A Blog by Jonathan Low


Feb 19, 2014

Ubiquity or Superiority: The Reason Apple, Google and Amazon Have Surpassed Microsoft

It can seem counterintuitive, but the bigger the competitors in one industry get, the simpler is the key to dominating.

It is notable but not particularly surprising that both finance and technology are experiencing a winner-takes-all moment in their strategic development.

They have been twinned from the start - that being the 1980s, a full generation ago - when financial deregulation and the tech boom began the co-evolution that continues to this day. They have enabled each others growth and in the process helped accelerate it through speed, access and power.

Along the way, as the following article explains, Google and Amazon have discovered that they make money by being everywhere, so that assuring convenience and ubiquity is to their benefit. Apple has learned that it dominates by differentiating its devices to such a degree that it can charge a significant premium and still gain market share profitably.

Microsoft has learned, the hard way, that it must choose. It has not yet been able to do so for historic, cultural and personal reasons. Which is why they have a new leader. JL

Ben Thompson comments in Stratechery:

A “Services and Devices” strategy is fundamentally flawed. Either be everywhere with your services, or differentiate your devices.
In his first column for the New York Times, Farhad Manjoo advocated relying on Apple, Google, and Amazon:
When you decide what to use, you’ve got to play every tech giant against the other, to make every tech decision as if you were a cad — sample every firm’s best features and never overcommit to any one.
I rather agree with and follow Manjoo’s advice, and my reasoning is all about the incentives that arise from Apple, Google, and Amazon’s business models:
  • Apple makes money when you buy devices, and they differentiate those devices by making their own operating system. This incentivizes them to make the best devices and best operating system, and, in my opinion, they do
  • Google makes money when you access their services. This incentivizes them to make their services available, with the best possible implementation, everywhere, regardless of device. And, in my opinion, they do
  • Amazon makes money when you buy stuff. This incentivizes them to make their store and content available, with the easiest possible access, everywhere, regardless of device. And, in my opinion, they do
One person who didn’t agree was Frank X. Shaw, Microsoft’s chief spokesman, who was miffed by Microsoft’s conspicuous absence from Manjoo’s recommendations:
So while your readers could take your advice and blend in with the current crowd, we’d encourage you (and them) to take a look at some alternatives that offer even better ways to get things done. And with a cross-platform connected ecosystem that spans the workplace to the living room featuring best in class products like Office, Skype and Xbox, we’re a pretty safe bet too.
Actually, no, Frank, you aren’t, and your colleague, Tami Reller, explained why at the Goldman Sachs-sponsored technology conference when asked about Office – Microsoft’s most indispensable service – on iPad and Android. As recounted by ComputerWorld:
“As we step back and say, these core applications, these core brands that are so important to enterprise customers and consumers, how do we make sure that we’re thoughtful about what we’re doing on the Windows platform, as well as cognizant of the fact that there’s other devices in their lives (emphasis in original),” Reller replied when she was asked about the status of the decision to put the productivity suite on other operating systems…
A follow-up question from the moderator brought even more from Reller, who talked about the importance of differentiating Windows to customers, both end users and OEMs (original equipment manufacturers), the vendors that make and sell devices. “A part of that [differentiation] is Office, for sure,” Reller said.
If that wasn’t clear enough, Reller pointed out that changes to Office’s platforms would be a business decision, not one based on customer requests.
“We come at it from that angle, which is ‘What businesses do we need to drive forward?,’” said Reller. “That’s how we will make the decision [to go cross-platform]. It really ends up being business by business, product by product. There’s no sweeping one decision.”View image on Twitter
So to summarize, Office is not available everywhere, and probably won’t be anytime soon, because Microsoft has a devices business to prop up. Oh, and Microsoft’s business needs are a priority over user needs. Tell me, Frank, how is that a safe bet?
The truth, as I’ve written multiple times (here, here, and here), is that a “Services and Devices” strategy is fundamentally flawed. Either be everywhere with your services, or differentiate your devices. And, given this:
Methinks being everywhere with services is a much more sustainable strategy. And, perhaps, one that would earn Manjoo’s – and my – recommendation.


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