Memo to Michael Dell 2

A week ago, I asked you: "What were you thinking when you issued a statement saying that recalling over four million laptop batteries because of a fire hazard would have 'no material impact on the company's finances?' You had to know the word 'material' would be dropped from all the headlines. It makes Dell, the man and the company, appear disingenuous. Dell, with its customer-direct model, needs to promote trustworthiness. This instead gives the appearance of being in denial."

I know you are a busy man, but this really needs your attention. As reported by the Washington Post and others, the president of your Japanese unit told reporters Tuesday that the recall of Dell laptops with Sony batteries will not impact Dell’s brand in Japan, where two Dell computers are reported to have caught fire. The headline on this article: “Dell says recall won't impact its brand in Japan.” This once again gives the appearance of being in denial. Of course it will impact your brand. The question is, how?

The same article reported public statements that amount to nothing more than finger pointing between Dell and Sony. So what if Sony is to blame? These are your customers affected, not Sony’s.

Full disclosure, Michael: I am a big fan of Dell. My desktop computer is a Dell. My wife’s laptop is a Dell. (Perhaps ironically, my laptop is a Sony.) I admire you as a company builder. So I want to urge you again to get your folks on message, emphasizing concern about customers and only concern about customers. Do not worry for now about calming the financial markets, your CFO can do that in purely financial discussions. Do not worry about who is to blame, the press is doing that for you. Have your people take the high road.

Perception is everything with this sort of PR problem. Dell not only needs to execute the recall well, as you appear to be doing. You need to use this as an opportunity to emphasize devotion to customers. You can turn this into a net gain for your brand. Sure, Apple has a similar problem with Sony batteries. So what? The answer to all questions about the recall should be, “We are busy taking care of customers.”

As a man who builds a business for the long haul, you know that happy customers will take care of your brand image and financial results. Not doing so will, well, you know that too.

Copyright © 2006 Philip Bookman

Technorati: Dell

Why Dell and HP Should Not Attack Apple

I have received requests to elaborate on when you should use the "attack strength" strategy. The following question from a reader illustrates the issue:

"In one article you explain lucidly why it is that Microsoft needs Zune (essentially the same reason Google needs online office 'stuff'), but then you describe Dell's DJ and HP's HPod as 'silly distractions.' These seem like attempts at similar 'attack their strength' strategies. Please explain."

The reason Microsoft should attack Apple's strength and Dell and HP should not is that Apple is a strategic competitive threat to Microsoft but it is not a strategic competitive threat to Dell or HP.

The strategic competitive threat Apple represents to Microsoft is covered in depth in Why Microsoft Needs Zune. To summarize, OS X is a potential threat to Windows. Microsoft must do everything it can to keep Apple from freeing OS X to run on generic Intel compatible PCs.

Perhaps it seems counter-intuitive to state that Apple is not a competitive strategic threat to Dell or HP. After all, Apple, Dell and HP all manufacture and sell personal computers. So let us first consider Apple’s personal computer strategy.

Apple sells simplicity, ease of use and hip style. The Mac is the appliance of personal computers. It is targeted primarily at hip, artistic urbanites, graphic artists, the education market and a small but devoted group of Mac true believer techies. Apple's strategy of controlling the core hardware and software enables it to maintain high margins. Mac has a worldwide market share of about 2%.

Dell and HP sell Windows compatibility, low price, reliability and customer service. Their Windows platforms are the generic PCs for every PC use, targeted at everyone. They compete with the world on hardware, have no control over the software, and thus employ a low cost provider, high volume, thin margin strategy. Dell is number one with about 18% worldwide market share, HP is number two with about 15%.

Mac provides fat margins, to which Apple is addicted. This means Apple is not likely to compete with any Windows PC vendor on low price. Nor are most Mac buyers choosing between Mac and Windows platforms when they make a purchase decision. Mac is thus unlikely to appreciably increase its small personal computer market share over the next five years and is not a strategic competitive threat to Dell or HP. (Dell and HP now even have insurance against the small but non-zero chance that Apple will change its strategy: they can cheer along Microsoft Zune, a kind of passive-aggressive attack-by-proxy.)

