This post on Serendipity Book and the linked article on Microsoft made me sad in so many ways.
Steve Ballmer has declared that the future is advertising – and so they will go head to head against Google and Yahoo.
First, taken literally, I find it very sad that anyone would think or want a future where there’s more advertising. Where advertising dollars will be enough to sustain a company of Microsoft’s size, along with Google, Yahoo and everyone else. With all of this money going into advertising, there’d be precious little left to actually do things like build products or services, improve them, or offer real value. It sounds horrible.
(Zeus Jones’ bias aside, I wonder whether anyone’s ever sat down with a calculator and worked out how much advertising revenue is required for this to work. )
That leads me to my second sadness. Here’s a company that actually makes stuff. Stuff that’s quite valuable and useful (in general) sort of throwing in the towel. They haven’t been unsuccessful in making stuff, but yet in Ballmer’s own words, “My general rule of thumb today is that anything the consumer doesn’t have to pay for, they won’t.”
To me, this completely undercuts the value that their products offer. Today, you don’t have to pay for an operating system or an office suite but people still do. They pay because, in general, they still believe they get value for their money.
But Microsoft haven’t just undercut their own products and efforts, they’ve also simultaneously reinforced the business strategies of their competition. It makes me sad that they didn’t look at the weaknesses in an online advertising funded business model. With only one primary revenue stream, Google and Yahoo are very vulnerable to fluctuations in spending. As anyone in advertising knows, when times get tight, ad spending is the first thing to be cut. (Ironically, spending on technology infrastructure is usually one of the last things to be cut.)
And this leads me to the last reason I’m sad which is that Microsoft is fighting a different battle with Google than the one’s they’ve fought most recently. Google is now like IBM was in the 80s. A big behemoth, that looks like it has its market locked up. The way to compete against one of these is to create a disruption – not to charge head on.
Microsoft built its business by being a disruption, they have an historic opportunity to reclaim their past. Imagine a world where Microsoft declares itself an underdog in the battle against Google and competes using creativity instead of brute force.
That would be a Microsoft you’d want to believe in.