What happened to Microsoft?
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What happened to Microsoft?

How Microsoft Lost Its Mojo: Steve Ballmer and Corporate America’s Most Spectacular Decline

I just got around to reading Kurt Eichenwald’s account of Microsoft’s decline in Vanity Fair. Microsoft has always held a grim fascination for me — when I first started writing this blog my number one topic was inveighing against Microsoft’s monopoly. Now Microsoft is just another information technology company. The article puts Microsoft’s drift down to two causes, a stagnation of its stock price that stopped the minting of Microsoft millionaires, and a stack ranking system that creates perverse incentives inside the company. My only criticism of the article is that it refers to Microsoft to being “cool” in the past more than once. As someone who was around at the time, I can guarantee that nobody ever thought Microsoft was cool.

Nokia falls in with Microsoft
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Nokia falls in with Microsoft

Matt Drance bottom lines the Microsoft-Nokia “strategic partnership” with the following headline: “Microsoft Buys Nokia for $0B.”

I have absolutely no qualms about calling this new regime at Nokia a puppet government. This is far and away the most brilliant move of Ballmer’s tenure.

All the analysts are on the same page on this one — this is a huge coup for Microsoft. It’ll be interesting to see whether this deal turns out to be important in the long run. Can Nokia handsets running Windows Phone 7 carve out substantial market share somewhere between iPhone and Android? RIM seems to be having trouble, and is better positioned than Microsoft/Nokia.

Also relevant is Horace Dediu’s short history of Microsoft’s previous mobile partners.

How Microsoft responded to Stuxnet
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How Microsoft responded to Stuxnet

John Borland at the Wired Threat reports on a talk by Bruce Dang, the engineer at Microsoft whose job it was to break down the Stuxnet worm. It’s an interesting look at exactly which vulnerabilities Stuxnet exploits, and how Microsoft’s security team broke down the problem.

A video of the talk will eventually be posted at the Chaos Computer Congress Web site. I’m going to try to remember to go back and watch it.

Update: Video of the talk is available here.

It’s Windows without windows
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It’s Windows without windows

John Gruber on the name of Windows Phone 7 Series:

The bigger naming question: Why name it “Windows” anything? If Microsoft is going for a clean break, why not a new non-“Windows” name? I think it shows just how perverse Microsoft’s obsession with “Windows” is. There’s no good way to leverage their Windows PC OS monopoly to extend it to mobile, other than the name, so they’re sticking with it. It doesn’t even make literal sense. The whole point of the “Windows” name is that it was for a system whose UI revolved around the concept of on-screen windows. There are no windows in the Windows Phone 7 interface.

It’s funny because it’s true.

Links for August 26
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Links for August 26

  • Nefarious idea of the day: requiring users to view and regurgitate an ad to prove that they’re human. (Microsoft has applied for a patent on this approach.)
  • Frank Bruni’s final column as the New York Times restaurant critic. I loved his advice for navigating a menu, which ends with, “Then scratch off anything that mentions truffle oil. Choose among the remaining dishes.”
  • By way of the Footnotes of Mad Men, a newsreel from the 1964 World’s Fair. Worth watching for the explanation of computers alone.
  • Andrew Sullivan on the American way of torture. I’m just going to keep linking to this stuff until I stop encountering people who believe that the way we have treated detainees does not constitute torture.
  • Hypocrisy watch: we send Bill Clinton to North Korea to retrieve US journalists who have been unjustly imprisoned, and we also imprison Iraqi journalists without charging them with any crimes.
  • Today’s compromise is tomorrow’s landmark legislation. Let’s pass a health care reform bill.
  • Ted Kennedy was the first member of Congress with an official Web site.
The Wal-Martification of Microsoft
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The Wal-Martification of Microsoft

John Gruber’s analysis of the current state of Windows really struck a chord with me, because it reminded me of an article I read a long time ago about Wal-Mart. (I blogged about it in 2006.) Gruber’s writing about Microsoft’s declining revenue and the recent news that Apple now holds 91% of the retail market for laptops that cost more than $1,000.

Here’s the key bit:

Microsoft is no longer ignoring Apple’s market share gains and successful “Get a Mac” ad campaign. But the crux of these ads from Apple is that Macs are better; Microsoft’s response is a message that everyone already knows — that Windows PCs are cheaper. Their marketing and retail executives publicly espouse the opinion that, now that everyone sees Apple computers as cool, Microsoft has Apple right where they want them.

They’re a software company whose primary platform no longer appeals to people who like computers the most. Their executives are either in denial of, or do not perceive, that there has emerged a consensus — not just among nerds but among a growing number of regular just-plain users — that Windows PCs are second-rate. They still dominate in terms of unit-sale market share, yes, but not because people don’t recognize Windows as second-rate, but because they don’t care, in the same way millions of people buy metric tons of second-rate products from Wal-Mart every hour of every day.

The older article explains why high-end lawnmower manufacturer Snapper stopped selling its products at Wal-Mart. Here’s Snapper’s then-CEO explaining why it was ending the relationship:

“As I look at the three years Snapper has been with you,” he told the vice president, “every year the price has come down. Every year the content of the product has gone up. We’re at a position where, first, it’s still priced where it doesn’t meet the needs of your clientele. For Wal-Mart, it’s still too high-priced. I think you’d agree with that.

“Now, at the price I’m selling to you today, I’m not making any money on it. And if we do what you want next year, I’ll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can’t put them at a competitive disadvantage. If I do that, I lose everything. So this just isn’t a compatible fit.”

The bottom line is that Snapper could not maintain their high quality or their reputation for high quality in a market where price was the main factor in purchase decisions. It doesn’t surprise me that Microsoft’s current Chief Operating Officer came from Wal-Mart.

As I side note, I just went to Apple’s online store and saw that the 17″ MacBook Pro costs $2,499. Then I went to dell.com and built a Dell Precision Workstation M6400 with nearly identical specs — the total was $2,864.

Links from May 31st
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Links from May 31st

Quotable: Mohammad Sephery-Rad
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Quotable: Mohammad Sephery-Rad

Mohammad Sephery-Rad, minister of Iran’s High Informatics Council, on replacing Windows with Linux for reasons of security:

All the software in Iran is copied. There is no copyright law, so everybody uses Microsoft software freely but we cannot continue like this much longer.

Apparently Iran is also seeking admission to the WTO, which would require them to respect international copyright laws.

Has Flight Simulator met its end?
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Has Flight Simulator met its end?

James Fallows reports that Microsoft has laid off the team that works on Flight Simulator. I was never much of a player of Flight Simulator, but it should be recognized as one of the most important games in the history of personal computing. It was one of the very first games to offer a first person perspective on the action, it was one of the first games for the IBM PC platform, and I think it’s likely that it’s the oldest continually developed computer game on the market.

Wikipedia has a lengthy article on Microsoft Flight Simulator.

PC Magazines has further details.

I can’t help but wonder if the better choice would have been to spin off ACES Studios and give them the Flight Simulator intellectual property to try to make it on their own.

Anil Dash on Bill Gates
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Anil Dash on Bill Gates

Anil Dash puts the career of Bill Gates in a wonderful context:

Bill Gates has pulled off one of the greatest hacks in technology and business history, by turning Microsoft’s success into a force for social responsibility. Imagine imposing a tax on every corporation in the developed world, collecting $100 per white-collar worker per year, and then directing one third of the proceeds to curing AIDS and malaria. That, effectively, is what Bill Gates has done.