/ “Google’s Not a Real Company. It’s a House of Cards.” Part 1

The person who uttered these absurd and presumptuous words is none other than Steve Ballmer, the CEO of Microsoft. An excellent article, written by Kurt Eichenwald, appears in the August, 2012 issue of Vanity Fair magazine entitled, Microsoft’s Lost Decade. Interviewing former and current Microsoft executives, the author finds the blame directed at Ballmer as the man who has led the company astray.

The wealthiest corporation in the world

Once upon a time, Microsoft dominated the tech industry: indeed, it was the wealthiest corporation in the world. But since 2000, as Apple, Google and Facebook whizzed by, it has fallen flat in every arena it entered: e-books, music, search and social networking.

This threesome roared ahead while Microsoft relied on pumping out Old Faithfuls such as Windows and Office. The company has become the high-tech equivalent of a Detroit car-maker, bringing out flashier models of the same old thing off the assembly line even as its competitors upended the world.

How could a company that broke IBM’s iron grip on the industry stumble so badly? Here’s one clue. Microsoft, which began as a lean machine led by young visionaries of unparalleled talent, has now mutated into something bloated and bureaucracy-laden. Potential market-busting businesses–such as e-book and smartphone technology–were killed or derailed amid bickering and power plays.

“I see Microsoft as technology’s answer to Sears,” says a former senior marketing manager. “Sears had it nailed from the forties to the sixties. It was top-notch, but now it’s just a barren wasteland. And that’s Microsoft. The company just isn’t cool anymore.”

One Apple product = all Microsoft products

Cool is what tech consumers want. Today, the iPhone brings in more revenue than the entirety of Microsoft. Is this true? Yes, 100%. One Apple product, something that didn’t exist five years ago, has higher sales than everything Microsoft has to offer. In the quarter ended March 31, 2012, iPhone had sales of $22.7 billion, while Microsoft had $17.4 billion.

On August 24, 1995, Microsoft reached the pinnacle of cool, releasing what would then be its largest-selling operating system ever: Windows 95. Bill Gates paid $3 million to the Rolling Stones for rights to use their classic Start Me Up as the theme song for ads and other presentations. Yes, a theme song for software.

After this earth-shattering success, Microsoft failed repeatedly to jump on emerging technologies because of the company’s loyalty to Windows and Office. “Windows was the god–everything had to work with Windows,” notes one executive.

Then, everything changed. On December 30, 1999, Microsoft stock hit $119.94 a share–then it started to fall. Even Microsoft, it turned out, was not immune to the dot-com crash.

To be continued shortly–stay tuned.

 

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