Perhaps it's due to the influence of Amazon, but there are a huge number of cloud computing projects coming out of Seattle these days. Just today, for instance, I learned about EMC's acquisition of Pi. Last summer, Nokia acquired Twango, and rebranded and relaunched it as Share on Ovi. Microsoft veterans are involved in all of these projects — Brian Valentine recently joined Amazon, Paul Maritz founded Pi, and Serena Glover and Jim Laurel founded Twango.
Contrast these with Microsoft's yawner announcement today that Windows Live SkyDrive will expand it's offering to 5G of free storage. Others are offering innovative new services and platforms for the cloud. Microsoft would like you to know that they've got a hard disk for you in the sky. Go nuts! Put anything you'd like on that hard drive. You can even share it with others.
With this track record of innovation, you can understand why Yahoo! is nervous about throwing their lot in with Microsoft.
Microsoft's fast-follow strategy may finally be failing. Fast followers observe the market leader, and imitate with superior engineering, marketing and or pricing. Fundamentally it's the strategy of an incremental disruptor. This strategy has worked well for the company for decades in operating systems and office suites. However, in a world where new web services can be created in months, launched and then propagated to millions of users over night, the two and three year product cycles implied by a fast follow strategy are an anachronism and a serious competitive disadvantage. In retrospect, the impact has been dramatic. In an effort to catch AOL the company has tried Frankenstein models several times, first embedding MSN into Windows, then the Active Desktop on Windows and finally MSN Explorer, a standalone Windows application. Eventually, the Windows team – some of the best followers in the company – moved over to MSN where they tried to catch Google in search, and Yahoo in Photos. These failures have consumed resources that could have been used to create successful new businesses rather than imitate others. In fact, the most successful online business the company created was the very original Expedia, which was spun-out publicly and then sold in the market later.
The Microsoft I knew had mojo, energy and creativity. They've become living proof of Christiansen's Innovators Dilemma. Having created so many incremental improvements to the original disruption, the innovator has become vulnerable to another disruptive innovation. Microsoft has known that they were vulnerable to this for over a decade. They haven't done anything about it, though. Perhaps it's the influence of antitrust regulators, or just bloat, but now it may be too late.
During the antitrust trials of the late 1990's I favored voluntarily dismantling the company. It seemed the only logical way to ensure continued momentum, without having to submit to government oversight. Today it seems as if that break-up is happening, inevitably and involuntarily, as innovators move out of the company. Moreover, having preserved the company intact, management has put themselves in the unenviable position of simultaneously having to respond to regulation and having to deal with the loss of their innovative edge.
So when yesterday Microsoft announced their new openness initiatives, and Sergey Brin said that he finds Microsoft's proposed acquisition of Yahoo! unnerving, it was hard to get excited. The relevance of Microsoft in this new world is increasingly waning. The statements by Microsoft and Google execs should be dismissed by thinking people as little more than pandering to regulators and politicians.
One can only hope that when these latest episodes are complete, the company will return its focus to customers and innovation.