Wednesday, October 21, 2009

Is this the end of the Borg?

Last weekend the NYT published a tough article about Microsoft and about the Borg that made some real fokkin' ripples... I'd be really worried if I were in their shoes. Especially Ballmer's. Is this a pre-announcement of his ultimate going down the drain? With all his billions and stuff? The sad story is that the article is right in most of its arguments. I hold some MSFT stock myself and I can tell you, ever since the Borg took the company's reign in his hands MSFT sucks! And, want it or not, the market is the best judge of a company's management efficiency. Microsofties will tell you that Gates drove the company in disarray and left it entirely confused. However, trust me dudes, during the Gates days Microsoft dominated the headlines every single day - incl. the weekends -, the stock was flying high just like AAPL and AMZN do nowadays, and the world worshipped his Gateness to death! Microsofties will still tell you that the Borg sorted out the mess Bill left behind... Who knows... they might be right. Problem is, today the company looks as gray, bureaucratic, arrogant and incompetent as IBM was before Lou 'Nabisco' Gestner took control.  Among other excuses, the entire IBM executive Board would give you then all the 'proper' executive reasons why they monumentally fucked up in their dealings with a Mickey Mouse company called Microsoft, while its young 'nerd' CEO, William Gates III, wiped away all the relevant IPRs from under their nose, and eventually developed Windows at IBM's expense, to walk out as the richest nerd on the planet less than ten years later. Sounds familiar?

Well folks, Borg's Microsoft smells very much like IBM then... without the innovation bit. Indeed IBM developped some of the most advanced innovations that changed the face of the earth in technology terms. They even got a Nobel Prize (at least one dude on their payroll did, working in their Labs). Microsoft has stolen most of what it's got. In the words of Daniel Lyons, a.k.a. FSJ:

... look, the Borg has never been out ahead on anything. The difference is, they used to be able to catch up. They've always been copiers. That's been their business model from the start. Let others go out and create a market, then copy what they've done, sell it for less, and crush them. They got into the OS business by stealing DOS from someone else. They created Windows by stealing Apple's ideas. They got into desktop apps by copying Lotus and WordPerfect and then having the bright idea to bundle all the stuff into one cheapo suite. They pulled the trick off again with Internet Explorer versus Netscape, in the late 90s -- that was the last time they were able to let someone get out ahead of them and then pivot and copy and give it away free and take them over. By the end of the 90s they had broken through 50% market share in browsers, and that was it for Netscape.

But what happened after that? This is what we were wondering. Larry says two things happened. One, the Borg got slower. They got big and fat and bureaucratic. Two, everyone else got faster. Look at Google. They got so big so quickly that there was no way for the Borg to claw them back. Same for all these other Web businesses. Amazon, Ebay, Skype, Facebook, Twitter. They came out of nowhere, and what they were doing was free, so the Borg couldn't just do a crappy knockoff and sell it for less. They were up against free -- the Web companies were using their own strategy against them.

Couldn't have put it better myself.


Nikolaos Antoniou said...

You say that "market is the best judge of a company's management efficiency" but how do you measure effciiency? Is it the brand? the Shares? Money? Health? Progress? And what kind of 'democratic' bahaviour one should expect from the market or the un-market? And at the end of the day who does really care? The developing countries? MIT and Negreponte with their 1 dollar computer? The EU Information Society... or just the shareholders? You know what, buy ART. It will never have anything to do with temporary trends and manipulative bahaviours. Balthus and Picasso are also brand names that will never, ever fluctuate (from the Latin verb: fluctuatus).

VJK said...

Search Google on the term. There's a formal definition. Measured by financial quantities. Nothing to do with real people management, not directly, at least.