Every once in a while a journalist, blogger or analyst will publish an article that crawls under my skin. I've grown weary of hearing how much Microsoft is missing the mark. This commentary seems to have reached a fever pitch in regards to our showing at CES 2011.

Mary Jo Foley in CES: What Microsoft's Ballmer didn't say

“This isn’t a typical keynote write-up. Usually, covering a keynote, I write about what executives say or announce. At the kick-off Consumer Electronics Show (CES) 2011 keynote by Microsoft CEO Steve Ballmer on January 5, the more interesting bits were what Ballmer didn’t say.”

Nick Eaton in Microsoft at CES: Not much new to talk about

“After juicy rumors gurgled online for days leading up to the event, Microsoft today gave techies little to chew on as they prepared for a weekend of gadgets and nerdery in Las Vegas.”

Jessica Mintz in Microsoft's answer to the iPad is still in pieces

“Instead of unveiling an elegant response to the iPad, Microsoft came to the tech industry's premier gadget show with a collection of exposed computer guts.”

I tweeted my gut response to the Mintz piece and my friend Ed Bott summed it up better than I ever could…

"Oh, man, that is one of the stupidest things I've read all week, in a week filled with stupid."

There seems to be a lack of objectivity at the moment for some reason. As best I can tell, these three articles (and many others not cited here) have some underlying foundations or assumptions which are questionable…

  • The real story is in the things Microsoft does not pick to highlight at the moment.
  • Anything less than a Microsoft branded competitor to anything Apple or Google announces or ships is considered failure.
  • The author lacks an understanding of how Microsoft has intentionally chosen to have a business relationship with partners.

So, how is Microsoft really doing?

I thought I would take a moment share my personal thoughts and key takeaways in response to the CES 2011 Microsoft keynote (video and transcript) taken in the order in which they were presented.

Living Room

Competitors

Microsoft XBox
Sony PlayStation
Nintendo Wii
Apple Apple TV
Set Top Boxes (Blu-ray / Cable / Satellite / TiVO / Google TV)

Facts

  • "...30 million Xbox LIVE members."
  • "...a new member joins Xbox LIVE every two seconds."
  • "Xbox 360 has been the No. 1 selling console every month for the last six months here in the United States."
  • "...sales for the Xbox 360 are now over 50 million units worldwide."
  • "In the first 60 days we sold over 8 million Kinect sensors worldwide."

Key Message

"Your Xbox is becoming the hub of your living room. It is your gaming system, but it's your movie, it's your TV experience, it's a TV show, and it's your sporting event. It's your social interaction all delivered directly to the biggest screen in the house."

My Commentary

Do some quick back-of-the-napkin math around the ecosystem for Microsoft alone (XBox Live memberships, games, consoles and peripherals like Kinect) and you'll quickly find this is a billion dollar plus business and growing. The XBox is becoming an entertainment console, more than just a gaming console, building on the strength of our partnerships with movies, TV, music and sports.

By comparison, Apple is a rounding error in this market with Apple TV. Sales have likely come through the magical and revolutionary price point of $99 to achieve sales of 1 million devices in 2010. It’s really too early to tell about Google TV but the initial reviews aren’t promising. Set top boxes are low powered, commodity items locked in to vertical market silos. I don’t hear much excitement about the non-gaming features of the PlayStation or Wii so they might be stagnating into the one trick ponies of gaming.

Rhetorical Questions

  • What does Apple have to offer consumers in the living room besides Apple TV, or what are they going to do to make Apple TV compelling and competitive?
  • There has been a long line of ‘make the TV smarter' initiatives from scores of companies over the years (including Microsoft). Is Google truly bringing anything new to this space with Google TV or is it an ‘also ran’?

Mobile

Competitors

Microsoft (Windows Phone 7) + Partners
Apple (iPhone)
Google (Android) + Partners

Facts

  • "We launched 9 phones across 60 mobile operators in 30 countries."
  • "...we'll finish the release that will make the Windows Phone available on the Sprint and Verizon networks in the first half of 2011."

Key Message

"We're proud of what the customers are saying about Windows Phone 7, and we're going to continue to invest in it aggressively in the future."

My Commentary

Journalists and analysts have continued to focus on how much market share we lost when the momentum for the smartphone market shifted from enterprise to consumer. That's old news...! It would be great to turn a corner and have a conversation about the future rather than rehashing the past.