Dell and HP are, of course, direct strategic threats to each other. Thus HP attacked Dell's strength buy acquiring Compaq and Dell attacked HP's strength by entering the printer business.

I will address the "when to attack strength" question more generically in a future post.

Copyright © 2006 Philip Bookman

Technorati: Dell HP Microsoft

Bamboozle Update

Google's strategy to defend against the Microsoft search threat is to attack Microsoft Office. This diverts Microsoft resources to defending Office, resources which might otherwise go to its search offerings. The Google Bamboozlers attack the Office cash cow with free offerings at very low cost to Google.

This attack advanced this week as Google announced Google Apps for Your Domain (memo to Google Marketing: needs catchy name; ignore Seinfeld fans voting for MOYD). This offering bundles Google Mail, Google Talk, Google Calendar and Google Page Creator into a suite of online applications that can be added to a web domain. The base offering is free, aimed at small and medium-sized businesses, non-profits and government agencies.

Mail, Talk and Calendar are a direct attack on Outlook and its Exchange infrastructure. Page Creator can be viewed as a poor man's substitute for PowerPoint. Expect to see Writely (Google's word processor) and Google Spreadsheets added in the future. Voila, Google Office begins to emerge. Take that, Office Live! How will you compete with free, Microsoft?

For more on Google's strategy to contain Microsoft, see Google Bamboozles Microsoft.

Copyright © 2006 Philip Bookman

Technorati: Google Microsoft

Microsoft Extends an Embrace to Firefox

Microsoft announced last week that it would help the Mozilla folks assure that the Firefox web browser will work well on Windows Vista. They even offered to house some Firefox staff at Redmond and provide a testbed and assistance.

Some commentators have displayed distrust of Microsoft's motives. Some have suggested that Microsoft wants to somehow steal Firefox IP, which is, after all, so hard to otherwise obtain for an open source product. Another amusing theory is that this is a recruiting ploy to entice Firefox whizzes to jump ship.

I think it may have happened this way: At some Microsoft meeting, the subject of Firefox and Vista came up. Someone said something like, "I know this is a bit whacky, but why do we really care if people use Firefox instead of Internet Explorer?" After a long silence, someone else said, "You know, that is a very good question. We used to care a lot, but I’m not sure there is any longer a reason to care."

When Microsoft declared war on Netscape a decade ago, Windows had no Internet capability. The threat was that the Netscape browser might somehow evolve in such a way as to take over the user interface and make Windows irrelevant. Microsoft did not much understand the Internet or the web and its brain trust used an extreme version of the "attack their strength" strategy, attack and kill ("embrace and extend" in polite company). The rest is history.

That was then. Today, Windows has Internet and web functionality deep in its guts. Desktop applications can and do use these capabilities regardless of which browser a user may choose to use. In fact, Internet Explorer is now really just an application that uses Windows internet services, Improving Internet Explorer is costly. Its security problems have given Microsoft a black eye that never seems to heal. It does not bring in a dime of revenue. It causes antitrust problems. And Microsoft now fully understands what a web browser is and is not, and that a browser is no longer a strategic threat to Windows.

In fact, imagine a world with lots of browsers in use on Windows, some with differentiating personalities, like the Flock browser which is geared towards photo sharing. Imagine that the browser as a general purpose web interface gadget became just one sort of browser. We may find that web applications that run on specialized browsers provide richer user experiences. We may one day use different browsers as much as today we use different applications.

How exactly would that threaten the Windows franchise? Perhaps it would not. Perhaps it would expand the market for the platforms which run Windows. Perhaps it is time to end the browser war so the Microsoft brain trust can focus resources on more important strategic issues?

