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Weekly Column

Shake Your Groove Thing: The Only Way to Beat Microsoft is by Ignoring Microsoft

Status: [CLOSED]
By Robert X. Cringely

Jonathan Schwartz, who is the new president and chief operating officer of Sun Microsystems, contacted me after reading last week's column in which I characterized Sun's new deal with Microsoft as a capitulation. Of course, he disagrees with nearly everything I wrote. I might in some future column delve further into this disagreement (we've agreed to meet at some point, possibly stripped to the waist). But to tie together the thoughts of the last couple weeks so I can move on next week to something REALLY interesting, I'll give only a single quote from El Presidente Schwartz: "This (agreement with Microsoft) makes Sun's Java Desktop STRONGER, not weaker. Now we have interoperability on our side." By this, he means Windows interoperability, which was apparently a key goal of Sun, to have guaranteed access to Windows APIs and such. Alas, life in the software business is not so simple, and what Sun has actually obtained from Microsoft (beyond the money, of course) is less than nothing. It is an illusion of interoperability that will only hurt them in the long run.

This is my second "how to compete with Microsoft" column. I wrote the first one on November 5, 1998, which today seems like a whole different world except the players mentioned in that column are nearly all the same as those mentioned in this one. You'll find a link to that column on this page, and if you have time I suggest you read it, not just for reasons of nostalgia for a time when Netscape stock was hot, but because it makes some points that are both good and still valid. The central point was that paying too much attention to Microsoft simply allows Microsoft to define the game. And when Microsoft gets to define the game, they ALWAYS win.

Look at the companies that can be thought of as true competitors of Microsoft -- companies that have caused Microsoft fits in the past. There aren't very many such companies, but ones that come to mind (in no particular order) are Netscape, Novell, Lotus, Adobe, Intuit, and IBM. This is not intended to be an exhaustive list, just some that came to mind; if your company also qualifies, well, I salute you. Some of these companies were in businesses where Microsoft had ambitions, like personal finance software and fonts. Some were at one time bigger than Microsoft, like Lotus and certainly IBM. Some created products that defined whole product classes like Netscape and Novell. And in every case, if we look to the time when that competitor was causing the greatest grief for Microsoft, it was when they were also paying no attention whatsoever to Microsoft.

Why should Netscape pay any attention to a 1996 Microsoft that wasn't doing a browser? Why should Adobe care about a pre-TrueType Microsoft or even a post-TrueType Microsoft? Why should Novell waste any time competing with Microsoft at a time, circa 1988, when NetWare had 20 million seats and MS Net (remember that product?) had none?

It was only when those companies decided to pay attention to Microsoft and decided to compete with Microsoft that they got in trouble. The classic case is Novell, which was technically YEARS ahead of Microsoft in network operating systems and might still be today if Ray Noorda hadn't decided he wanted to go toe-to-toe with Bill Gates by buying WordPerfect and Paradox. Novell's downfall was in paying attention to Microsoft when it might better have paid attention to its own core business.

As for the others, Adobe managed to beat back Microsoft not by competing with Redmond, but by doing something right from the beginning (PostScript) that was technically beyond Microsoft's ability. To this day, Microsoft chases Adobe technology, which has allowed the latter to build a fine business. Intuit, on the other hand, was suckered into a near-merger with Microsoft that I'm told by some who were there on both sides was only intended to identify and siphon-off the best Intuit technical and marketing people. Through this loss of talent, which was critical, Intuit had no choice but to start competing with its almost-partner. Lotus actively tried to kill not just directly competing Microsoft products, but all of Windows. Obsessed with Microsoft, then-Lotus CEO Jim Manzi drove his company into the ground. I know, I know, Manzi sold Lotus to IBM for $3.3 billion, but when he took over. Lotus was bigger than Microsoft. When he sold to IBM, Microsoft was bigger than Lotus by a factor of seven.

Such obsessions help only Microsoft, as Oracle is slowly beginning to realize and Sun will, too, when President Schwartz stops enjoying his new power-glow and executive washroom key, and realizes what a world of hurt his company is in.

