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Friday, August 04, 2006

On Microsoft´s diversified competitive environment

Which company doesn´t compete in a way or another with Microsoft? I can only think of two: Coca-Cola and Ikea...

Seriously speaking, Microsoft´s huge free cash-flows finally find some battlegrounds to be invested. It looks today as if Microsoft could start competing against any software or Internet industry player whose market proves sufficiently juicy.

Take a look at Microsoft´s competitive landscape, & you´ll find how tough the software/Internet environment is since only top-notch companies operate in this industry:

- Operating Systems: Microsoft Windows vs. the open-source community´s Linux
- Consumer Electronics / Digital Industry: Microsoft Zune (an iPod-like, an AppleStore-like, an iTunes-like, MS Media Player vs. Quicktime - Microsoft is, like Apple did, keeping its environment closed, too bad for them) vs. Apple
- Video Game Stations: Microsoft´s XBox 360 vs. the Sony Playstation
- Internet Browsers: MSIE vs. Mozilla Firefox, Opera, Safari, Crazy Browser, etc.
- Search Engines, Instant Messengers, eMail services: MSN vs. Google
- Same as above, + Media Content: MSN vs. Yahoo!
- Encyclopedies: Encarta vs. Wikipedia, Britannica, Universaelis, etc.
- Enterprise Resources Planning (mostly business intelligence & customer relationship management): Microsoft Dynamics (ex-Business Solutions)´s Axapta, Navision & MapPoint vs. SAP, Oracle-Siebel, Business Objects,, Amdocs, Cognos, Sage, etc.
- Contacts Management: Outlook vs. Mozilla Thunderbird, Eudora, Novell Groupwise, and even IBM´s Lotus Notes & Domino
- Office Solutions: MS Office vs. Open Office, Star Office, Corel WordPerfect Office, Google, etc.
- Personal Finance: MS Money vs. QuickBooks, etc.
- Internet Development Standards: the .Net galaxy (AJAX, XML, etc.) vs. LAMP (Linux-Apache-MySQL-Php)

And I´m forgetting so many (MS Meeting, MS Visio, MS Project, Windows Mobile, MS Exchange Server, Virtual PC, etc.)...I believe Microsoft´s ability to deal with so many impressive competitors deserves an in-depth reengineering of "commonly-agreed corporate strategy rules" like, for instance, "diversification is evil" & "the BCG matrix is wrong" which prove to be jeopardized by Microsoft´s software industry leadership. But that´s another story.

As I see it, Microsoft´s main strengths are:
- top-of-the-class Software Development Project Management Methods, undoubtedly;
- R&D horsepower (MS doesn´t find it too hard to attract talents from all over the world; R&D headcount: over 25K!)
- a certain know-how when it comes to reaching the mass-market; I would say this was Bill Gates´ genius, cf. the democratization of Windows 3.0 against MacOS, IBM OS/2 and Jean-Louis Gassée´s BeOS, although Microsoft undoubtedly had the worst product at the time i.e. less stable and user-friendly.

Before I finish, I bet Microsoft will soon make (say before 31 December 2007) a VoIP acquisition (Wengo?) to allow Outlook users to basically "Skype" their contacts who are online just by clicking on a button. Who bets?


  • i don't think they will acquire wengo ... because it is a 9 telecom subsidiary.

    it looks like very powerful and easy to use Voip service. and much better than skype.

    By Anonymous gandon françois albert, at 8/04/2006 01:37:00 PM  

  • you have forgotten one very important microsoft's strength: cash. then they might have a long term ROI strategy such as for the Xbox.

    By Anonymous gandon françois albert, at 8/04/2006 01:41:00 PM  

  • True about Wengo (I was just making a link with a former post));), it already belongs to 9 Telecom. But I didn´t mean they will acquire Wengo but a VoIP company since the synergetical scope with existing Microsoft products is very wide.

    About Cash & Microsoft: take a better look at the article. On line 6, second paragraph, I wrote: "Microsoft´s huge free cash-flows"...

    By Blogger Jeremy Fain, at 8/04/2006 01:48:00 PM  

  • i said it just because it was not in the last paragraph. but yua are totally right . ;-)

    about "sinergies", do you know another wengo-like or skype-like? because i don't.

    because Outlook isn't web-based, so such technical integration would be maybe harder? but very interesting.

    By Anonymous gandon françois albert, at 8/04/2006 02:47:00 PM  

  • Another Skype-like: Gizmo

    About Outlook not being web-based, true, but the same synergies would go for MSN Hotmail, MSN Messenger, etc.

