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Comment by jordank | Hacker News Reader

Publishing videos to the world may have issues, but these sorts of videos can have extreme internal value (the OP mentions this). I've worked on quite of a few of these — they've turned out to be useful tools in securing budgets and coordinating teams.

These concept videos can also be useful when an ingredient brand wants to push other players in their industry forward. When company A needs company B to buy into building new types of hardware, far-out concept videos can go a long way. By publishing concept videos, firms can essentially create reference designs for the future.

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"useful tools in securing budgets and coordinating teams"

This is exactly what Gruber is referring to. If crazy videos like this are being used to determine budgets, then the company is being led by fools.

Any manager that would watch this video and then declare "Yes! Build me that!" doesn't understand how products get made and should not be let anywhere near the Product team.

Not everyone's a product visionary, but you need a way to manifest your vision to get everyone on board or rally the troops. Sometimes it's an email, presentation, speech, or prototype. For a company with over 100 corporate executives listed and over 10,000 employees attending its global sales conference, it's not unreasonable for Microsoft to be using video. Large orgs are as much about politics as they are about products, and you need to champion your idea to others.

When company A needs company B to buy into building new types of hardware, far-out concept videos can go a long way.

Compare this to how far (and how fast) one can get by letting your purchasing power do the talking, rather than a concept video. I like concept videos, personally. They are techno-lust candy to me. If this is a big part of how they move other players in their industry forward, however, then this is an inherent weakness in their business model. Industry players respond much more quickly when you're handing them money.

> Compare this to how far (and how fast) one can get by letting your purchasing power do the talking, rather than a concept video.

This makes a lot of sense when you're Apple, and very little when you're Microsoft. Going to Samsung and saying "I'll buy 10MM units, guaranteed" isn't very fiscally responsible if you don't sell hardware.

Disclaimer: I work for Microsoft

Exactly. That is the weakness in your business model to which I referred. I'm not saying that it's a failing in your business model. Clearly you're doing fine despite it. But it is a relative weakness against Apple's integrated model.

Historically it's been a strength. Apple's resurgence is a pretty recent thing, and most hardware+software companies have not done well. Look at Sun and see how well the hardware+software model worked for them. For that matter, look at Android, which is following the software-only model and has overtaken the iPhone in most areas now.

Or you could simply point out that a lot of companies failed because Microsoft sucked the air out of the OS market after IBM foolishly licensed DOS from them under non-exclusive terms. If IBM had bought DOS outright (or bought CP/M) the IBM PC would probably have been a successful integrated hardware+software business (actually it was, but it would probably have lasted longer) like so many others. Even without owning DOS, IBM tried to block clones, but its BIOS was too small a barrier to entry. It's actually Microsoft that's the big exception.

I don't really follow. How did Microsoft suck the air out of the OS market? By being successful? That seems like a rather convenient definition for you. You blame the failure of hardware+software on the success of Microsoft's software-only approach. It actually seems we agree on the facts. You just somehow cast this in a negative light.

I could likewise argue that Apple has "sucked the air" out of the smartphone market. That didn't stop Android from taking the lead from Apple.

No, I point out that hardware+software worked before Microsoft and works well now. And if IBM had licensed DOS exclusively, it would have worked well for IBM. Android represents an example of dumping – taking a loss on a product using subsidies. It's fairly easy to be "successful" if you spend a lot on a product and then give it away.

Historically it's been a strength. Apple's resurgence is a pretty recent thing

The historical context in which it was a strength is gone.

It was a strength during personal computation's ramp-up to ubiquity. It was a strength while Moore's Law allowed Microsoft to confidently add features in anticipation of more Mhz for less money in the nick of time. It was a strength while the margins for hardware vendors were fat and Microsoft could benefit from their race to the bottom as they competed with each other. That is when the hardware vendors were the most innovative. It was a strength before various governments around the world grew weary of its monopoly position on operating systems. And, frankly, it was a strength back when consumers were willing to eschew quality in favor of a cheaper, safer choice.

Those days are over. Computers are ubiquitous now. We've hit the Ghz barrier. The race to the bottom is over, and hardware vendors have razor-thin margins. Their corporate structures and cultures were formed around making things cheaper. Microsoft can no longer tie products together without legal hassles. And perhaps most importantly, humans have figured out open data formats and protocols.

Biology is replete with strategies that were historically strengths until environmental changes turned them into liabilities. For well over a billion years being an anaerobe was the best game in town. Then cyanobacteria gave us photosynthesis and free oxygen, rendering anaerobes' dominance an edge-case at the dawn of life.

