Microsoft, both follower and leader

Things have changed a great deal for Microsoft over the past few years — due to various circumstances — and the company is now focusing on a wide variety of areas that were previously of little or no interest. One such area is the small to medium-sized business market.

The two things that always brought in the money for Microsoft were Windows itself and Microsoft Office. Part of the reason for Microsoft’s change is because there hasn’t been anything much on offer from Redmond in this department lately; besides, people have shown that they’re reluctant to upgrade as frequently as they once did. The company’s focus has volleyed between the upcoming version of Windows and fixing security problems which have plagued it since its introduction to the Internet a decade ago.

It doesn’t seem that Microsoft has ever known the Internet very well: Bill Gates originally said that Microsoft had no interest in it, revealing that he had no idea of its potential. In fact, the only reason that Windows became Internet-enabled was due to Netscape successfully leading the way to the World Wide Web, which in turn brought about Microsoft’s desperate attempt to overpower Netscape. Here we saw Microsoft bundling Internet Explorer free with Windows, in what seemed to be a potentially lucrative market, sacrificing financial gain for the power of leadership.

Why do I bring this up? The reason is due to Microsoft’s continuation of this behaviour. We can see that Microsoft is staying true to form: rather than focusing on innovation, it is entering into markets that already show signs of success; more importantly, it is still attempting to establish itself as leader of these markets via unfair practices. Although Microsoft still has a substantial amount of cash tucked away, and certainly doesn’t have any lack, it is evident that the company needs to keep making money by greater and greater amounts. If you want to stay high then you have to increase your intake — so to speak. Using its monopoly position to muscle into existing lucrative markets is an easy and effective way of achieving this goal.

Microsoft is still having to work hard for its money, holding off those ‘attempting’ to compete with it. Where Microsoft’s monopoly still looms large, and users find themselves unable to easily (and cost-effectively) escape Microsoft’s lock-in, there really isn’t fair competition. If you try to compete with Microsoft it’s like running a race with lead weights on your feet, where you’re forced to produce something many times greater than your opponent to do as much as draw level. In those instances where you do well, you’ll probably find that you’ll be further encumbered by the weights of patents, proprietary file formats/protocols, and other Intellectual Property issues. Also, there’s the fact that Microsoft is likely to integrate your new ideas into its own offerings (e.g. Microsoft Office) via bundling, and use them as a means to get existing users to upgrade. Bundling is a powerful thing, and Microsoft knows it!

Just as Microsoft ‘won’ the Internet by bundling IE with Windows, it is attempting to win its place in any other market where there is good business. Microsoft’s Exchange Small Business Server was a start, elbowing out the mail server companies that provided for small businesses. Then there’s Microsoft’s Office SBA (Small Business Accounting) package: it doesn’t fill a gap, Microsoft is elbowing its way into a market that is already established — and planning on bundling its ‘competing’ product with MS Office. Now there’s Microsoft Office Live, where Microsoft plans to bundle free Web hosting, domain names, and e-mail accounts with the package — elbowing its way into yet another successful market.

Rather than leading innovation, Microsoft seems to be pushing harder and harder into markets that are already successfully established, blatantly showing frustration in having missed out on areas that companies such as Google are already successfully leading. Within the past few years we’ve seen Microsoft jump into the cell phone, anti virus/spyware, VoIP (Voice over IP), and game console markets to name just a few. Microsoft is branching out in many directions, and where bundling isn’t an option Microsoft uses its proprietary file formats and protocols to gain an upper hand and lock out competition, or lock existing users in.

Being the leader in a successful market doesn’t stop Microsoft coming along and taking away your crown. As we know, Microsoft doesn’t enter into a market where it doesn’t believe it can be the leader.