognize good ideas and copy them; now Microsoft can’t even recognize genius.

The strategic bottom line is that Microsoft, under Ballmer, feels compelled to compete everywhere — that they must directly confront any company achieving any significant success, no matter how far afield that success is from the areas where Microsoft is already winning or doing well.

Jobs’s memo, on the other hand, was an acknowledgement that Apple had tried to do too much at once:

It was a mistake to launch MobileMe at the same time as iPhone 3G, iPhone 2.0 software and the App Store.  We all had more than enough to do, and MobileMe could have been delayed without consequence.

And as for what the company is going to do:

The MobileMe launch clearly demonstrates that we have more to learn about Internet services.  And learn we will.  The vision of MobileMe is both exciting and ambitious, and we will press on to make it a service we are all proud of by the end of this year.

Not a guarantee that Apple will somehow magically do everything better. Simply a promise to learn and to press on. Credible and humble.¹ And, more importantly, realistic. Apple employees may not always — or even often — agree with Jobs, but they do believe him. Apple tends to do and achieve exactly what Jobs says they will. (His declaration in January 2007 that Apple would be selling 10 million iPhone per year by 2008, for example.)

Ballmer’s promises, in contrast, defy belief, at least regarding where Microsoft stands against Apple in terms of “end-to-end experience” and against Google in terms of search and online advertising. He’s either ignorant or lying — neither of which is inspiring to the rank-and-file engineers.

I’m reminded of this great line from Tim O’Reilly back in 2002 regarding Bill Gates:

Microsoft gets a lot of heat for not leaving enough on the table for others. My mother, who’s English, and quite a character, once said of Bill Gates, “He sounds like someone who would come to your house for dinner and say, ‘Thank you. I think I’ll have all the mashed potatoes.’” This isn’t quite fair, but it gets the point across, at least about some of Microsoft’s behavior.

Gates may be gone, but the attitude is infused in the company’s culture. The difference between the ’90s and the ’00s, though, is that today there are far too many potatoes on the table for any single company, no matter how large, to eat.

Microsoft ought to be more worried about doing well in their core competencies — OS licensing and developer platforms — than in expanding into unrelated new areas. Ballmer is keen on pointing out that Microsoft sells 30 Windows licenses for every Mac that Apple sells, but Windows Mobile, which has been on the market for eight years, doesn’t even outsell the year-old iPhone by 2-1. And Apple is gaining fast; it seems possible that by 2010 Apple could be selling more iPhones than all Windows Mobile handsets combined, and it arguably already has more third-party developer interest.

Ballmer, I think, needs a little more Developers Developers Developers and a little less Advertisers Advertisers Advertisers.