Copyright © 2006 Philip Bookman

Technorati: Firefox Microsoft

IBM and Microsoft: Attack By Proxy

During the 1990s, as Microsoft grew into a software mega-giant, IBM recognized it as a strategic threat. IBM was determined to keep Microsoft from becoming a direct competitor in its core strategic business, complex big-ticket technology solutions. IBM decided to attack Microsoft's strength, Windows. By keeping Microsoft pinned down defending Windows, IBM would cause Microsoft to use resources that might otherwise go into seriously competing in the complex big-ticket technology solution market, where IBM must defend its position at all costs.

While IBM competes with Microsoft on many fronts, like the Notes versus Exchange competition, here we examine only its direct strategic attacks on Windows.

The OS/2 debacle was the first attempt at this. OS/2 was still around, though on life support, and all IBM’s after the joint development relationship with Microsoft collapsed. So IBM threw OS/2 at Windows ("a better Windows than Windows"). But Microsoft Windows crushed OS/2, which led IBM to realize this was not the sort of market it really wanted to be in, a decision that led to pulling the plug on OS/2 and, ultimately, exiting the PC business entirely with the Lenovo deal.

The next attempt to implement the "attack Windows" strategy was much more sophisticated. IBM adopted the most clever though difficult to execute stratagem of them all, attack by proxy. In attack by proxy, you get another company to attack your competitor's strength. The trick here is to assure the surrogate has staying power and the resources and focus to mount an effective, sustained attack. This is not an easy thing to pull off, but is brilliant when it works. How did IBM do this? IBM fell in love with Linux.

There certainly were other factors behind IBM’s adoption of Linux. There are always several reasons behind the choice of how to implement a strategy and we all know that all slides (does IBM still call them foils?) must have three bullets. Regardless, IBM jumped aboard the open source Linux bandwagon, arguably assuring Linux its current level of success through its direct and indirect support. Linux is giving Microsoft fits competing with Windows on the server side and in small devices. The Microsoft brain trust is haunted by the prospect of someone coming along with the right formula for wrapping the necessary software and services around Linux to make it a true Windows desktop competitor. And the success of Linux has spurred on all sorts of other open source efforts across the spectrum of Microsoft’s product lines.

IBM has succeeded brilliantly in attacking Windows by proxy with Linux. This has vastly reduced Microsoft’s likelihood of making the necessary commitment of resources to effectively enter the complex big-ticket technology solution business. The bonus is that IBM has gotten many other benefits from its Linux efforts, but that is the topic for another discussion.

Copyright © 2006 Philip Bookman

Technorati: IBM Microsoft

Memo to Michael Dell

I was glad to read this morning that you have pulled the plug on your iPod competitor, the DJ Ditty music player. Dell needed this like HP needed HPod. Dell needs all the focus it can muster on its core business, not silly distractions.

But what were you thinking when you issued a statement saying that recalling over four million laptop batteries because of a fire hazard would have "no material impact on the company's finances?" You had to know the word "material" would be dropped from all the headlines. It makes Dell, the man and the company, appear disingenuous. Dell, with its customer-direct model, needs to promote trustworthiness. This instead gives the appearance of being in denial.

It is great that Dell is now using AMD chips, but you are a bit late to the game, this coming just when Intel appears to have leap-frogged AMD in price and performance. What happened to Dell's nimbleness?

I am really worried about you, Michael. You seem to be lost in reveries of the past. No one except perhaps your family cares about what you have done over the last two decades or how you started in your dorm room. Dell the company has had a great strategy as the low cost, direct-custom-order computer company. What you need to do is focus on execution. Some critics are suggesting that focusing on execution is your problem. They say it creates an uninspired culture. They say you need imagination and creativity. They want you to pump more money into R&D. That is not what Dell is about. Dell innovates in customer service, direct ordering and low cost manufacturing to make build-to-order computer purchasing work great. Don't listen to those who would change your core. Dell is what it is and attempting to make it like Apple or anyone else will not work.

Forget imagination. Dell needs to refocus on execution, but that does not equal cutting costs. You cannot cut your way out of your current problems. Instead, you have to fix what is broken.

Your supply chain and manufacturing glitches are the easiest thing for Dell to deal with and I believe you when you say that they are mere hiccups.

