Vanity Fair has an article featuring Satya Nadella, Bill Gates, and Steve Ballmer. The article is pretty long and has lots of details. The one that got my attention is these two paragraphs explaining Microsoft’s need for new business models. One of the things I figured out a couple of years after leaving Microsoft is if you focus on creating new business models, then fit the technology it is so much easier than creating innovative technologies to fit legacy business models. If you go back in history what Bill Gates did licensing DOS to IBM and keeping the rights to license to others is a new business model. When you paid $2k for a computer, paying $100 for an OS to make it work was acceptable.
Microsoft’s big bet on an OS was Longhorn, aka Windows Vista where Ballmer admits he didn’t put resources on Mobile and Browser. Windows XP was the last Microsoft OS I worked on. When I saw Longhorn coming I knew this is not going to work. You can’t tell everyone to be innovative because when you put it all together many things simply don’t work.
In some ways Microsoft needed to get back to its past and write apps for other platforms. Microsoft used to be the biggest app developer for the Mac with Word, Excel, Powerpoint.
Microsoft’s historical reluctance to open Windows and Office is why it was such a big deal when in late March, less than two months after becoming C.E.O., Nadella announced that Microsoft would offer Office for Apple’s iPad. A team at the company had been working on it for about a year. Ballmer says he would have released it eventually, but Nadella did it immediately. Nadella also announced that Windows would be free for devices smaller than nine inches, meaning phones and small tablets. “Now that we have 30 million users on the iPad using it, that is 30 million people who never used Office before [on an iPad,]” he says. “And to me that’s what really drives us.” These are small moves in some ways, and yet they are also big. “It’s the first time I have listened to a senior Microsoft executive admit that they are behind,” says one institutional investor. “The fact that they are giving away Windows, their bread and butter for 25 years—it is quite a fundamental change.”
VF closes with the perspective of there is a future story unfolding.
Introducing Ballmer at Oxford, his friend Peter Tufano, the dean of the business school there, said, “When we write the history of business for the 20th century and the 21st century, there is going to be a whole chapter on Microsoft.” Of course that’s true. In the next few years, we’ll know if that chapter is celebratory—or a cautionary tale.