It's in their complete inability to get to market quickly, take risks and work together. And that is directly related to their HR policies in particular their ranking system.
Having lived in Seattle for a couple of years, and knowing many Microsoft employees during that time, my outsider's view is that MS's consumer-side failures are largely geographical and cultural.
Redmond, or even Bellevue, is extremely isolated from Seattle, which in and of itself is not exactly deeply intertwined with the cultural centers of the US. Locals know this - Microsoft employees who move from Seattle across the lake to the east side often joke about nobody ever visiting them again (sometimes less-than-jokingly). It's also more or less a company town - Microsoft's presence is so overwhelming and absolute that a lot of the technological zeitgeist from the rest of the country never make it there. If you lived/worked there it's easy to believe Microsoft's ridiculously optimistic PR pieces - pieces that would be hilarious when read in any other environment.
This isn't even an urban/suburban argument (though it has shades of it), it's a "company town vs. diverse city" thing. Microsoft's geographical location gives its people tunnel vision and a grossly false picture of the technology sector.
The second part I've observed is a lack of internal honesty within Microsoft. Failure seems to be couched in safe corporate-speak to the point where it's greatly muted (maybe that's the intent). You cannot expect your work force to pivot and fight hard when they've been falsely told their giant failure was a minor hiccup. I saw this after the WinPhone launch - MS employees were still honestly bullish about its prospects even when the market as a whole had completely rejected it.
If MS wants to be nimble in the consumer space, it needs to set up shop in cities where their competitors play - you will not get an honest impression of how your products (or your competitors' products) are doing otherwise. They also need to have frequent, honest, no-holds-barred accountings of how they are doing. If a product was a flop, call it a flop.
I guess one way to look at it is Microsoft is a good counterweight to the argument you should eat your own dogfood. You should, but you should not do so exclusively.
For example, when the iPhone came out, the management called AT&T and asked them to exclude the iPhone from the previously negotiated Microsoft Employee Discount program. MS phone is Ok, Blackberry is Ok, iPhone not Ok. The effect was, obviously, even less awareness of the best products out there, especially among the most loyal, and thus most influencing managers. One high-ranked manager told me he can't use an iPhone because he couldn't give money to the company trying to kill MS. Assuming the unlikely that Apple indeed was out to kill MS (rather than the more plausible - to make a good product and a few bucks), that would be a very good reason to get half a dozen iPhones, so that you know well what's going to hit you over the head real soon.
Culture is the least identifiable, least amendable, and yet most influential component of any organization...
I've never worked there. I did work at IBM while MS was beating the hell out of OS/2 and Lotus though. During those years, MS did use phrases like "cut off the air supply" and "embrace, extend and extinguish." "Killing the opposition" seems like it's a very deep part of their corporate ethos, at least that's what a lot of their competition thinks and FWIW, their golder years seemed to be when they were more vocally that way. I'm not sure that's the healthiest approach to take. From there, every thing starts to look like defense, are they making a given play because they have something to contribute and a vision of how search, mobile, gaming, etc.. should be that's different than the market? Or are they making the play because they want to shore up their defenses?
I'm not sure I'll ever fully trust them, maybe if they had a complete outsider running the show.
It's a destination for MBAs and project managers, not a place to innovate.
Yes, suburb Seattle is quite different from urban Seattle, but ALOT more people live in the suburbs. You also have to compare it to San Francisco and San Jose, how many of your friends from the city will visit you once you moved to San Jose? Honestly any?
Seattle is fairly international and non-isolated, its in the same category as the bay area, which is to say: we have a lot of space between us and the next mega-cities (Vancouver or Portland), but that is true of any western city.
As for Redmond, I remember when it was just a bunch of trees with a filming lot for Northern Exposure. It never had much of its own identity, like Kirkland, Bothell, or Lynwood; they are just part of the suburbs. Even Bellevue is a bit souless, they have an urban core but its mostly a shopping mall. Not much difference from any other big city in the states!