And that brings us to IBM, which is one of the other two major companies I see today taking what I believe to be the correct approach to doing business in a Microsoft-dominated world.

Start by completely removing Microsoft from your thoughts. Develop a good and sound business plan. It should in no way be based on Microsoft, either for or against. Microsoft should not be part of your business. What is important is to run YOUR business, and not be distracted by Microsoft. If it makes business sense to YOUR company to do business with Microsoft, do so on your terms. Limit your dependence, limit your exposure.

This is why Java is important to IBM...

IBM basically supports four different hardware platforms and several more operating systems. It has been IBM's dream since the early 1980s to consolidate and make applications portable across all platforms. Java is the key to IBM's success in this area. It is important because it is completely Microsoft neutral. One of the platforms IBM supports is Windows on Intel. With its Java strategy, IBM can support this platform equally well. Java is operating system independent. This is true even between versions of Windows. IBM is not dependent on a specific version of Windows and will be minimally affected by changes to Windows. Java allows IBM the ability to peacefully coexist with Microsoft. IBM is not for or against Microsoft. Microsoft is not part of IBM business planning. IBM is no longer distracted by thinking about or worrying about Microsoft.

Please understand here that a lot of what IBM is up to right now makes no more sense than what Sun is doing, but in its Java strategy, IBM is taking the correct approach. And that's why Microsoft will use this new deal with Sun in some way to disrupt IBM. You heard it here first.

Another company that is competing with Microsoft by ignoring them is Google. Google is the new Devil to Microsoft, and once Google goes public, it will be even worse -- a Devil with money.

Google has a business plan that includes the almost constant introduction of new products. They are not afraid to launch 10 services. They are not afraid if a few turn out to be flops. Finding great new product ideas for Google is a statistical process. Google is investing in good people and is letting them be creative. They are letting them think and act on their ideas. This is scary for Microsoft, which finds itself continually in reaction mode and never quite getting enough up to speed to be a real player before Google makes another change.

Google, unlike Microsoft, actually is a technology company, and this technology extends beyond development all the way to operations, which is almost unknown in the software/Internet space. Google has figured out the best computer power per dollar of investment. They've also realized they cannot and should not scale their support linearly with the number of servers. They've introduced better system management tools and better automation, but with a business objective in mind. Corporate IT everywhere else is still thinking in terms of headcount with the more heads the more powerful the manager. Google is smarter than that. They invested in their data center operations from the start while most companies invest as little as possible and pay more after the fact.

Most companies (including Microsoft) have about a 25-to-one server-support ratio, but Google does not have 4,000 people tending their 100,000 servers. This means they can deploy a HUGE application less expensively than anyone else. This gives them a competitive advantage. They CAN compete with Hotmail, Yahoo, and AOL with e-mail.

Google shows, just as Adobe did a decade before, that companies CAN compete with Microsoft. But to do so they have to unlock the intellectual talent of their employees and then USE that knowledge. Bringing this story back where it started, I can't see where Sun is doing this. They do not appear at present to have a culture that can grow the company beyond their present business model. Sun's pricing and support of Star Office demonstrates this point.

When a baseball team is losing, often the quickest and cheapest thing to do is to replace the manager. That's what Sun has done. Jonathan Schwartz is a very smart manager I'm sure. But his brain, no matter how big, is no substitute for a culture that encourages innovation and growth. Sun needs to regain that creative spark and I think they should use Microsoft's money to do so.

I say use the Microsoft cash to give every Sun employee (EVERY employee, all 36,000 of them) a six-week sabbatical with $2,000 in spending money. Stagger the time off over a year so customers won't suffer. Every person on sabbatical has to return with new ideas for Sun. They have to propose new businesses and ways of improving old ones. The ideas can be crazy, they can be big or small, but the worker must have ideas and defend them or they must leave the company. Many workers would leave, seeing the sabbatical as severance pay, and that's okay, too, because those people aren't needed.

At the end of this year of transformation, Sun would be a very different and better company provided Schwartz and McNealy decide to listen instead of talk. The company would be ready to compete -- not just with Microsoft, but with anyone.

Of course, they won't do it.

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