Understanding Microsoft Better

One reason that I will probably never shift over to the Apple ecosystem is simply because I am so accustomed to using Windows. Which is not to say that I am not tempted: of course I am. But sit me in front of a Windows PC, and I can be working right away (insert Windows 8 joke here) – shifting to a Mac is tempting, but I lose a couple of days just figuring out what is where. Windows is literally part of my muscle memory now (insert Windows 8 joke here too).

And it’s not just me! Microsoft is, for better or for worse, omnipresent in so many people’s lives today, and that’s primarily why Bill Gates is as wealthy as he is.

But how? How did Microsoft get to be Microsoft?

“Microsoft entered the operating system (OS) business in 1980 with its own version of Unix called Xenix but it was MS-DOS that solidified the company’s dominance. IBM awarded a contract to Microsoft in November 1980 to provide a version of the CP/M OS to be used in the IBM Personal Computer (IBM PC). For this deal, Microsoft purchased a CP/M clone called 86-DOS from Seattle Computer Products which it branded as MS-DOS, although IBM rebranded it to IBM PC DOS. Microsoft retained ownership of MS-DOS following the release of the IBM PC in August 1981. IBM had copyrighted the IBM PC BIOS, so other companies had to reverse engineer it in order for non-IBM hardware to run as IBM PC compatibles, but no such restriction applied to the operating systems. Microsoft eventually became the leading PC operating systems vendor”

So much so that the PC was ubiquitous. Almost part of the furniture!

So potent was the PC — especially the Windows PC — two decades ago, that The New York Times commented: “Computer use has become so widespread, and Microsoft’s grip on the industry so powerful, that the introduction of Windows 95 took on the decibel level of a national event, almost a new August holiday that might be dubbed Bill Gates Day.”

In effect, for many many years, especially for the layman, Microsoft was Windows, and Windows was Microsoft. But that is no longer true, and has not been true for years.

The story of Windows’ decline is relatively straightforward and a classic case of disruption:
The Internet dramatically reduced application lock-in

PCs became “good enough”, elongating the upgrade cycle

Smartphones first addressed needs the PC couldn’t, then over time started taking over PC functionality directly


It’s just that it took some time for Microsoft itself to realize this:

My well-chronicled frustration with Microsoft’s corporate strategy comes down to one point: I don’t think any company should have both horizontal (i.e. services) and vertical (i.e. devices) businesses. It creates conflicting incentives: a horizontal business should be great on every platform, while a vertical business should be differentiated.

And Nadella’s approach has been key:

Microsoft existed to “empower every person and every organization on the planet to achieve more.” Though vague enough to deserve a place in the pantheon of corporate sweet nothings, the new mission offered a semantic shift that would define Microsoft for the five years that followed: It would become a people company instead of a product company.

I hope to post more about the company, especially the fifth link, because understanding how Nadella got Microsoft to completely reinvent itself is worthy of deeper exploration.