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back to article Microsoft's dumpster-diver partner strategy is rubbish

Microsoft is not the worst corporate investor on the planet. But it's clearly not the best either, and threatens to undermine its own attempts to be relevant in growth markets like mobile and internet by continuing to buy buy stakes in or partner with also-rans like Barnes & Noble, Yahoo! and Nokia. Of course, it may be that …

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Pint

Buy the market leader?

Microsoft buys Apple.

Most of the reg's commentards would spontaneously combust.

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Meh

Re: Buy the market leader?

Even if they could afford to buy a market leader, how would they avoid the DOJ & antitrust? They can't. They will just have to figure out how to make better software, because in the end that is what they are.

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Re: Buy the market leader?

Yes, and they would need to come up with at least a half a trillion dollars in addition to the $50 billion on their balance sheet to buy Apple.

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Pirate

Yes, with their own cash on hand.

I have had this happen to me. Worked for a solid company who with a view to the future built up cash in the bank to guard against down spots and insure large development efforts could be funded to completion. That's what a responsible and smart company would do, right?

Surprise to all when Mumble, Inc. bought us up with barely a fight! What happened?!?

Mumble went to the large investors and asked why all that cash wasn't coming their way in the form of dividends, large dividends, and suggested that if Mumble was in charge the money would be freed up and distributed to the 'investors'. That's only right, right?

Our company got bought by Mumble Inc. with our company's own money. *Because* our company had money in the bank that investors wanted stripped out.

Could this happen to Apple? Gee, what is the size of their bank account? Could large investors want to see that get distributed in their direction? Big grin - I can haz divadenz naow?

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@Bill Neal Re: ".......how would they avoid the DOJ & antitrust?"

Precisely. The strategy in theory is to buy into companies who have the competences and or market experience you lack in order to compliment/extend the range of your business. The moment however that a company the size of MS starts trying to purchasing market leaders the alarm bells start to ring at the DOJ in the States and at the European Commission. What the author has to say is not without interest but he is failing to take into account that fundamental point.

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Anonymous Coward

Re: Yes, with their own cash on hand.

Welcome to HP

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Silver badge

How could Microsoft partner with a market leader?

They want to be the partner leader. They are not going to share with Apple, Google or Amazon...

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Headmaster

Re: How could Microsoft partner with a market leader?

I would be very interested to know if you are able to point to any indications that those three companies would be willing to share with MS, or for that matter with each other. Further, I am obliged to point out that if there were any indication that Redmond, Mountainview, Amazon and Cupertino were willing to "share" (ie divide up the spoils) with each other, competition authorities all over known space would begin to howl in chorus (with very good reason).

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Anonymous Coward

They just need to adjust thier thinkging a little

Instead of forcing the visionaries out and replacing them with Window drones fire the bosses and get some real talent.

I can think of one name to start with.

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Coat

Re: They just need to adjust thier thinkging a little

Hmm, that wouldn't be a certain party that's so out of touch that even his initials spell "BS" backwards, would it?

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Re: They just need to adjust thier thinkging a little

That's pretty much sums it up.

MS turned into a company ran by career managers and MBAs. Talented and initiative engineers do not fit there anymore.

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Anonymous Coward

Re: They just need to adjust thier thinkging a little

"Turned into?"

"Talented engineers do not fit there anymore?"

“The best way to prepare is to write programs, and to study great programs that other people have written. In my case, I went to the garbage cans at the Computer Science Center and I fished out listings of their operating systems.” William Henry Gates III

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Microsoft's method

1) First rate is expensive, second place has hopes of becoming first rate so they are expensive too. Third rate knows they will never be better than third rate and will sell for much less.

2) Piss in the source code until is has some Microsoft flavour then distribute as a part of the operating system. In the past people would try to make do with the Microsoft offering rather than pay for something that worked.

3) When the competitors have been hit in the revenue stream, add some Microsoft extensions and make other Microsoft products depend on them.

Used to work fine, but now Microsoft has to compete with high quality free software. The first time that the Microsoft offering causes a little hassle, people try the alternatives. Making other products depend on extensions just puts those products in danger of being replaced. Only the thoroughly locked in stay with Microsoft, which is why the prices went up 30%.

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Re: "The first time that the Microsoft offering causes a little hassle, people try the alternatives"

If only that were true.

