Friday, September 30, 2005

Changing perspectatives in business

One the most difficult things in business is changing your perspectative in order to understand a new paradigm or perspectative. Business have tendency to see things through the established paradigm that has served them. This tendency is especially reinforced in successful companies largely because of their success. So when they look at a rapidly changing marketplace such as the technology industry, they have a tendency to look at through "previous paradigm colored" glasses.

IBM was unable to grasp the importance of the personal computer revolution. They licensed the OS from a small but successful computer software company. Had they realized the importance of the coming revolution, they would have bought Microsoft outright. However IBM was in the mainframe business and they never thought these underpowered lightweight machines would take off as they did. They were largely a heavy iron company, and saw the world through those ideas. They never envisioned the network effects of the PC revolution with it's cheap PCs, putting computing power everywhere.

In many ways Microsoft is in a similar position tha IBM was in in 1981. While they have a monopoly on the desktop PC market similar to the market that IBM had in mainframes, they don't quite seem to understand the paradigm shift that is occurring. Google on the other hand does understand it. It's funny to watch comments on recent slashdot story about Google patents. MS still sees everything through the lenses of the Windows monopoly. Everything is about the desktop and tying web services to the Windows desktop. This is a solid approach as it continues to support the current monopoly. It's also the safe approach which makes it unlikely to succeed in the long term.

Companies that take advantage of paradigm shifts are the ones that stand to benefit the most from the paradigm shift. MS right now is simply trying plug a hole in the dike to protect the Windows monopoly. By protecting the Windows monopoly, they are missing out on the key characteristic of this transformative revolution right now in computing.

"The network is the computer" was a key marketing slogan of Sun Microsystems for years. The slogan was designed to sell Suns larger systems to corporations. Google has realized that dream by building the world's largest web computing platform. It's built the ultimate mainframe system so scalable, they can serve hundreds of millions of requests daily. The Google platform takes the Sun slogan and makes it reality. It's a platform a company can use to build in application, and not really worry about scability.

Microsoft's response to this is likely to be two fold. First off they will expand their service offerings to include a web services component. Secondly they will attempt to couple those services very tightly with the Windows desktop. What they will not do is build the massive application server that Google has already built.

Microsoft will always have the desktop PC monopoly. The importance of that monopoly will certainly decrease just as the mainframe market didn't disappear with the PC, it just wasn't the only market.