Microsoft is finally reaping its harvest of arrogance

About 24 hours from now, Microsoft chief executive Steve Ballmer is expected to announce a restructure of the company’s management.

It’s a long time coming. Microsoft has been on a downslide for a long time now, losing ground to Apple, Google and whoever else is taking a stab at any one of its various projects. The company’s most successful franchises, such as Office and the Xbox, have come under threat as well.

Microsoft has made some good steps, especially in its ‘one experience’ campaign, which provides the same user interface across mobile, desktop and tablet devices.

But it’s simply played catch-up for far too long. There are plenty of reasons for this, including a management structure that is bogged down by supervisors and a corporate process that kills any new ideas before they can get off the ground.

But there’s something else to blame for Microsoft’s downfall. All you need to know is contained in this video.

In case you can’t watch, Ballmer is asked about his first reaction when Steve Jobs unveiled the iPhone. He laughs, then mocks the device for its $US500 cost and says because it doesn’t have a keyboard, it’s not a good email machine. And thus, it won’t appeal to business customers.

“I like our strategy,” he says in that video.

His strategy is a failure. Microsoft’s share price has increased 32% in the past five years. Not a bad return. During the same period, Apple’s share price has increased 148%

The Surface tablet has recorded disappointing sales. Last month, Microsoft unveiled its Xbox console, but was immediately upstaged by Sony which offered a cheaper console with fewer software restrictions. And Office is losing ground to the cloud.

Is Microsoft going to disappear? Hardly. Such an alarmist view ignores the fact Microsoft has a huge stronghold on various markets, including mobile where it has started to make some progress.

But make no mistake – this is what happens to an arrogant company.

Now, Microsoft wasn’t the only company dismissing the iPhone back in 2007. But this lesson speaks volumes for any person running a company who is dependent on watching technology trends.  If you can’t see where the wind is blowing, how do you intend to run a business properly? How can you possibly better your company by refusing to take on new and exciting trends?

This isn’t about which is the better phone or who is going to control the mobile market. It’s about being able to recognise when the market is shifting a certain way, and then following it.

Microsoft finally has a decent strategy when it comes to a unified experience across devices. But it’s five years too late.

Tomorrow, Microsoft is going to unveil a restructure. It may be a large one, it could just be a reshuffle of a few executives.

It doesn’t matter. It’s not likely to put the company on a pathway to success. The only way it can do that is by acknowledging the truth – that it’s simply been left behind.

Don’t let it happen to you.


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