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Linux

Own Worst Enemy

Sounds like Microsoft's own worst enemy is Microsoft. They should have gone ahead and split the company up like the original judge ordered in the anti-trust suit.

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Windows

3 problems...

IMO there are 3 big concerns for Microsoft when it comes to their products. I'm not talking about just the mobile market btw, but instead try to approach it as a whole.

First: Inflexibility. The market has changed - considerably - yet it seems that Microsoft somehow doesn't manage to adapt. For example: the times where they could dictate standards are pretty much gone. The time where they could put a new product on the market with solid expectations that it will sell is also behind us.

Examples of this issue would be the ongoing cycle of pushing out a product which is "so so" only to fix things afterwards. A first impression is the most important moment, yet it seems MS doesn't care about that. Another example would be advertisement. I get the impression that MS doesn't really know how to sell their own products. Take the recent Windows Phone: "It can 'smoke' the competition" (when taking pictures, putting stuff on social media, finding locations around you, etc.). Cool, but I'm not into social media, occasionally take pictures and locations... I live in the Netherlands where that service doesn't work yet. So why would I want a Windows Phone?

Second: Prejudice. IMO well deserved (see above wrt 'first impressions') but still a sad development. Because if there's one thing MS does quite well (IMO of course) its fixing stuff. Software like Office, Expression Web, Visual Studio, etc. have come a long way and when looking at the current version it has become quite usable and enjoyable (though taste obviously differs).

And finally: Tunnel vision. Closely related to my first point but IMO important enough to mention separately: Whenever they spot a missed opportunity which could provide access to a new market then MS seems to have a tendency to totally focus on that single aspect and somewhat ignore everything else. Something which in the end also manages to get "fixed" again but by that time the 'damage' has already been done. Resulting at least in item 2 to become a relevant issue again.

IMO Microsoft has some very high potential and manages to produce quite some interesting and plain out impressive products. Yet it seems to me that they really need to realize that times have changed.

BUT... I guess we'll find out how many of my assumptions hold truth once Windows 8 hits the shelves.

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Big Brother

Re: 3 problems...

Microsoft 2012 = IBM 1985

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Re: 3 problems...

Fourth Problem:

JS envy: Their product isn't Apple, and they shouldn't try to be. Their product is what IBM use to be: not cool but business bread and butter. It needs to conform to cross-platform standards, but it doesn't need to look like Apple. From the scuttlebutt so far, Windows 8 looks like it may rival Windows 98ME for the title of Epic Failure.

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FAIL

Red Hat

"Red Hat bought JBoss, and has been cleaning up in the middleware market ever since."

Only when considerd in terms of FOSS/Linux sales. Fact all of red hat sales amount to a rounding error on MS sales. Since the writer only deals in FOSS revenue terms red hat must look gigantic even if Oracle has much higher middle ware revenue.

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Re: Red Hat

Yes, Red Hat is less than 1/10th the size of IBM WebSphere. Not JBoss, the entire Red Hat company. Big Blue is larger than even Big Red in middleware.

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FAIL

That is some chart!

What, pray tell, is the point of assigning numbers to that awkwardly drawn depiction of twilight at the foothills?

Why, in Q2/2010 did HTC appear twice, once up at the top with either 10 or 100 percent market share; but also at the bottom as a little ‘snow cap’ on Nokia? Was there a joint venture; or just an over-jointed artist?

Why would Asymco want to assert its copyright on this low definition Rorschach test inspired doodle?

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Anonymous Coward

Re: That is some chart!

What an odd comment?

I'm note sure what point you're trying to make but The content of the chart seems very clear and actually seems pretty obvious - only Apple and Samsung are making any money in mobile devices and for MS that's bad news because they can't force Samsung to licence WinPhone so they're only ever going to have scraps from the table until they do something compelling and game changing.

Which I doubt they will...

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Anonymous Coward

Nokia an also-ran?

It need not have been. It should not have been.

It was the Microsoft touch that finished it off

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Anonymous Coward

Re: Nokia an also-ran?

Indeed. And is that Q4/2011 uptick in Nokia profits attributable to the MeeGo N9, a product that comfortably outsold Lumia despite no marketing and being withheld from sale in key Nokia markets. The N9 shows there is still an appetite for "true" Nokia products, but not the Microsoft abomination.

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Anonymous Coward

Re: Nokia an also-ran?

