A Little History
When I started working at Microsoft, I was blown away by its competitive nature. Microsoft competes to win and when it sets its focus on a target, the target has eventually become irrelevant within a short period of time. Microsoft and its employees are some of the most competitive bunch I've ever seen.  I learned a lot.

Was AOL a Real Competitor?
Once I joined in on the competitive nature of Microsoft, the second thing that surprised me was Microsoft’s attention and focus on AOL.  I never got the infatuation with AOL and I wanted my company (Microsoft) to stop focusing its efforts on beating a company that I thought was irrelevant.  Instead, I argued, we should be focused on Yahoo.  I wrote a letter to Steve Ballmer, Kevin Johnson (VP of Sales) and the head of MSN (who’s name escapes me now).  My letter pretty much said something to the effect of:

MSN Sucks.  Yahoo Rocks.  AOL is irrelevant.  We need to focus on beating Yahoo.

Remember, at the time, Yahoo was the Google of the net and Google didn’t yet have today’s popularity.  The first person who replied to my email was Steve Ballmer; he respectfully disagreed.  I later ran into Steve at the Microsoft Global Summit (an internal pep-rally for MS’s sales/consulting people) and we had a similar discussion about AOL and Yahoo, but I didn’t get anywhere.

I love Microsoft and I want to See it Win
A few nights ago, after Google released its Google Talk, it occurred to me that Microsoft’s focus on AOL between 1999 and 2003 is probably the sole reason why its losing so bad to Google.  While AOL and MSN continued to build bloated software that tries to do everything for everyone, Yahoo and Google were busy building “minimalist” products that were really good at delivering core functionality in compact, fast and simple products.  Somewhere along the lines, Yahoo departed from its original mantra and started making their home pages more and more complex and Google took over.

Had Microsoft been paying attention to Yahoo instead of AOL, MSN wouldn’t have a reputation for creating bloatware and it might have beat both Yahoo and Google.  Now, 5 years later, Microsoft is behind Google and unless it changes its ways, it will become irrelevant.

So, once again, I shared my thoughts with Steve Ballmer.  Here is the letter I wrote to him on Friday night…

[formalities removed]

Why Microsoft is Losing to Google

Microsoft’s focus on AOL (and Sun and Oracle) in the early 2000s is the reason why Microsoft is having its ass handed to it by this little company.  The focus on Sun and Oracle was the right thing to do back in late 90s, but by 2000, it was obvious that Sun and Oracle were no longer a big threat.  The only real threats were LAMP and [at the time] Yahoo.  Microsoft identified the LAMP threat fairly easily by 2001 and therefore, I believe the LAMP threat is now contained, but the Yahoo threat (what Google is now successfully doing) was completely missed.  Having missed this threat for 5 years is the reason Microsoft is currently losing to Google.

MSN is NOT the Answer to Google!

You will not beat Google with MSN.  Why?  Because MSN was a failure from the start.  It had an identity crisis and built the impression in everyone’s head as a BLOATED piece of garbage.  MSN could come out with the greatest invention tomorrow and no-one will care.  It will be impossible for MSN to remove its bloatware image.  Just look at Instant Messaging:  Google comes out with a product that doesn’t have multi-user chat, video or 90% of the other features of MSN IM, yet everyone loves it – including most Microsoftees!  Google Desktop is beating MSN Desktop search, even though MSDN DS is better.

Google Will Beat Microsoft!

Unless Microsoft makes some major changes, Google WILL beat Microsoft.  Everybody loves the underdog and right now, your biggest enemy is the fact that people are rooting for the underdog: Google.  No matter how untrue, Google is perceived as an innovator – they really are not innovating at all!  In fact, they are doing exactly what Microsoft did in the 80s and 90s: Create 20% of the stuff that 80% of people want and make it super easy to use!  Microsoft beat Lotus, Word Perfect, Novell and other competitors using this same strategy.  Now its getting beaten by someone who’s doing the exact same thing.

What to do NOW to Beat Google in 5 Years

Here are the things I think Microsoft needs to do ASAP:

·         Longhorn (Vista) should be the last release of a MS OS – Yep, forget about this bloatware crap every 5 years, or even every 2 years or even ever 1 year.

·         Sell the OS as a Service – How about $49/year gets you a state-of-the-art OS that’s always up to date with the latest technologies.  Auto-update the OS with small, incremental upgrades.  People will be more likely to switch to Vista, support will be easier, your costs will be down and you’ll get $250 out of each user every 5 years rather than $99!

·         Release a New Series of “MINI” Tools Under the Microsoft Brand, NOT MSN – These tools will have a direct target -> Google!  Keep MSN around for the people who want the fat, bloated stuff (feature-rich :-), but then release a new series of Tools that has 900KB install files (like Google Talk).  These Mini-tools can be included as part of the “OS Subscription”.  Here are the ones I think would be important to have:

o       Microsoft Mini Chat – a simplified chat client without the frills but with the ability to talk w/other IM clients

o       Microsoft Mini Mail – a simplified mail client that contains both web/based and a Vista client app – both super simple to setup and use

o       Mini Search, Mini Sidebar, even a Mini Browser!

o       … - You get the idea – The key is to have these tools be simple, fast and branded under Microsoft, NOT MSN.

·         Keep up the Great work in the Dev Teams, SQL Team and Office – Those tools don’t have any real competitors right now.

Anyway, that’s my 2 cents.  It’s 1am and I got out of bed to write this email.

In case you’re wondering, Steve did reply.  That’s what I love about Microsoft: no-one is too important to skip emails.  When the CEO of the company replies to a partner's email, that sets a “no exuses” tone for the rest of the company.  We’ll see if it had any value to Microsoft in a few years :-)