“There are three sides to every story: Your side, my side, and the truth.” —Robert Evans, “The Kid Stays in the Picture”
I’ve been ruminating on how Apple and Google could have come up with such divergent takeaways from studying the incredible, terrifyingly dominant run of Microsoft under Bill Gates.
For those too young to remember, Microsoft had a run like no other. Through a combination of strategic brilliance, relentless focus and sheer determination, Microsoft leveraged its initial DOS beachhead into a PC industry-crushing market share and massive profits vis-a-vis Windows, Office, Internet Explorer and BackOffice, a position cemented by a unified foundation of developer tools and legions of dedicated Microsoft developers.
When Microsoft set its sights on a market, it would squeeze the life out of the market leader like an anconda wrapping itself around its prey. Before it was done, the company struck numerous segments, including personal computing (Apple and IBM), word processing (WordPerfect), spreadsheets (Lotus), databases (Borland and Sybase), networking (Novell) and Internet browsers (Netscape).
It’s not hyperbole to say that Apple’s phoenix-like rise and Google’s ascent are directly and positively correlated with Gates’ decision to step away from running his company as CEO in 2000.
Two different takes on the truth
Apple and Google may have fundamentally different strategies, but I believe that both companies have derived their own truths from seven core attributes from Microsoft’s playbook:
1. Integrated strategy: One reason that Microsoft was able to dominate in segment after segment is that every Microsoft product leveraged its sibling by harnessing common APIs, developer tools and linked functions. Hence, when Microsoft eyed a market that was dominated by one of its competitors, it simply could embrace the competitor’s strategy (i.e., emulate their offering) and then extend it (by augmenting the approach with proprietary APIs that harnessed deep ties within Microsoft products). And soon, the competitor was extinguished. In this light, one can see parallels between how deeply Apple has integrated iTunes, iOS and iCloud across all of its offerings, and contrast this with the loosely-coupled approach that Google has taken.
2. Platform homogeneity: Another reason that Microsoft became so dominant is that the very concept of a PC came to mean Windows, Office, Office Docs and Microsoft Foundation Classes, irrespective of whether the hardware was made by Dell, HP or Toshiba. One can contrast this approach with the similar mindset of Apple with iPhone, iPad and the iOS SDK, and the highly fragmented environment that defines the Android universe. Case in point, very few Android devices run the latest version of the OS, whereas within days of Apple’s release of iOS 5.1, over half the market had upgraded.
3. Developers: In a way that Apple never got prior to the second coming of Steve Jobs, Microsoft always saw developers as core to their success. The company worked tirelessly to ensure that developers had: A) The tools that they needed to succeed; B) Economics that warranted a singular embrace of all things Microsoft; and C) The marketing programs and sales channels required to successfully penetrate all levels of the market. Here, one can see how fully Apple has embraced the importance of developers, while Google has made the very definition of the Android platform subject to numerous caveats, much to the dismay of software developers.
The hard truth here may simply be that for all of its celebration of the engineer-driven culture, the sheer amount of face time and handholding required in a successful platform play is beyond the ken of Google, where “good enough,” “free” and “automated” have historically been the catchall approach.
4. Waste transistors: Former Intel CEO, Andy Grove once quipped that as quickly as Intel found new ways to add transistors to its processors, Bill Gates found a way to consume them. This gets to a very fundamental tenet of Microsoft’s success — namely, price-performance was always moving up and to the right. One can see how Apple has embraced this ethos in pushing the envelope in interaction richness, application and graphical processing power and core hardware functions. Conversely, Android — despite a similar view of the world at Google — remains throttled by hardware API limitations and platform fragmentation realities. This is a by-product of Google letting hardware manufacturers and carriers customize Android to fit their business goals as opposed to enforcing compatibility standards from the get-go.
5. Commoditization: Much of Microsoft’s power derived from an inevitability that they established in the market. Anything that they cast their eyes upon would become a commodity, a ubiquitous set of functions that would essentially become free….so long as you bought into the Microsoft bundle.
While Apple has focused on creating and maintaining proprietary differentiation and the high-margin pricing and customer loyalty that it affords, Google has fully embraced commoditization to try and disrupt its competitors’ business models. Apple’s strategy has worked incredibly well for them, owing to the halo effect that they have created for themselves (i.e., entire families become Apple households, standardizing on Macs, iPods, iPhones and iPads). By contrast, I’d argue that Google has miscalculated how long it’s going to take for post-PC devices to reach a commoditized state, and the layers of functionality that they will have to seamlessly integrate and iterate to become a viable alternative in the cloud era. If anything, Amazon is better positioned as the Un-Android Android.
6. Love all segments: When companies embrace commoditization, they tend to see all markets as readily within their grasp and think that they merely need to show up to win. Following this tendency, Microsoft rarely met a product category that it didn’t like, and Google is now similarly aligned. By contrast, Apple exercises restraint in picking a few market segments to focus on, and then goes all in to deliver what it considers insanely great products that have no equal.
7. For the win: Someone once compared Microsoft to a football dynasty who week after week would so thoroughly blow out the competition that it was embarrassing to all parties involved. Microsoft just couldn’t resist running up the score. This company culture was partly a by-product of their resilience in seeing products through multiple generations until market success was assured. But an equally big part of this was due to Bill Gates’ aggressive nature. In this regard, there are strong similarities between Gates’ Microsoft and the culture that Steve Jobs built. In comparison, Google has a more collegial style. Small projects are encouraged there, and failure is seen as part of the larger goal of “letting a thousand flowers bloom.”
So what’s your take? Is Microsoft the right analog for viewing the post PC market battles? Are there other core truths that one must factor into the equation?
Mark Sigal is an eight-time entrepreneur, whose ventures have sold to Apple, IBM and Intel. He is chief product officer at Unicorn Labs, an eBooks and eLearning platform provider.
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