Yeah, having used both an N9 and a Lumia 800, I can assure you that the N9 is hopeless in comparison with the Lumia. The MeeGo OS feels like something from 10 years ago and the UX is frankly terrible. You can say whatever you want about Winphone Vs iOS etc but MeeGo was (and still is) a POS

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Anonymous Coward

Re: Nokia an also-ran?

Well, my experience is exactly the opposite and I still do use N9 which I have chosen over Lumia.

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Nokia an also-ran? Of course not!

In fact, shows a very US perspective. For the world outside the US, mobile phones were almost synonymous with Nokia for the 1990's and most of the 2000's. This includes also smartphones. Nokia is not an also-ran but a former giant. A lot like IBM. Like IBM, it was caught by nimbler competitors.

Time will tell if it keeps fading or reinvigorates itself.

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Megaphone

what about skype, instagram

I dont understand matt; why you have not considered skype and instagram.

obviously they are leaders in their respective fields and are now sided with microsoft.

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Re: what about skype, instagram

Heard people switched to viber on mobile because of a simple thing, it is phone number based rather than nickname.

Old Skype would see this trend and do something about it. Under Microsoft, they don't.

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Anonymous Coward

Barnes & Noble deal makes sense

Unless you are Apple, who can sell anything whilst they remain 'cool', you need to avoid being just another ho-hum device. One way is to have content, like the Kindle Fire.

Microsoft have the music side sorted with Zune being linked to the account so getting books seems the next step.

Whether you like their implementation/partners or not, their strategy seems so obvious I can only assume Matt is being deliberately obtuse for some unknown reason.

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Microsoft can't buy a market leader, it has to merge and thus change it's essentials

Microsoft doesn't buy the market leader because Microsoft doesn't want to change.

Consider the example of Microsoft buying Apple. There is no way that can be a purchase, it has to be a merger. Furthermore, the Apple executives are the ones which need to bump out the Microsoft executives, since those at Apple have made the right choices and executed them well.

The result is a company which isn't Microsoft anymore. And that's why Microsoft don't buy the market leader -- they don't want to lose "their" company to outsiders.

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Re: it has to be a merger

Right! Because mixing fire and water in equal parts is always good for both fire and water!

/end sarc

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Apple Source too Big to Buy, Too Rich for Failure and so Quick into Cloud Control

What if Apple buy Windows for SMARTR Program Enablement. A Virtual Mutually Beneficial JOINT Adventure seeding both systems new feeds and needs for Virtually Advanced IntelAIgent Operating Systems in CHAOS.

Choose your CHAOS Provider with Due Diligent Care...... Some and Too Many are Snake Oil Salesmen playing with an empty deck and ever fearful of the consequences of past other lives destroyed to be of any possible good use in an unusual future with Clouds Hosting Advanced Operating Systems on Browser Pages/Sublime Information Stores.

Some Browsered Pages display Super Sensitive Inside Intelligence once thought to be way above Top Secret and Cosmic but now MetaDataBase Heavy Information Fuel for Anonymous Alternative Attention ..... Bigger Picture Arrangement.

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Anonymous Coward

The sendo effect

The simpsons had a skit covering this.

The principle is an old one but still works. A business offers to "support" a smaller one by providing expertise, cash, tech, etc. They install someone on the board and manage to wreck the business while at the same time pruning information, contacts and tech from the now seriously sick business. Then they buy the ashes of the business in the fire-sale.

On this side of the pond, its called the sendo effect - MS did this to Sendo to gain a foothold in the mobile market and it worked.

MS are not the only large corp who does this, IBM, BT etc have all played this game and ended up with the business assets as a knockdown price.

IMHO Driving Nokia into the wall is probably a valid (commercial) MS strategy.

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Droves.

"All of which leaves Microsoft in a quandary: consumers are leaving Windows Phone in droves"

Er, was there ever as much as a whole drove of MoPho consumers in the first place?

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Re: Droves.

If you count Windows Mobile, then yes.

A lot of corporate "emailphones" used to be either Blackberry or Windows Mobile - don't have figures for the split, but pretty sure WM was a clear second place due to the Exchange server integration.

WM is now properly dead and being buried (even the app store is closed) so corporates are forced to leave WM, and the WP7 marketing position appears to be "Don't want the corporate market", so WP7 won't even get considered..

My next company phone looks practically certain to be either an iPhone 4S or Samsung Galaxy S II/III.

So the 'droves' is fairly accurate as all the corporate contracts vanish - probably mostly to iPhone

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