Windows Phone 7 is a version 1 product for Microsoft. By comparison the iPhone v1 was 1 phone across 4 mobile operators in 6 countries. Apple is just now addressing non-AT&T networks here in the United States with the fourth generation iPhone. Microsoft announced on day one Windows Phone 7 will be available on Sprint, Verizon and AT&T. Net: I believe Microsoft has demonstrated a strong entry into this market. Watch out Apple -- we compete more effectively when coming from behind -- reference the rise of the XBox in the gaming console market. Note Microsoft is also bringing the success of social gaming in the living room to the mobile space with XBox Live -- an area where Apple currently has no comparable offering.

Rhetorical Questions

  • Can Apple or Google continue to hold their positions in mobile experience with competitive offerings from others and their respective partners given the relatively short refresh cycle (2 years) of opportunities for consumers to choose something different?
  • Will the Google model of OS customization by each handset maker hold up in the long term?

Personal Computer (Desktop, Laptop, Tablet)

Competitors

Microsoft (Windows) + Partners
Apple (Mac and iPad)
Google (Android / Chrome) + Partners

Facts

  • "Windows 7 PCs are the fastest selling PCs in history, selling over 7 copies a second, they now represent more than 20 percent of all the PCs connected to the Internet."
  • "We shipped a new release of Windows Live to over 500 million people around the world."

Key Messages

  • "Windows has always been, and will continue to be, about the breadth of hardware and software applications..."
  • "…define and deliver this next generation of devices to customers through the innovation of our partners."
  • "...Windows PCs will continue to adapt and evolve."

My Commentary

Quite frankly, I’m not sure Mr. Ballmer could have been any clearer about the business model for Microsoft in this space: Breadth, partners, adapt and evolve. Journalists need to understand this at a fundamental level when writing about product announcements and responses to the competitive landscape.

The only way for Apple to radically change the personal computer market and displace Microsoft + partners is for tablets to take significant market share from other form factors (desktop and laptop) in a very short period of time. If we include iPad sales when measuring market share Apple is still relatively low on the worldwide personal computer market share looking at the most recent numbers from Q3 2010. To get an idea of position I took Apple sales figures and combined them with IDC estimates…

Manufacturer Units Market Share
HP 15,766,000 16.8%
Acer 11,648,000 12.4%
Dell 11,136,000 11.9%
Lenovo 9,213,000 9.8%
Apple 8,080,000 8.6%
Asus 4,793,000 5.1%
Toshiba 4,659,000 5.0%
Others 28,566,000 30.4%
Total 93,861,000 100.0%

Without a doubt, the iPad has been a success for Apple. If you exclude iPad sales numbers for the quarter (4.19 million) they are somewhere below Toshiba in market share. That’s a nice jump of more than doubling their personal computer volume. It will be interesting to see what Q4 and beyond looks like but my prediction is Apple will begin to flatten out rather than skyrocket in taking market share if the price point for the iPad v2 stays consistent (i.e., $499+).

There are some who will argue the tablet represents a whole new market segment. From my personal use of the iPad: It's not a laptop replacement...and in order for a tablet to be successful in the long term it must become a laptop replacement. The wild card here is the price of the iPad: Can (will) Apple get it low enough to appeal to the mainstream consumer so it’s an additive rather than replacement purchase?

Don’t get me wrong. I believe tablets will be important in the long term. It’s just very, very early in a never ending game.

Rhetorical Questions

  • Will the tablet factor become the dominant form of computing in the next few years?
  • If so, is the rise of the tablet in the mix of personal computers linear or exponential in growth? (Note: Exponential favors challenger, linear favors incumbent.)
  • Does the tablet play by a different set of refresh cycle rules in comparison to the other form factors of desktop and laptop?

One more thing...

Apple and Steve Jobs is rather famous for the ‘one more thing’ presentation style. The Microsoft CES 2011 keynote has it’s equivalent – usually peppered throughout rather than being at the end. This year was no different so it’s worth noting there were items mentioned in the keynote which are important from a consumer standpoint. These are areas where we are making progress or our competitors are either weaker or non-existent.

