Tag Archives: microsoft

More on Microsoft-Skype (Microskype?)

The NY Times did a nice summary today of what analysts are saying about the Microsoft/Skype deal. And I don’t think it’s nice just because it confirms a lot of what I said yesterday. I think it’s nice because the author does a good job of quickly capturing and explaining a variety of viewpoints.

FYI, if you are over your 20 article limit on the Times, just clear your cookies. Bing, got more Times!

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Microsoft + Skype = Winning

Here are some of my initial thoughts on why the Skype deal is a good one for Microsoft, presented in sections, like a good PowerPoint.

Cool features that won’t make much (or any) money, but might improve market share:

  • In game voice calls when using Xbox
  • Skype someone straight from Outlook
  • Or Hotmail, if anyone even uses Hotmail any more
  • Skypeout someone at any phone number that shows up in any Office application
  • Find a number in Bing and one click call it

Ways Microsoft might use Skype to make money from businesses:

  • Integrate features into Exchange server to enable enterprise VOIP
  • Better yet: integrate features into the suite of online apps for small business – they need the savings on phones more than enterprises and lack the skills to set up their own VOIP
  • Implement a “call me” feature for advertisers

Strategic plays:

  • Integrate Skype into their investee Facebook to help counter Google’s voice products
  • Continue to wall off Yahoo from anything business related, relegating the ‘hoo to being a consumer content company
  • If the SMB play works, leverage it against Zoho, Google docs and other productivity apps
  • Build relationships with phone carriers who are moving to IP networks and losing landlines as fast as Lady Gaga is losing fans

Where it won’t work, even though Ballmer thinks it will:

  • Microsoft mobile OS

Did Microsoft overpay at $8.5 billion? Definitely. But they’ve got about a zillion dollars in cash, earning about zero percent interest, much of it sitting untouchable overseas, where Skype is conveniently located. So what’s a billion or two between friends?

Of course, all of the above assumes that Microsoft executes, which is a big (BIG!) assumption. After all, if Microsoft were good at executing this stuff we would all be using Outlook Live instead of Gmail.

See here and here for NY Times coverage, here for TechCrunch and here for GigaOm.

Being Successful Doesn’t Make You Right

No, this isn’t some sort of epistemological exploration of what “right” really means, or whether such a thing can exist at all in a post-modern world. Quite the opposite: it is a blog entry on corporate culture and how that culture works, or doesn’t work, at successful companies, in this case Google and Microsoft.

Peter Sims wrote a piece about why he thinks Google is potentially past its prime, on the way to becoming the next Microsoft. I don’t know if he’s right about that; I suspect he is, but I hope not, since I have friends who work at Google. But in the course of his article, he talks about Google’s corporate culture and how it might be hindering current success:

“Product manager candidates, for example, are told they must have computer science degrees from top universities. But while Google’s core algorithm was a brilliant feat of engineering innovation, a growing chorus of voices question whether it can be sustained. That cookie-cutter approach to people misses important opportunities for diversity and creates glass ceilings for non-engineers, both of which stifle innovation. Cultural hubris, another pattern Jim Collins in particular raises, is of foremost concern. It is often said that at Google the engineers lead engineering, product, and even marketing decisions. But when the company has failed, such as with Google Wave or Google Radio , critics have questioned whether the company really understands people.”

Google has been incredibly successful, and folks at Google will say “our culture must be right; look how successful we’ve been.” But maybe Google wasn’t successful because of its engineering-led culture. They launched with a great search solution right at the time the market was ripe for contextual advertising. So maybe their success was due to luck. Or maybe the engineering culture was important early, but not now. After all, it’s not like Google has been spewing out successful new products (hello Orkut). In fact, Google still makes the vast majority of its revenue from the same search business it’s been running since launch.

In the same way, people at Microsoft used to say about their culture: “It must be right; look how successful we’ve been.” But Microsoft was successful mostly because it had a monopoly on operating systems, which it brilliantly leveraged into applications success. Perhaps it was successful despite its culture, not because of it. In fact, I would argue that Microsoft’s historic corporate culture of aggression was in fact counter-productive, leading directly to the antitrust actions that have hampered the company ever since.

The point is that companies, and the employees therein, should recognize that there may not be a causative relationship between the corporate culture and success, or if there was once such a causative relationship, it may have been severed as the strategic landscape changed. Companies would thus do well to avoid resting on their laurels and to instead constantly examine practices and cultures and see if they need revision based on current conditions.