OK, a slight stretch for a snappy headline but these have been two lead stories in the last few days.
Others will comment with more depth and more knowledge than I can on either Facebook’s tenth anniversary or the appointment of Satya Nadella to succeed Steve Ballmer (and, of course, Bill Gates) at the head of Microsoft. But I was remembering, quite a while ago now, a META Group event in London when the Web was just arriving and disintermediation was a new word. The speaker took a look at the banking industry, with new on-line start-ups starting to eat the lunch of the established financial institutions.
The point was this. The new entrants invested, typically, in just two things: infrastructure, and software development. Existing players had institutional weight; they had enterprises to keep in existence with all the corporate overheads that accumulate over time. with shareholders and stockmarket expectations and dividends. They needed to cut costs to compete with the new lean players. And (doesn’t it still happen?) they would target the IT budget. So the area of investment which differentiated their new competitors was precisely where they were dis-investing.
Microsoft is fast approaching 40. It’s a solid, established player with corporate overheads, strategies, shareholders. Is it still as lean and sharp as the company which turned on a sixpence (a dime, if you’re American; a 5p piece for the youngsters) when it “got” the Internet and realised that MSN and AOL were not going to be where most of the traffic went. Enter Internet Explorer, competing with Netscape; and the rest is history.
Well … we can look at areas in the recent past where that hasn’t been repeated. Smartphones? a lot of Windows phones have been sold, but Android and iPhone are the big players and an Office 365 subscription gives access to Office mobile software on these platforms as well as Windows. But on the other hand: Office 365 is a good model, for both consumers and Microsoft, because it converts intermittent capital costs for what is still essential software into predictable operational costs. And while capital versus operational is the language of the enterprise, where Microsoft’s heart arguably is these days, the concept works for individual licences. There are undoubtedly challenges, but a CEO with an Indian background may have the right insight and vision to work round all that unavoidable corporate baggage.
What about Facebook? Facebook has got to the stage where it is acquiring the corporate baggage (shareholders and so on). It’s had to face up to public perception, particularly over issues like personal online security. Both companies now find themselves covered in the main news sections and financial pages, like any other corporation, rather than only in geek-tech reporting. They’ve gone mainstream.
So Facebook has new competitors in the social media space, sharper and newly innovative where Facebook is unavoidably solidifying. Microsoft is in a stable, continuing enterprise market which it understands; it appears not to understand the consumer market so well. Facebook is in precisely that consumer market, although a lot of enterprises use it to communicate with their own consumers. It’s a fashion market. What’s coming next? and how can Mark Zuckerberg stay ahead of the game?
No links here; just a personal opinion, and you can find lots of links with some easy searching!