Microsoft, Past and Future

Tuesday, 4 February 2014

In broad strokes, here is my view of Microsoft’s history.

In the beginning, Bill Gates stated the company’s goal: “A computer on every desk and in every home.” That was crazy. The PC revolution was well underway, but the grand total of PCs sold when Gates stated that mantra was, by today’s standards, effectively zero. PCs were for hobbyists. Everyone involved knew they were on to something, but Gates realized, at the outset, that they were on to something huge. The industry was measuring sales in the thousands, but Gates was already thinking about billions. Here’s Gates, in an interview from 2010:

Paul Allen and I had used that phrase even before we wrote the BASIC for Microsoft.

We actually talked about it in an article in — I think 1977 was the first time it appears in print — where we say, “a computer on every desk and in every home…” and actually we said, “…running Microsoft software.” If we were just talking about the vision, we’d leave those last three words out. If we were talking an internal company discussion, we’d put those words in. It’s very hard to recall how crazy and wild that was, you know, “on every desk and in every home.” At the time, you have people who are very smart saying, “Why would somebody need a computer?” Even Ken Olsen, who had run this company Digital Equipment, who made the computer I grew up with, and that we admired both him and his company immensely, was saying that this seemed kind of a silly idea that people would want to have a computer.

He was right. And not only did the first part of the phrase come true, the last three words — “… running Microsoft software” — did too. From the mid-’90s and for the next decade, there was, effectively, a computer on every desk and in every home running Microsoft software. At least 95 percent of them were running the Windows operating system, and among the rest, most were Macs running Internet Explorer and probably Microsoft Office too.

Windows was almost everywhere, and Microsoft was everywhere.

Peak Microsoft was unfathomably pervasive. They won so thoroughly that Steve Jobs conceded that they’d won, telling Wired in February 1996:

The desktop computer industry is dead. Innovation has virtually ceased. Microsoft dominates with very little innovation. That’s over. Apple lost. The desktop market has entered the dark ages, and it’s going to be in the dark ages for the next 10 years, or certainly for the rest of this decade.”

Steve Fucking Jobs said that. He was exactly right. And who knows where we’d be today if Jobs and NeXT had not been reunified with Apple the next year.

“A computer on every desk and in every home” was incredible foresight for 1977. It carried Microsoft for 25 years of growth. But once that goal was achieved, I don’t think they knew where to go. They were like the dog that caught the car. They spent a lot of time and energy on TV. Not just with Xbox, which is alive and well today (albeit not a significant source of income), but with other ideas that did not pan out, like “media center PCs” and the joint ownership of “MSNBC”, which was originally imagined as a sort of cable news network, website, dessert topping, and floor wax rolled into one.

What they missed was the next step from every desk and home: a computer in every pocket. It’s worse than that, though. They saw it coming, and they tried. Pocket PC, Windows CE, Windows Mobile — swings and misses at the next big thing. They weren’t even close, and damningly, Steve Ballmer didn’t even seem to realize it. That’s what’s so damning about that video of him laughing at the original iPhone. Whenever I dredge up that video, a handful of defenders will write and tell me it’s unfair to mock him for his reaction, that he was actually right — that the original iPhone was too expensive. But what should have scared Microsoft wasn’t what the iPhone was in 2007, it was what the iPhone clearly was going to be in 2008, 2009, 2010. Prices come down, chips get faster. Software evolves. Apple had unveiled to the world a personal computer that fit in your pocket. That was amazing. That the original iPhone left much room for improvement is simply the way revolutionary products always get their start.

