Microsoft Has Become An Interesting Company Again

 

How many of us had never, ever used Microsoft Windows before? For many, it’s their only choice of operating system especially when they bought their desktop or laptop. For selected few, it’s the only operating system that they ever encountered of in their life (other than iOS and Android I mean). My experience with desktop was with DOS (can’t remember exact details which flavour it was) when I joined a computer club (trust me, it was a big deal back then) in 1988 (nope, never gonna reveal my age).  Then I stopped. Primarily because my family can’t afford to enrol me into the club anymore and PCs were expensive back then to buy it ourselves.

(Windows 1.0. Nope, never got the chance to play around this. Image from Wikipedia)

But in 1994, my family finally managed to cough some dough to bought one (no, not from Dell). Yes, it was a PC with Microsoft Windows because Apple Macintosh was still too expensive for us, not many programs available for Mac and compatibility issues with other hardware (i.e printer). And it came pre-installed with Windows 3.1, along with a relatively large and loud printer that can woke the whole town if we tried to print something on midnight. So we left the printing part during the daytime. Me and my sister used it so much that sometimes it hang, due to insufficient memory/RAM (and then a quick call to the support dude asking ‘what is ‘insufficient memory’ meant?’).

(Windows 3.1. My first Windows OS. Image from Wikipedia)

We used it mostly for desktop publishing/word processing thingy (WordPerfect) or some art/graphic thingy (Printshop Deluxe). We tried Lotus 1-2-3 as well, but since we were still noob, we were not sure what is it for . Oh, and no Internet. Not even dial-up service. A year later, Windows 95 was released, but we were unable to upgrade it due to insufficient memory (more like insufficient money). But with all those challenges, it opened up my eyes to the potential of PCs (and after that Internet) to revolutionise the whole world. So I came to respect Bill Gates more and more after that, I even save some money (for almost a year) to buy his book (The Road Ahead).

 

(The Road Ahead. Image from Wikipedia)

For me, the book solidified his status as a great company leader and visionary (as much as I respect Steve Jobs, he never wrote a book). Inside the book, we can understand his history, his view of the future, how it might impacts us and technologies that he envision. There’s even an old photo of him with the late Paul Allen staring in front of computer at Lakeside School, and how he (Bill Gates) manipulates a software program to ensure he’s the only boy in the class full of girls (well, that’s what he wrote. Don’t sue me Bill)*.  Yes, he was (and still is) a guy with clear mission and vision. Yes, he is smart. Yes, he has the ability to execute the marketing and business strategy to sell Windows (and other Microsoft suites of programs) to every possible desktops and laptops. But yes, he was also ruthless, sneaky, manipulative and fought to kill. But you don’t build a billion dollar company and become a billionaire in the process without making few enemies, right?

As much as admiration (and criticism) towards Bill Gates and Microsoft, we can’t deny that by making PCs cheaper, more available and more user-friendly to us, Microsoft has changed our lives through their dedication toward innovations, released a products that increase our productivities (blue screen of death aside) and become one of the most admired company people love to work for.

Bill Gates truly has brought Microsoft from a software company to the software company.

 

Start Me Up

(Windows 95. Image from Wikipedia)

With the Internet mania (and dot-com craziness), Microsoft was one of the companies well-placed to take advantage from the growth of PC industries in the 90s (another companies worth mentioned were Intel and Dell). I’d say that Windows 95 (and Office suite) really solidifies Microsoft as the giant among other giants. With that, slew of other products (and competition) came from Redmond like Internet Explorer (I was never a big fan of any IE and always tried to find alternative), MSN, Encarta (big fan), Windows CE (I used it for a while circa 2009-2012, before switched to iPhone’s iOS), Bob (seriously, who would actually use ’em, even today?) and even Microsoft Mouse (succeeded by IntelliMouse). And it makes Bill Gates the richest person (or among the richest person) on this planet, especially during dot-com bubble.

(Not to mention several enemies, lawsuits, hate jokes, dirty jokes, hateful messages, photoshopped image of Bill Gates as Emperor in Star Wars and plain skepticism from the rest of the world about their dominance. I do remember he wrote that he understands the people’s fear that Microsoft might stifle innovation to maintain market lead and claimed that Microsoft got plenty to lose if they did that. But even with less-than-desirable products that they released, it doesn’t seem to me that Microsoft lose anything, at least from what I observed during 90s and early 2000s. Exhibit A: Internet Explorer web browser).

So Microsoft cruised along, minting money, expanding their power and dominance, collecting lawsuits, making enemies and became one of the largest enterprise in the world. Seems like nothing could go wrong with them. The question was asked about who can beat Microsoft before it becomes much larger and powerful (Answer: Google, Apple and Facebook. But that’s a discussion for another day).  There seems nothing could go wrong and Bill Gates can hand over the key to the kingdom to his successor which also happens to be his friend in Harvard, Steve Ballmer (just don’t call him ‘another Steve’. That title belongs to Steve Wozniak).

 

Monkeying Around

What are to like about Steve Ballmer during his tenure as CEO? He maintained Microsoft lead in PC industry. He settled the lawsuit with the government. Annual revenue surged. Net income increased more than 200%. Total annual profit growth higher than GE and IBM. And don’t forget Microsoft X-Box. And Windows XP as well.

What are not to like about Steve Ballmer? Stagnant share price. Failed to see how iPhone (and Apple) makes Microsoft almost irrelevant. Failed to fight Google in search (but at least not making a mistake of buying Yahoo!). Failed to see Google’s threat was not in search but smartphones. Declaring open source software as ‘communism’ and ‘cancer’. Zune. Nokia. And anybody still remember Vista? How about Internet Explorer 6?