Microsoft employees are actually brutally honest. We internally criticize our own stuff all the time, there is not much of a reality distortion field in Redmond or Beijing. But we aren't going to hang our dirty laundry in public, what company would do that?
Finally, Microsoft has many offices around the world, many are deeply involved in core products; Silicon Valley for example. My own office has a 1000 people I think.
I was careful to disclaim that this isn't a urban vs. suburban thing (though it is, to a limited extent) - this is a company town vs. business-diverse city thing.
After all, Google and Facebook were both born and headquartered deep within suburbs. The difference is that Mountain View and Palo Alto are swimming in tech companies - even if your social circles were entirely tech people, it's extremely unlikely they all work at the same place.
Compare with Seattle (stronger in Redmond/Bellevue) where practically everyone works for Microsoft (if you're on the east side) or Amazon (if you're on the west). Even for members of the community who don't directly work for MS, the relationship with MS is so overwhelming that it grossly distorts reality inside the bubble.
There's a lack of perspective because just about everyone works for the same company, subject to the same cognitive biases, with no substantial competition base (or hell, just other tech companies) to give you the necessary occasional whack upside the head.
> " but its mostly a shopping mall. Not much difference from any other big city in the states!"
I very, very heavily disagree. The US has many incredibly interesting big cities, even if some of them are deeply flawed from a financial or civic perspective. NYC and SF are no-brainers, but even the much-lampooned suburban gridlock of LA is (arguably) the cultural center of the entire country. New Orleans, Detroit, Chicago, Boston... I don't think I can seriously describe any of those as soulless mostly-shopping-malls.
This is my personal opinion, but IMO Bellevue epitomizes the worst of forced-urbanization. Its soullessness and emptiness is far from the norm in the US, and definitely not the norm for urbanization in the world.
The US has far more boring big cities, though. You've already mentioned the interesting ones.
I'm not sure about the suburban blight around it, I never lived there to experience any of it. But inner tubing down the Guadalupe....
I think you have a very poor understanding of the pudget sound area economy. On the west side, you are just as likely to run into someone working for a startup, Starbucks, or Boeing, or UW, than Amazon. Amazon isn't that dominating. Now, in the east side, Microsoft is bigger, but there are still a lot of other companies, eBay, Google (on both east and west sides, and even in freaking Bothell now), a bunch of startups. Its not quite the monoculture you make it out to be!
Now, when we are talking about Bellevue, you compare it to San Jose, not San Francisco, or Fort Worth, not Dallas, or some weird industrial wasteland suburb of New Orleans (of which there are plenty), not the wards or the French Quarter. All of these interesting cities have their souless mostly-shopping mall areas. Looking international, what I've seen the same nearby satallite cities of Tokyo, Paris, Bangkok, Amsterdam, Lausanne, etc...tells me suburban blight is not just an American problem.
> take risks and work together
When I was there, I was _constantly_ being told (as a manager in DevDiv) that our next release had to work together with each and every new technology that might almost be ready near our ship time (Windows, SQL, Office, etc.). This added not only a huge amount of schedule risk, but dramatically slowed everything down. When your development team has to wipe their machine and install a new build of Windows every week (literally true during one ~9 month cycle of a product I was on), you lose a lot of time. Especially when those builds each pass basic smoke tests, so they're sufficient for running tests, but do not pass basic usage tests, so you can't, say, install Visual Studio successfully on some of them.
Microsoft is well-practiced at the strategy of lashing together all of the boats before they head off to a battle at sea...
And unfortunately I have little sympathy for people who complain about the ranking system. The numbers of "poor" ratings required were so low even back in more-aggressive days that they served more to prevent managers from copping out on delivering hard messages than unjustly delivering bad review scores. Though, certainly, many leads delivered the, "oh, so sorry, couldn't get you a better score" message. But, that's often part of why they're still leads and not managers.