Microsoft’s institutional lack of taste had finally come to bite them in their ass. While Ballmer laughed at the iPhone and presumably walked around with a Windows Mobile piece of junk in his pocket, Larry Page and Sergei Brin carried iPhones. Google never laughed at the iPhone; it made money from it by providing web search and maps. Google quickly became, and remains to this day, a leading developer of iOS apps. And it was Google that was fast to follow the iPhone with Android, slurping up the commodity-market crumbs that Apple, focused as ever on the quality-minded high end of the market, eschewed. I don’t think it was ever within Microsoft’s DNA to produce the iPhone, but what Android became — the successful fast follower — could have been theirs if they’d recognized the opportunity faster. The Microsoft of 1984, a decade away from industry dominance, wrote software for the original Mac, and learned from it. When Bill Gates first saw a Mac, he didn’t laugh — he wanted to know how it worked, right down to specific details, like the smooth animation of its mouse cursor.

No company today has reach or influence anything like what Microsoft had during the golden era of the PC. Not Apple, not Google, and not Microsoft itself. I don’t think Ballmer ever came to grips with that. Ballmer’s view of the company solidified when it dominated the entire industry, and he never adjusted.

Hence Windows 8. One OS for all PCs, traditional and tablet alike, because that’s the only way for Windows to run almost all of them, and Windows running almost all PCs is the way things ought to be. Rather than accept a world where Windows persisted as merely one of several massively popular personal computing platforms, and focus on making Windows as it was better for people who want to use desktop and notebook PCs, Microsoft forged ahead with a design that displeased traditional PC users and did little to gain itself a foothold in the burgeoning tablet market. It was easy to see. Windows 8’s design wasn’t what was best for any particular device, but instead what seemed best for Ballmer’s “Windows everywhere” vision of the industry and Microsoft’s rightful place atop it.

Horace Dediu captures the change in the industry wrought by iOS and Android in this succinct (and, as usual, well-illustrated) piece from a few months ago, writing:

If we include all iOS and Android devices the “computing” market in Q3 2008 was 92 million units of which Windows was 90%, whereas in Q3 2013 it was 269 million units of which Windows was 32%.

That’s a startling change, and Ballmer never seemed to accept it. Windows 8 wasn’t designed to adjust to the new world; it was designed to turn back the clock to the old one.

I think it’s a very good sign that Satya Nadella comes from Microsoft’s server group. As my colleague Brent Simmons wrote today:

Creating services for iOS apps doesn’t sound at all like the Microsoft I used to know. Using Node.js and JavaScript doesn’t sound like that Microsoft. The old Microsoft would create services for their OSes only and you’d have to use Visual Studio.

There’s still a lot of the old Microsoft there, the Windows, Office, Exchange, and Sharepoint (WOES) company. It’s most of the company by far, surely. (I just made up the acronym WOES. It fits.)

But in the Azure group, at least, there’s recognition that Microsoft can’t survive on lock-in, that those days are in the past.

Even if you don’t choose to use Microsoft’s cloud services, I hope you can agree on two things: that competition is good, and that Azure’s support-everything policy is the best direction for the future of the company.

In short, Nadella’s Server division is the one part of Microsoft that seems designed for, and part of, the post-iOS, post-Android state of the industry. A division pushing toward the future, not the past.

Successful companies tend to be true to themselves. The old Microsoft’s Windows and Office everywhere, on every device strategy was insanely ambitious, but also true to their culture. Apple has grown to eclipse Microsoft in financial size, but never set its sights on Microsoft-ian market share. Google is unfocused at the edges, but it’s never tried to act like any company other than Google. Google makes operating systems and office applications, but in a decidedly Google-y way. The last thing Microsoft should do is attempt to be like Apple or Google.

Cloud computing is one potential path forward. The cloud is nascent, like the PC industry of 1980. In 30 years we’ll look back at our networked infrastructure of today and laugh, wondering how we got a damn thing done. The world is in need of high-quality, reliable, developer-friendly, trustworthy, privacy-guarding cloud computing platforms. Apple and Google each have glaring (and glaringly different) holes among that list of adjectives.

Satya Nadella needs to find Microsoft’s new “a computer on every desk and in every home running Microsoft software”. Here’s my stab at it: Microsoft services, sending data to and from every networked device in the world. The next ubiquity isn’t running on every device, it’s talking to every device.