Fake Steve Jobs (really Dan Lyons from Newsweek) has an excellent blog entry detailing why Microsoft is no longer relevant as a player in the IT industry. The piece is in response to a New York Times article (rego required: see Bug Me Not for fake rego details) on Microsoft, which damned with faint praise.
Larry’s like, Look, the Borg has never been out ahead on anything. The difference is, they used to be able to catch up. They’ve always been copiers. That’s been their business model from the start. Let others go out and create a market, then copy what they’ve done, sell it for less, and crush them. They got into the OS business by stealing DOS from someone else. They created Windows by stealing Apple’s ideas. They got into desktop apps by copying Lotus and WordPerfect and then having the bright idea to bundle all the stuff into one cheapo suite. They pulled the trick off again with Internet Explorer versus Netscape, in the late 90s – that was the last time they were able to let someone get out ahead of them and then pivot and copy and give it away free and take them over. By the end of the 90s they had broken through 50% market share in browsers, and that was it for Netscape.
But what happened after that? This is what we were wondering. Larry says two things happened. One, the Borg got slower. They got big and fat and bureaucratic. Two, everyone else got faster. Look at Google. They got so big so quickly that there was no way for the Borg to claw them back. Same for all these other Web businesses. Amazon, Ebay, Skype, Facebook, Twitter. They came out of nowhere, and what they were doing was free, so the Borg couldn’t just do a crappy knockoff and sell it for less. They were up against free – the Web companies were using their own strategy against them.
Another difference was the customer set. In the old days you were talking about selling to corporate America, and consumers just followed suit – remember the marketing shit about how you want the same stuff at home that you have at the office? Selling to corporates was easy. You have lots of levers you can pull to make them do what you want and pay what you tell them to. We all had a playbook – we just studied what IBM had been doing for decades, and we copied them. (Larry stopped and chuckled a little bit when he said this, and for a moment just stared out the window with this glazed, happy expression on his face.) The Borg’s other customer set were hardware OEMs. Again, easy to coerce, and no messy dealing with end users. Perfect.
But on the Web things changed – now you were selling to consumers, and the Borg had no way to coerce or control consumers the way they could coerce corporate accounts.