Bill Gates and Steve Ballmer showed incredible leadership managing the transition from the 2008 downturn to preserve Microsoft as a major player in the technology industry today.
For those of you unfamiliar with the Courier project at Microsoft it is a product that was cut back in 2008/09 when Microsoft was facing the global economic meltdown. Microsoft faced an unknown future with doom and gloom on every 6 o’clock news channel. At the same time they were on an R&D spending spree which had never been seen before in the history of man.
Recent news reports have been critical of the Microsoft Batman and Robin duo who put a PC in every house, on every corporate desk and created the standards which define personal computing the world over today. See the CNET story here or the Redmond Channel Partner story here. However both of these reports lack the the broad economic context in which the decisions were made or the way the future looked in 2008. The reports fail to understand the true nature of Microsoft’s dilemma and a stable of spending that needed to be allocated to preserve their intellectual property dominance on the corporate budgets which drive the Microsoft business model. It is important to note that the intellectual property which drives Android and iPad pays royalties to Microsoft.
First the emergence of the Cloud as a phenomena was omnipresent and the battle for the data center was looking like VMware might make it hard for the Windows Server market to be monetized. Massive investments were needed to respond to VMware and keep Microsoft in the game which was building the future of cloud computing. Inline with this, the investment in cloud infrastructure was seen to be huge empowering a generation of developers Microsoft has hoped will come to use their tools. Although the future of Azure and the acceptance of its value by the market is still in its infancy, the broad vision offers incredible promise in a market that will be increasingly dominated by mobile users and the elastic computing which feeds their needs.
Second, regardless of which ‘screen’ in the Microsoft lexicon accesses the Microsoft stable of software it is clear that increasingly these services will come from the cloud and the investment in 2008 had to reinforce the future which we now know as Office365. The crux that CNet and RCP fail to factor in is that the iPad works for Apple because they can make the entire product profitable through their hardware and software approach. Microsoft is less able to make a product like Courier profitable unless it pulls consumption of the Microsoft stack.
Here in lies the true merit of the decision made by Gates and Ballmer. Investing heavily with a 2008 economy in crisis, in a product which out of the box does not drive the stack is investing in a losing game for Microsoft. One knows out of the gate Courier will struggle to be a profitable investment since this type of mobile operating system is not excessively lucrative.
Placing the bet on Windows 8 and Office365. Who could analyze Microsoft and recommend they preserve spending in projects like Courier versus ensuring the the investment in Windows and Office? And that was the question in 2008. Do we try to compete with a product in iPad which will not be profitable for us before we ensure our investment in Office and Windows which can empower the mobile users of the future when Windows 8 hits the market? For those of you still unconvinced, what is it about Courier that will not be available profitably in the Windows 8 timeframe?
Can Microsoft afford to lose to iPad? No, however the way they win in 2008 was to make sure that the product that will come out in 2009-2012 will be cloud enabled and run on Windows 8.
In my opinion, Steve and Bill are dominant players shaping the industry successfully with sound decisions around spending which generates profits for Microsoft. For those of you wondering what happened to the Courier team, many of them are working on Windows 8 and other teams at the Redmond based skunkworks.