This is the question posed in a fortune piece by Jay Galbraith.
The more I learn about the current situation in software, the more Microsoft’s position seems to mirror General Motors’ position in the auto industry a few decades ago. Like Microsoft (MSFT) today, GM was an icon in its industry, held a quasi-monopoly, produced eye-popping profits and was often distracted by antitrust lawsuits. When a company experiences this kind of environment over a couple of decades, it eventually loses its competitiveness. Of course, Microsoft would vigorously deny any such comparison. The top executives in Redmond, Wash., claim to be on top of the trends in the industry. They are confident they can develop all the software they will need to be competitive.
I am not concerned about Microsoft developing the software. They always have. My question is whether they will develop the new business models. As computing moves away from the desktop and onto small mobile devices, the industry moves away from Microsoft’s strengths. Consumers are driving computing now, though, and customer-centricity is not a Microsoft competence. Steve Ballmer, Microsoft’s CEO, will have to give a lot of his famously YouTube-worthy stage performances to convert the middle managers who are currently enjoying monopoly profits.
Microsoft also suffers from the incumbent’s curse during a technological transition. The curse is well described in Clayton Christensen’s research. Cloud computing, in which software and other applications are housed in a central location and delivered over networks to end users, could lead to a shift away from desktop-based computing and from complicated operating systems. As Microsoft adapts to it, will it promote cloud computing or protect Windows? Will the team leading Microsoft’s Azure cloud computing business have the freedom to cannibalize the desktop? Or will it be integrated into Windows, where the desktop mafia will slow, modify and dilute the efforts to convert to a new business model?
I think cloud computing as it is called today is a major disrupting trend. It is not just a recent phenonmenon. We used to call this the ASP model during the dot com hey days. It went by SaaS for sometime and now the new buzz word is the cloud. But make no mistake about it. It will shake up the software/IT industry. We already have the early beneficiaries in Google, Salesforce.com and Amazon. But this is just the beginning. If you combine the cloud with mobile it is a powerful enabler. That is the key to take the power of the technology to masses and businesses all over the world. That is the direction I am aiming our company.