  • Office 2010, Office Web (Consumer), Office 365 (Corporate), Office on Windows Phone. (Although not mentioned in the keynote: Office for Mac.) This is a great example of where Microsoft has continued to ‘adapt and evolve’.
  • Bing – It continues to nibble (if ever so slightly) away at Google market share. Apple offers third party web search engines in all of its products as far as I can tell -- their closest match as a revenue generator being iAd.
  • Azure Services -- I guess we could theoretically count Mobile Me here if we really want to stretch the definition of a category. Google is making some inroads here but also has to compete with folks like Amazon Web Services.
  • Surface -- People make jokes about Surface as the typical Microsoft answer to iPad. It's cool to see us innovating here...and some of these things are directly applicable to things like tablets. Apple has touch with up to three fingers -- Microsoft is looking at stuff that makes interacting with devices an extension of your body and voice with natural user interface -- the first output of these investments are products like Kinect and Surface.

Summary

I’ve put together a simple table (alphabetical by company name) which helps us see the competitors for each area and their strategic bets. I believe it’s important to note the growing overlap – e.g., XBox Live present in the living room and mobile.

Company Living Room Mobile Personal Computer
Apple Apple TV iPhone Mac and iPad
Google Google TV Android + Partners Chrome / Android + Partners
Microsoft XBox Windows Phone 7 + Partners Windows + Partners

So, I’ll ask a final rhetorical question…

Who is currently best positioned to lead across all three areas over the long term?



Categories: Apple | AppleTV | CES | Home Theater | Microsoft | XBox 360 | iPad | Google | Comments [11] | # | Posted on Wednesday, January 12, 2011 12:33:13 AM (GMT Standard Time, UTC+00:00)   

Apple is a huge competitor in the space Windows Media Center seeks to inhabit. Evidence?

Front Row and Windows Media Center

Apple TV and Media Center Extender

But even though I want to compare and contrast these products I find myself always holding back.

Why?

Because of the signal to noise ratio. On the somewhat rare instance I do post something related to Apple it almost never fails that folks show up bringing nothing to the conversation of value. Case in point, go read the two comments on Thoughts on iPod Amnesty Bin. After reading those I again had to ask myself 'why bother'.

Mary Jo and Long are beginning to understand the pitfalls of writing anything other than high praises of Apple.

So, I ask myself would it be worth the time and effort to give my perspective of MacOS, iPod and AppleTV or will I be labeled as just another Apple hater who works for Microsoft. Can I count on the community (both PC and Mac) to engage in the conversation?



Categories: Apple | AppleTV | Media Center Extender | Microsoft | Windows Media Center | Comments [8] | # | Posted on Wednesday, June 13, 2007 7:10:42 PM (GMT Daylight Time, UTC+01:00)   

More stuff from Thomas to chew on in How To Turn Microsoft Around. I'm glad he caveated the post at the beginning and end with the note about armchair quarterbacking. I'm glad to see some folks setting the record straight in the comments over on his blog, so I would encourage you to go read those. Anywho, my two cents about what Thomas wrote follows -- please go read his entire post -- I'm just going to try and boil it down to the action items he recommends in summary.

1) "...create a Microsoft certification whereby thoroughly tested systems receive a special Microsoft seal of approval. This would be reserved only for PCs that met the most rigorous testing requirements."

Done -- see http://www.microsoft.com/whdc/winlogo/hwrequirements.mspx. I expect Thomas' answer will be 'that's broke, you need something better'. My belief: Our ecosystem of partnerships (Chris loves it when I use that particular group think Microsoft-ism) isn't broke, and in many ways is quite healthy.

2) "Microsoft should spend $3 billion buying everything cool that it can get it's hands on irrespective of the busness outlooks of the individual internet properties. By combining these properties into something cool they *can* build a presence yet on the net."

Yikes. Throwing money around 'irrespective of the business outlook' is absolutely irresponsible, both to our employees and shareholders. The logic here doesn't make sense to me at all: Ignore the business fundamentals and make a decision solely on a nebulous perception of 'cool'. Friendster used to be cool, and now seems to be a footnote in the annals of Web 2.0 supplanted by MySpace and Facebook. Let's chat in 10-20 years and see how sound an investment it was to shell out $1.65 billion for YouTube or $35 million for Flickr -- I for one largely think the jury is still out on those. Anyone remember the dotcom bust around 2000? That was largely fueled by just this sort of approach in regards to investment. No thanks -- been there, done that, got the t-shirt (which is the only thing left for my personal 10 grand -- ouch).