Sweating and jumping on a stage before and during addressing the audience is a personal choice, so I’ll leave to you readers whether to like it or hate it.

So what had gone wrong? In my opinion, as he was the COO and the business-guy, he was not as visionary or creative like Bill Gates. He was good in defending Microsoft’s existing products and creates a boatload of money from it. He was good in deciding to settle the lawsuit with the government, as prolonging would meant a distraction to him and the rest of the employees. He’s a number guy at Microsoft, and it’s no surprise that he concentrates more on sales, revenue, expenses and income instead of where the technological trend is heading towards. But you can’t deny the fact that he loves Microsoft. Ever saw Steve Jobs screamed from the top of his lung that he loves Apple? Ever saw Larry Ellison proclaimed and did the same with Oracle?

But to be fair to him, there are several steps that he took creates the fundamental of today’s Microsoft. He managed to fend off and stabilises Microsoft during the rise of Google and Apple (and 2008 financial crisis) should be applauded as well. Oh, and investing into Facebook (not sure how it integrates with the rest of Microsoft’s products, but surely healthy financial return). And his move towards Data Center, hence paving the way to Microsoft’s cloud business is one of them (in fact, I’d say the most important) and also led Satya Nadella to be named as his replacement. He created a trajectory for Microsoft to rise again, although he’s no longer the one to lead.

 

Will The Empire Strikes Back?

In all honesty, the announcement of Satya Nadella was a bit of surprise for me. I was expecting maybe Microsoft would bring back old timer like Paul Maritz, Nathan Myhrvold or Ray (Raymond) Ozzie to head the helm. Nothing against Satya though. I was just not expecting him.

But he’s the guy chosen by Microsoft’s BoD to lead. And looking from past experience, I’d say that he’s more than capable, knowledgeable and plenty of experience with technological trend (being almost a lifer with Microsoft won’t hurt his chance either). After all, he used to lead a project to move to cloud computing, led the cloud and enterprise division prior to his appointment as CEO,  and bring a lot of previously on-premise enterprise infrastructure into clouds (I truly believe this is the connecting dot between what he’s doing now and what Steve Ballmer did in the past. So Steve Ballmer was quite visionary as well, but just not visionary enough to fight Google and Apple during his tenure).

So what does he did so far, the ones that attract my attention? Two of them are the most outstanding, at least in my opinion.

Moving To Cloud

Theoretically shouldn’t be a surprise, since he led cloud division before he got the promotion. What surprises me is that Microsoft finally admits (maybe not explicitly) that on-premise enterprise infrastructure is no longer a bright future (and maybe cash cow as well) for them. He’s willing to take the risk of forsaking still-healthy revenue for the future, although that future is rift with other competitors like Amazon and Google. But consider Microsoft is stronger in enterprise market than those two, I think he understands the competitive advantage that Microsoft has with their existing client.

Just hope he delivers what he promises with Azure. In other words, more results and less talking, unlike certain fellas in Redwood City.

Embracing Open Source

If you tell me 10 years ago that one day Microsoft would embrace open source, my reply would be ‘are you on drugs, mate?’

But not only Microsoft (under Satya Nadella) embraces open source, they also has become a Platinum member of Linux Foundation. Microsoft Azure also supports Linux and its distros like Red Hat and Ubuntu (my favourite Linux distro, used to be Red Hat), Docker container and even MySQL database. Not only that, Microsoft bought GitHub, long the favourite place for programmers for showing off source code management and version control using Git. Which is wisely strategic, as those programmers need somewhere to host their applications, and Microsoft Azure is ready to host them. And just recently, joined Open Invention Network, which allows developers to use Microsoft’s patent without any licensing fees (Caveat: Remember the old mantra ‘there’s no such thing as free lunch’? I’m skeptical with Microsoft’s move on this one, but I’ll try to be positive)

I wonder the look on Steve Ballmer’s face when Satya Nadella announced those news.

 

However, there are also two cases that I still don’t understand why Satya still doing it.

Not Selling Xbox

Simple reason – Microsoft mostly deals with productivity applications or programs. How gaming console fits that description baffles me until now.

Disclaimer – I had one gaming console in my whole life. It’s Xbox 360. So don’t ever say that I’m being biased.

 

Buying Mojang (Minecraft)

Same as above. If the strategy is to glean big data or enhancing AI capabilities of their Azure cloud, then clearly I missed it. But I must admit I’m still clueless. Satya is not a financial quant, so I doubt it’s about some funny accounting strategy.

 

So how’s the performance of Microsoft since Satya Nadella becomes their third CEO? Launched an AI division with 5,000 new scientist and engineers. Bought LinkedIn (great strategy to integrate with their Microsoft Dynamic and Office 365). Bought GitHub (great strategy to entice more apps hosted in their cloud). Bought SwitfKey and Xamarin. Sold Nokia. And MSFT market cap doubled to almost USD700 billion (as of March 2018). Not bad for a 4-year tenure.

But how will Satya performs and behaves for the next 4-year (or more)? Will he go back to the path of steamrolling MSFT’s competitors like what Bill Gates did? Will he become as excited with his company like Steve Ballmer (for the love of God, please not). Will he become smart but ruthless like Jeff Bezos? Time will tell. But one thing for sure, I can’t wait to find out.

And I truly believe, after following Microsoft history and using their products for the last 25 years, Microsoft has become an interesting company again, and deserves a respect from us.

*Although to be fair to Steve Jobs, Bill Gates was actually born on a silver platter and therefore, his opportunity to get exposed to technologies like computer when he was young was much higher than Steve Jobs. We all love the rags-to-riches stories right?

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