When do we call it? RIM is dead. Apple is the most valuable company in the world. Android is the best-selling smart phone OS world-wide. Microsoft cannot afford to lose.
Now, what happened with RIM is sad. It’s a good company; they did a great job. Ok, let’s not be overly generous; their phone OS, like Nokia’s, has always been awful. Yes, people loved their Blackberry’s. But people didn’t know any better. RIM’s mistake? They saw an opportunity (to enter the consumer space in a big way) and they took it.
They made a lot of money.
But it wasn’t the heart of the company. Their core competence was with the Blackberry service and with enterprise. They just faked it in the consumer space. RIM rode the wave for a little while then got destroyed by the big boys.
They made a lot of money.
Now they are sinking fast and likely the wake will take them all the way down (leaving nothing or at least much less than what would have been left had they stuck to their market). Sometimes things happen that way.
I, for one, am proud of Nokia (even though I’ve criticized them in the past for making crappy phone software). They are trying to do something different (unlike Samsung say). Lumia phones are unique and cool hardware-wise. Going all-in with the Microsoft phone OS (formerly known as Metro) instead of Android was a tough, bold call. Things to consider when predicting the success of the Lumia and of Nokia:
Metro gets good reviews (even from people I know who use it).
Metro’s biggest issue: it’s GUI is boring, every app looks the same.
Palm also had an innovative (and competitive to iOS/Android) operating system and good hardware, and failed…hard.
Microsoft has to win this – they need to at least be third and will spend any amount of money to do so (they will buy RIM, twist its enterprise partners arms, etc.), and they have the money.
The Vanity Fair article on microsoft finally makes it online:
Amid a dynamic and ever changing marketplace, Microsoft—which declined to comment for this article—became a high-tech equivalent of a Detroit car-maker, bringing flashier models of the same old thing off of the assembly line even as its competitors upended the world. Most of its innovations have been financial debacles or of little consequence to the bottom line. And the performance showed on Wall Street; despite booming sales and profits from its flagship products, in the last decade Microsoft’s stock barely budged from around $30, while Apple’s stock is worth more than 20 times what it was 10 years ago. In December 2000, Microsoft had a market capitalization of $510 billion, making it the world’s most valuable company. As of June it is No. 3, with a market cap of $249 billion. In December 2000, Apple had a market cap of $4.8 billion and didn’t even make the list. As of this June it is No. 1 in the world, with a market cap of $541 billion.
Sixteen days later, Bill Gates handed off the C.E.O. reins to Ballmer. “I was stunned when Bill announced that he was stepping aside to become ‘chief software architect’ in January 2000, with Steve Ballmer succeeding him as C.E.O.,” recalled Paul Allen. “While Steve had long served as Bill’s top lieutenant, you got the sense through the nineties that he wasn’t necessarily being groomed for Microsoft’s top spot. I’d say that Bill viewed him as a very smart executive with less affinity for technology than for the business side—that Steve just wasn’t a ‘product guy.’ ”
Balmer is smart. But smart isn’t enough in a technology company. You need to have a technical vision as well. That Microsoft did nothing with PocketPC for ten years is inexcusable.
“If you don’t play the politics, it’s management by character assassination,” said Turkel.
At the center of the cultural problems was a management system called “stack ranking.” Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees. The system—also referred to as “the performance model,” “the bell curve,” or just “the employee review”—has, with certain variations over the years, worked like this: every unit was forced to declare a certain percentage of employees as top performers, then good performers, then average, then below average, then poor.
“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review,” said a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”
Supposing Microsoft had managed to hire technology’s top players into a single unit before they made their names elsewhere—Steve Jobs of Apple, Mark Zuckerberg of Facebook, Larry Page of Google, Larry Ellison of Oracle, and Jeff Bezos of Amazon—regardless of performance, under one of the iterations of stack ranking, two of them would have to be rated as below average, with one deemed disastrous.
This stack ranking thing sounds bad, but it sounds too bad to be all true. There are quite a lot of superstars at Microsoft; it can do great things.
Yet Isaacson understands how genius worship has led to multiple interpretations. “It’s like arguing the gospels with a fundamentalist,” he says about the futility of trying to rebut what he sees as misreadings of Jobs’ life. He tells me what he’s told lots of people who have sought him out to catechize about the book—that his biographies aren’t how-to manuals for the good life. He isn’t arguing that readers not look for guidance in the story of Jobs; he knows it is the nature of biography-reading to do so. But Isaacson stresses that Jobs’ life was complex, the lessons to be found myriad.
The legacy of the Walter Isaacson book continues with derivatives. I think Steve Jobs chose wrong, he should have chosen David McCollough. Isaacson missed something; he doesn’t have the love (of technology in this case).
Jobs was a unique character: he didn’t have to be the way he was to be successful, he just was that way.
But I hadn’t known about this addendum from Isaacson (not bad).
He has compared university administrators to subprime-mortgage brokers, and called debt-saddled graduates the last indentured workers in the developed world.
At least Thiel’s fantasies are aimed at improving the world. “It seems like we’ve not been thinking about the right issues for a long time,” he said. “I actually think it is a big step just to ask the question ‘What does one need to do to make the U.S. a better place?’
What’s interesting about Thiel is his drive to make the world better (basically solely through technology) combined with his harsh Libertarian views. An unusual connection occurred to me while listening to NPR’s Fresh Air this morning: Jill Tartar, former director of SETI, kept describing civilizations (ours and alien ones) as technologies. E.g., “an old technology” might describe an ancient civilization who managed to get to us from across space. Describing our civilization by our technology alone…is certainly one way to describe us, but it assumes a equivalence of our fundamental nature, or our societal moral nature, while compared to another species.
Belief: Company X could have came to market with product Y Z years ago!
Implied: Company X would have owned the market like Company A does now.
Reality: Product Y would have sucked and nothing would be different.
Today Nokia announced that it lost $1.7 billion in the second quarter, its fifth quarterly net loss in a row. Just a few hours before the announcement, the WSJ published a great piece revealing how, as early as 2000, the Finnish phone maker had designed a proto-iPhone – complete with a color touch screen and geo-location, gaming, and e-commerce capabilities. The phone, though, never moved into the mass production phase because of ”a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market.”
While it’s not surprising that a lumbering, oversized multinational corporation failed on the innovation front, it’s clear that Nokia does not suffer from a dearth of ideas: It spent $40 billion on research and development over the past decade, almost four times what Apple spent over the same period. Nokia also developed and ultimately discarded not one but two operating systems, Symbian and MeeGo. Nokia’s deficiency lies in what Vijay Govindarajan and Chris Trimble call “the other side of innovation,” or the problem with executing new ideas, not just thinking them up.
Nokia had a nice piece of hardware in tablet form years ago based on Linux: it never took off. This mythical iphone-pre-iphone would also have had no traction. Nokia phones have always sucked software-wise (if you don’t think so, you just didn’t know any better). Basically no one knew any better until the iPhone arrived (except Palm Treo users to some extent).