    By Blogger Jeremy Fain, at 8/04/2006 02:52:00 PM  

  • Oh, but MS already has MS Office Communicator, which integrates with Outlook + does VoIP and Outlook also has web-based version, Outlook Web Access... =)

    By Blogger Kari, at 8/04/2006 05:21:00 PM  

  • There is other software for Voip!

    For example ekiga, which is free software and supports H.323 and SIP protocols. This are people who try to fit into a standart and not doing there own stuff like Skype does!

    To give a different point of view to your discussion before, take a look at:

    By Anonymous Anonymous, at 8/04/2006 06:57:00 PM  

  • Kari> once again, thanks you. I didn´t know Office Communicator. You are the one who should run the IT Addict blog.

    Anonymous> thanks for the software name and the link. I took a look at it: original thought indeed, one of the few members of the open-source community unwilling to see the Microsoft Corporation dismantled.

    By Blogger Jeremy Fain, at 8/04/2006 07:21:00 PM  

  • Microsoft this year VOIP acquisition

    By Anonymous Prince, at 8/05/2006 07:44:00 PM  

  • Good job Prince, we appreciate that!
    Here's an extract of the link you provide: "accelerate the delivery of its unified communications vision, bringing together various modes of communication (e-mail; instant messaging; short message service; voice/telephony; and audio, video and Web conferencing)" - it seems to be the mission statement of the acquisition by Microsoft of Switzerland-based AG.

    By Blogger Jeremy Fain, at 8/06/2006 12:31:00 AM  

  • Damaka (www.damaka) would make a neat purchase for MS.

    By Anonymous Anonymous, at 8/06/2006 09:19:00 PM  

  • Hi, just to give some modest imput to this conversation, Microsoft hasen't been late into acquiring voip companies, and even before the one Prince points out (which seems more business-oriented), Microsoft was already buying Teleo which is pure skype-like Voip.

    And I remember that back then I heard there were more than 1,000 voip skype-like start-ups just in the US market. Even Yahoo has bought one.

    But I believe this conversation has slipped a bit from the original post, and therefore I must say you make a very good point Jeremy here, I would even specify consulting business where MS competes with IBM and a lot of others (with Microsoft Consulting Services). The reasons you give are precise, I even read that too much money was injected into R&D and some of it couldn't be spent! Which points out that cash is nothing without agility in these new IT markets where speed makes the difference. And that's probably why we were seing so much of MS's corporate re-organization lately, just trying probably to make a 50B$ elephant danse...

    By Anonymous Hadrien, at 8/08/2006 05:08:00 PM  

  • Since you´re half of a Microsoft insider Hadrien :-), I was indeed expecting you to comment on this post. I didn´t know MS R&D had cash to spend. I suggest we all start right here thinking of projects we might sell to MS R&D so that their cash burn rate fits their budgets...

    By Blogger Jeremy Fain, at 8/08/2006 05:16:00 PM  

  • Funny you say that, my entrepreneurial thoughts sometimes go to intrapreneurship. I had actually worked on projects aiming to intergrate a big company which therefore carries some advantages: business synergies, fewer financial risks, reliance on solid assets to develop, and probably most of all learn from great professionals, to trackback your most recent post, learn from smarter people than you. As we all know that the 3 crucial factors in entrepreneurship are people, people, and people (actually a real VC joke, surely I'm not learning anything here).

    By Anonymous Hadrien, at 8/08/2006 07:07:00 PM  

  • Yes, I´ve heard that "people, people & people" joke (and obviously its "the team, the team & the team version" too) too many times. And by the way I think this is all wrong: in my opinion, VCs look at:
    1- the entrepreneur
    2- the entrepreneur
    3- market size and growth
    4- and once they´ve understood what the product/service is about (you have about 10 seconds to explain it or they aren´t interested anymore), they move straight to the business plan financials.
    Well, this is anyways an out-of-topic conversation as you often like to point out...

    Intrapreneurship: a great way to start a business, I agree.

    By Blogger Jeremy Fain, at 8/08/2006 07:16:00 PM  

  • To all, and especially Hadrien since you´ve raised the issue, two interesting articles on Microsoft´s external acquisitions policy: Microsoft is more active than ever on the M&A market!
    - Dan Lewin (MS Emerging Business Team):
    - Julien Codorniou (from Microsoft France´s VC-relations division - post in French):

    By Blogger Jeremy Fain, at 8/09/2006 10:38:00 AM  

  • Great! Thanks for the links Jeremy

    By Anonymous Hadrien, at 8/09/2006 10:49:00 AM  

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