There are a few places were Tim seems to try to dig into the particulars of Microsoft’s Web 2.0 meanderings, like this question about the possible directions for Outlook:
TIM O’REILLY: So how much is that part of your strategy? We talked yesterday a little bit about Outlook and how it seems like there’s this enormous potential to sort of blow away really the crude offerings of the social networking sites, because at the end of the day Outlook for many people is a reflection of their real social network, rather than this kind of, hey, are you my friend, will you be my friend; you can actually tell who you communicate with.
BILL GATES: Well, I think we’re not going to turn Outlook into MySpace.
TIM O’REILLY: I’m not talking about MySpace, but -
BILL GATES: You’d actually like it to be this idea of your contacts, who you communicate with. There’s a lot of rich data that Outlook sees that can help you in your communications, and that definitely is something we want to do driving forward. The idea of making it easy to see schedules, see multiple schedules, the traffic kind of activity you had, we have some of that in this next version of Outlook, but we could go a lot further in the idea of the communication network.
TIM O’REILLY: And you have some of that in the live contact feature in Messenger as well.
BILL GATES: Right, so that if someone updates the contact, then it automatically can come down onto your local store.
But, I wonder, why doesn’t Microsoft try to turn Outlook into the world’s most potent business social network, instead of just a Plaxo replacement? It staggers the mind that Gates turns away from a big, and tangible opportunity (one that could lead to who knows what), and instead continues the endless strategy to win all wars with all competitors. In this one interview, we wander from OS strategies, to handhelds, tablet PCs, the iTunes/iPod dominance of the music business, games, navigation in cars, and everywhere else.
Microsoft continues to define its strategy as winning all of these critical battles, and gaining leverage through that. But Microsoft cannot possibly win all of these wars, and it is certainly falling behind in areas where it can’t afford to lose. The recent announcement of Vista slipping past Xmas is just one glaring example. Sony mismangement of the PS3 is giving Microsoft breathing room in the games area, but, as Om Malik recently pointed out, that is more than countered by the near monopoly of Apple in the music player space, and the likelihood of Apple’s dominance in the ongoing battle for the livingroom.
But more interestingly, the inheritors of all the cool Web 2.0 apps companies — Google, Yahoo, and eBay — are moving at a blinding rate to sew up the future. Del.icio.us, Flickr, Writely, and the other legion apps companies, have built what may be an unassailable innovative lead that Microsoft, middle-aged and slow-footed, may not be able to close, no matter how many times they reorganize engineering management. Google is moving forward with a vision of the Web OS, and planning how to get that onto our devices; Microsoft continues on with a smaller, parochial vision, of getting Office onto the Web, and holding onto all those paying customers in companies everywhere. The new offering from AjaxWrite, pushed Mike Arrington to ask the question “Will things like AjaxWrite have an impact on Microsoft’s Office revenues over time? Yeah, it must. Even so, Bill Gates says that he just doesn’t understand our infatuation with thin client versions of Word.” Mike had lunch with Gates at Mix, and was struck by his unresponsiveness to this market dynamic:
I asked a few questions, specifically about what Microsoft’s plans are around an online version of Office. Bill responded at length without really giving an answer. He did say that he thought people were too infatuated with the thought of an online version of Office, but that they were really focused on the idea of cloud storage for office files. This fits right in with their strategies around Office Live, of course…
I think it represents an obsession with big picture, dinosaur, Soviet-style five year plans to conquer the world, while smaller, more agile Web 2.0 companies are nibbling away the edges of the Empire by rolling out apps that will support migration from the big cash cows that Microsoft is basically banking on: Office and Windows.
The stock market answered the slip in Vista’s release by paying 72 cents less a share for Microsoft stock, now at $27.02: a 3% loss. I am predicting — despite what the pundits say — that continued erosion of the core of their business will lead to an additional 20% or higher drop in that stock price before year’s end.
Too many battles to win means that they will surely lose. Their fate is to become the IBM of the 21st century, and to be eclipsed by some upstarts who did not even exist when they were in their heyday. It’s not a terrible fate: IBM is still a large, and successful company. But they aren’t the dominant force in technology that they once were, back when mainframes were a hot new idea. In the future, we will think that desktop applications suites were a neat idea once upon a time, too.
[Update: 2:47pm ET 24 Mar — Mary Jo Foley points out that now Office is going to be delayed as well, so things are actually worse for Microsoft than I reported this morning.