Microsoft's dominance is literally the edge-case at the dawn of personal computers. They are now in a position where they have to look to concept videos to inspire ossified and margin-starved cost-cutters to innovate.

Anaerobes probably thought the first air-breathers were an anomaly, too.

Most of what you just said is irrelevant. The question is not just whether Microsoft is in a weaker position, but whether software-only has become a weaker position. Microsoft's antitrust scrutiny, GHz barrier, open formats, etc. What do any of these have to do with the software-only strategy? Antitrust scrutiny? Well, that would only get tighter for Microsoft if they started selling hardware. GHz barrier? Affects everyone whether they sell hardware or not. Open formats? Seems irrelevant, and Microsoft generally supports widely-popular open formats.

I also don't think the environment has changed as much as you say. We've still got numerous PC manufacturers selling "IBM compatibles" running Windows. On the phone front, we've got a similar situation, with Android in the lead. On tablets, it's likely just a matter of time before someone dethrones Apple. Really, when you talk about historical context being gone, I think you're just talking about Apple becoming so huge. And that is a big deal. I'm not sure it fundamentally changes the software-only strategy, though.

I would personally (and this is just me, and obviously has no relation to Microsoft's plans) love to see Microsoft sell hardware. I would love to buy a sleek tablet, phone, and laptop made by Microsoft. I'd love it if we sold a premium product designed exclusively in-house. But would this be a good strategic move for Microsoft? Honestly probably not.

As characterizations of Microsoft's historical strategy go, I'd say that merely calling it a "software-only strategy" is pretty anemic. The real strengths of that strategy were drawn from the details that you claim are irrelevant.

I couldn't disagree more on that point. You ask what those details have to do with the software-only strategy? Well, they were the historical context in which that strategy allowed them to dominate. Did it matter that the hardware innovation of that era had to do with cost reduction? Yes. Did it matter that Microsoft was able to keep customers captive through closed document formats & protocols? Yes. Did it matter that Microsoft both had and leveraged a monopoly position? A thousand times yes. Did it matter that Microsoft had OEMs over a barrel and got them to sign anticompetitive distribution terms? Of course.

I would be reluctant to point to Android phones as an example of a software-only success, because that knife cuts both ways for Microsoft. How is Microsoft going to sell Windows Phone in a market where Google is dumping a free operating system as a loss-leader for potential ad-revenue? Android is just yet another way in which the historical context that allowed Microsoft's software-only strategy to thrive has changed. You have to be able to actually sell the software, after all.

Regardless, here's a great illustration of the effects of Android's software-only model:

http://theunderstatement.com/post/11982112928/android-orphan...

> Did it matter that the hardware innovation of that era had to do with cost reduction? Yes.

Why is this relevant? If the hardware innovation had been about attractiveness or energy efficiency or portability or any other factor, would Microsoft have been unable to compete? Would Windows have been non-viable if Compaq had been selling sleek aluminum boxes instead of beige boxes? Have hardware manufacturers stopped competing in price now? Last I checked, that was still a major selling point.

> Did it matter that Microsoft was able to keep customers captive through closed document formats & protocols? Yes.

This has nothing to do with the viability of the software-only strategy. Would anyone be less locked-in by Microsoft Office if it were running on a Microsoft Machine?

> Did it matter that Microsoft both had and leveraged a monopoly position? A thousand times yes. Did it matter that Microsoft had OEMs over a barrel and got them to sign anticompetitive distribution terms? Of course.

Sure, and you still haven't explained how any of this makes Microsoft's software-only business weak now. Microsoft reached their dominant position as a result of their software-only strategy. Software-only allowed them to partner with every PC maker to make sure that 95% of people would buy a Windows machine.

> I would be reluctant to point to Android phones as an example of a software-only success, because that knife cuts both ways for Microsoft. How is Microsoft going to sell Windows Phone in a market where Google is dumping a free operating system as a loss-leader for potential ad-revenue?

That's a good question, but I think the end answer will come down (partly) to price. If Windows Phone is a better experience than Android, but it costs an extra $15, will anyone care? Is anyone going to reject Windows Phone because it adds a couple percent to the price of their phone? (Especially when many Android phones are probably paying as much for patent licensing anyway.)

> Regardless, here's a great illustration of the effects of Android's software-only model:

That's an illustration of how crappy the carrier lock-in model is. Or perhaps how little Google cares about its phone users. There's no intrinsic reason Android couldn't use the Apple model and push directly to consumers. Nonetheless, Android is selling extremely well in spite of this.

Sometimes the products that companies need to buy aren't yet being made (and can't yet be purchased as components). In this case there is some financial risk associated with producing a new product — videos and other materials can help convince this player to take that risk.

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