Three legged race
The battle over desktop computing that played out in the 80’s can be framed with several different narratives. The one that is currently making the rounds as a bedtime story in Cupertino, Mountain View and Redmond goes like this.
A closed system with an innovative feature set was gaining market share. A software company provided a similar feature set for an open system. The open system with the nifty features ended up dominating the market but in an unexpected turn of events, it was the implementation of the feature set that ended up making buckets of money for twenty years, not either system designer or any hardware manufacturers. There are four lessons that come out of this story that are currently driving strategic thinking at Apple, Google, and Microsoft.
First, Apple can never get over the fact that they did the gui first and better, but Microsoft sold enough gui’s to make Bill gates the richest man in the world. I can only imagine how many apple employees and founders over the years have thought “That should have been us.” Their takeaway is that if they had only been able to defend their IP it would have been them.
The second lesson is that you need to be careful not to let someone else write the killer app that defines your system. The internet is ever more the application platform that defines desktop computers, smart phones and everything in between. Google see’s itself as Microsoft of 20 years ago, the internet as the IBM compatible PC architecture, and windows PC’s and iPhones and everything else as just so many Dells and Compaqs. Google is doing everything it can to commoditize internet access of all kinds. Hence Android, Chrome, Nexus One and Chrome OS.
Microsoft remembers how powerful the network effect was last time around. Then they look and see how large of an installed base they still have. Unfortunately their competitors aren’t doing them the favor of forcing users to completely choose which side of the fence they will be on. Microsoft is desperate to tie users in once again and steamroll the competition. The Xbox family of video game consoles is their current great hope at achieving this. Connectivity to their game consoles is one of the few places where they can keep a walled garden growing. Everything else they are doing is to provide a fully functioning ecosystem so that people can go back to being nothing but Microsoft users. Their search, productivity, desktop, email, browsing and smart phone product offerings are all mostly unbundled products now. There is nothing to stop users from choosing one or two of those products and taking a pass on the rest. The Xbox 360 and whatever comes next offer them the best chance at re bundling things.
The final lesson is that no one knows for sure where the big money will end up being made. All three companies’ product offerings are converging on one another in an attempt to cover all the bases. The only big thing that none of them do convincingly yet is social media. The thing that keeps them up at night is that they don’t get it done right before Facebook turns the corner and becomes the next Windows.
