The core of Microsoft’s problems

September 20, 2013 § Leave a comment

From The Verge:

“The Nokia deal is a lot of things,” said Ballmer. “One of the things it is, is a way to make sure we can capture the gross margin upside because we’re making most of the investment today, that we need to make even owning Nokia.” It’s clear Microsoft wants to take some of the smartphone profits away from giants like Apple and Samsung, and Nokia is a key part of that plan.

That, right there, is the difference between Microsoft and Apple and, I believe, the core of Microsoft’s problems. I appreciate that this is a conversation with investors, but Balmer is laying out his goal purely in financial terms; a goal that is simply to take profits away from the other players. Even on investment calls Steve Jobs always talked about the passion to create great products that people want to use. He knew that the profits are a side-effect of that goal. It’s not always what the investors wanted to hear, but he didn’t change his message depending on who he was speaking to.

When your goal is simply to make money, to take profits from others in the market, then you can’t focus on making great products. If you always have one eye on the bottom line you can’t keep both eyes on the ball. You are prone to panicking, and doing things like buying Nokia, a company that has already been ruined by pursuing the same strategy.

Balmer also said:

“We know that we’ve gotta do a great job”

There’s no doubt that’s true. The question is, do they know how?

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