3) "Open an incubator in San Francisco."

Done. How about Redmond, Cambridge, Bangalore and Beijing as well. Don't forget our university partnerships either. Not to mention we fund more 'startups' than you can imagine outside of these research groups in product groups themselves. In fact, Windows Media Center (itself a internal startup which has been highly sucessful, shipping 5 great versions in 5 years) just recently spun off its own startup group (can't say more, sorry). Heck, why limit it to only what we can do ourselves -- we should think about how we invest in others. Oh, wait -- that's done too: http://microsoftstartupzone.com/. Don't get me wrong: San Francisco is a lovely place -- but not the only place -- for great ideas and startups.

4) "Rather than one or two top evangelists though they should hire about 30 of these connectors and also give them direct access to the executives making the business decisions at Microsoft."

Evangelism works best when it's grass roots (I think Robert would tend to agree with me here). I think the answer here is not bringing in folks from outside as high profile connectors but rather encouraging and increasing the profile of folks from within. (I'm pretty sure MiniMicrosoft would agree.)

Thomas, you should seriously think about joining Microsoft personally -- you've got the right mindset that change is good -- come and work for a company that really believes that and empowers you to make it happen.



Categories: Microsoft | Comments [1] | # | Posted on Friday, March 9, 2007 6:21:25 AM (GMT Standard Time, UTC+00:00)   

Mini-Microsoft has gone on sabbatical (although not really) and Robert Scoble has left for a startup. Who is left around to carry the torch...? Well, let me take a moment, walk a few blocks and hold it up.

Today's announcement by Bill Gates was all about making a safe, zero risk, predictable move.

Yippee.

During the press conference every Microsoft employee got an email today from Steve Ballmer. Unfortunately, I read it after reading Guy Kawasaki's The Top Sixteen Lies of CEOs and quite frankly Steve's words ring hollow. I think Steve has good intentions -- but the stock price is speaking way louder at the moment. I also think he has PR folks helping him a bit too much.

Friendly piece of advice for him: Steve, stop by any cafeteria in any given building each day and each lunch with a group of 3 or 4 Joe or Jane Microsofties and engage them in conversation. If you do, people will begin to believe in the magic again.

Anywho, here are the sort of announcements which would have made a favorable impression on me...

1) BillG is coming back full time to lead us through the current / next round of competitive pressures.

Let's face it, Sergey and Larry probably smell blood in the water right now. I'm not sure the competitive tenacity, desire or hunger to win is present in the resultant executive team lineup announced today (nothing really changed now, or in two years: it's still status quo). It's clearly in Bill's DNA to compete -- and we need that now more than ever.

2) J Allard has assumed the role of Chief Software Architect.

Please, please -- anyone closer to 40 as a CxO would be nice. Do the math on the average age of our executive team and cringe. Yes, with age comes wisdom -- but sometimes a tendency to think you've got it all figured out (I'm learning this on a nearly daily basis these days). IBM never planned to be supplanted by the young, upstart Microsoft.

3) Microsoft will be broken up into multiple companies.

It doesn't matter how you slice or dice it -- any company with 70,000 employees is going to have way more chiefs than indians. Don't split it as the courts wanted to with Windows as one company and Office as another. Split it up into granular pieces with the explicit goal of having them compete with each other. Fork the code after we ship Windows Vista and carve out competitive landscapes (where the Windows designed for small businesses can start chipping away at the Windows designed for medium sized businesses, and vice versa, as but one example). Instead of acquisitions, let's have some spinoffs.

4) Windows Vista will be available for Holiday 2006.

Yeah, I know, this one is a long shot. But this kind of 'all hands on deck' whereby the entire company is invested in accelerating (not delaying) the shipment of Windows Vista could be catalyzing. Getting everyone to drop everything for the next month and concentrate on nothing but Windows Vista would send a clear message we mean business.

So where does all of this leave me professionally...?

Honestly, I'm not really sure at the moment. I'm pretty sure I'm still going to stick around. I believe there is still enough time and strength to pull us out of the morass, turn the ship around and head us in the right direction.

Of this I'm sure: If it's to be, it has to start with me.



Categories: Microsoft | Comments [2] | # | Posted on Friday, June 16, 2006 8:00:47 AM (GMT Daylight Time, UTC+01:00)   
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