However, having seen Microsoft in action from the inside, any collaborations - most of which are _required_ at gunpoint from top-down - result in a horde of program managers shuttling themselves from building to building "owning" the X->Y relationship, one each per group-pair and arrow direction. It's a win-win for them, as those are a quicker path to promotion than trying to build up internal scope or working with the external market (godforbid <grin>).
Frankly, it's really, really expensive and painful for ~2000 developers on three different teams to each be adding a slew of features with one of those teams building on top of and coordinating the other two. Even with huge amounts of communication, tracking, and the best of intents, until the products at the bottom of the chain settle down, you can't make any progress at the top. And when the top is finally making progress, you actually can put developers in front of APIs (in our case) and then you find out that the stuff at the bottom is totally unusable, but it's too late, because they finally stopped churning and want to ship soon.
I don't claim there's an easy answer, but throwing more people or tools at the coordination problem doesn't (I've seen it tried).
For example, look at how their mobile offering's .NET-based APIs and "WCF lite" GUI toolkit lasted for precisely one generation before someone got the bright idea of yanking it and replacing it with a whole new system based on a gussied-up version of COM. I have a really hard time believing that's an example of coordination. From the outside, it looks a lot more like someone from the Windows division becoming jealous of what folks from the other divisions were accomplishing, and deciding to horn in on that game while simultaneously reasserting the old Win32 technology base at the expense of newer technologies.
It's also a spectacular waste of effort, and left a lot of us developers feeling like we just became collateral damage in an internal power struggle.
Why I'm leery of Windows Azure, even though it seems to be doing mostly the right thng.
And I am not saying that stack ranking is responsible for all its failures but I fail to see how it encourages co-operation which is so critical for successful companies.
1) Their brand reputation became toxic over time. Windows ME was seen as a bad product. XP prior to service pack 1 was seen as a bad product. Normal people knew what the blue screen of death with. Normal people made jokes about the quality of Windows. Correct or not, their market dominance (seen as insurmountable) contributed to it. By the early 2000s, no one liked Microsoft.
Windows Mobile was just as good as the competition (pre-iPhone). It might not have been dramatically better, but it was just as good. In the 90s that would have been enough for them to swallow up the market completed, but it didn't happen here. People were slow to adopt smartphones in this time period.
2) They are just an old company. As you said, they are slow to get to market. It's the ship you can't turn around. Google is a lot like Microsoft in their ability to form partnerships, but unlike Microsoft is very nimble and able to adapt to the market, has the courage to try something completely new (Chrome OS was laughed at just a few years ago), and has the right amount of cockiness to make it happen (usually).
There can only be one Google/Microsoft in technology. If you accept that, how can Microsoft possibly win?
This. Combined with their failure to realize this. I strongly suspect that Windows Phone would have been more successful if they hadn't given it a name that evokes innumerable products with which everyone has a love-hate relationship at best.
> They are just an old company.
They're 362 days older than Apple.
This Apple is really NeXT.
Something potatolicious explained so wonderfully.
I don't buy it. A decade ago Google and Microsoft were on different planets. It's totally possible for one company to sell operating systems to everyone and a different company to provide ad-supported services to the same people.
The mistake Microsoft made was to take Google's nominal preference for open standards and open source technologies as a declaration of war. So they started pushing Bing solely for the purpose of pissing in Google's oatmeal and started astroturfing and lobbying against them left and right, and the next thing you know Google is putting more resources behind Google Docs, they release Chrome and take a huge chunk of Internet Explorer's market share, and by the time Google realizes that Apple is poised to take over the expanding mobile device market in ~2006 the chances of them looking to Microsoft to act as a check on Apple's power would have been such a ridiculous suggestion that I doubt they even considered it, so instead we saw Google's full might behind Android which is obviously what did Microsoft in for the mobile space and what may destroy them yet.
Microsoft's mistake was to attack something they couldn't kill, and in so doing they turned what might have been a thorn in their side into a major war. And it's a war they're losing.
Citation needed. Seriously.