Great customer service is core to your strategy. Dell's has deteriorated dramatically in the last few years. Stop denying the extent of the problem and stop quoting surveys that say it is getting better. Admit it sucks and really commit to fixing it.

Online ordering is core to your strategy. It has become very hard for a mere mortal to navigate your web site and feel confident that they can get what they need. Your phone sales staff who backstop the online process seem committed mainly to up-selling. You are sending people to Best Buy with Dell specs in their hands. Get out of denial, admit this sucks and really commit to fixing it.

I am sure you actually know what else needs to be fixed, like the speed of decision-making. Stop reminiscing, get out of denial, admit what sucks and really commit to fixing it.

Fast.

Copyright © 2006 Philip Bookman

Technorati: Dell

Venture Capital Pie

Reading about Frank Quattrone's deal with federal prosecutor's got me reminiscing about those heady days of the Dot Com Bubble. Quattrone personally contributed a great deal to inflating that balloon, and in tribute I have dug up a song I wrote shortly after the bubble burst (with apologies to Don McLean).

Venture Capital Pie

A long, long time ago
I can still remember how
that money used to make me smile

And I knew if they heard my pitch
I’d convince them they’d get rich
and maybe they'd be happy for awhile

But the April ruling made me shiver
with every business plan I’d deliver
Bad news on the ticker
I couldn't get much sicker
I do remember how hard I tried
to get those investors to decide
But they just shrugged
and I just cried
The day the bubble died!

We started singing:
Bye, bye venture capital pie
drove my Lexus down to Sand Hill Road
to give it a try
But them good old boys just said
“The well has run dry.
No more funding for pie in the sky!
No more funding for pie in the sky!”

Copyright © 2001 Philip Bookman

(The "April ruling" refers to the April 3, 2000 Microsoft court ruling that signaled a market crash and is considered to have been the day the Dot Com Bubble really burst. Sand Hill Road is the Silicon Valley street where many VCs have their offices.)

Why Microsoft Needs Xbox

It is late in the 1990s, and you are Bill Gates. You have successfully, though painfully, moved your lumbering giant of a company into the Internet era and trounced Netscape. Instead of being thrilled or relieved that this titanic threat has been overcome, you are a worried man.

You have learned from your friend Andy Grove that "only the paranoid survive." You are now indeed paranoid about game consoles. Game consoles, game consoles, the very words haunt you. Your "we nearly missed the Internet" experience has opened your eyes to other threats to your Windows empire. Some have been imagining how game consoles hooked to the Internet could doom your dream of Windows PCs in the family room. Game consoles could evolve into being the home Internet computer without a hint of Windows. Worse, Sony has emerged as the likely dominant player with Playstation. Sony has deep pockets and deep knowledge of the consumer entertainment and electronics business. A Sony computer in every family room connected to the Internet without Windows is a terrifying threat.

You have decided to make a bold strategic move. You will pin Sony down defending Playstation as a game console. This will divert Sony resources that could otherwise go into making Playstation more of a general purpose home PC threat. You will do this by attacking their strength with a Microsoft game console, which you refer to as the "X-box" (the hyphen will later be dropped by your marketing gurus).

Your engineers have convinced you that this machine must be designed from the ground up to be focused on games, with great graphics processing on TVs at its core. They have been clear that they mean both hardware and software. They have been bold enough to tell you flat out that this means no Windows under the hood. They have been persuasive and you have decided to bite the bullet and abandon, for now, your Windows Everywhere mantra.

You are committing Microsoft to this strategy for the long term. You are willing to lose money and accept second or third place in the market for years so long as you keep Playstation in it place as a mere game console. Windows must be defended at all costs.

Taking the long, strategic view, you also decide that Windows will become a great game platform, even if it takes many years to get there. Then you will start the process of converging the X-box and Windows platforms. Time, money, and constancy of focus and vision are on your side.

Fast forward to the present. Microsoft and Sony are duking it out for top spot in the game console space. Sony is tied up in knots keeping Playstation competitive with Xbox in games and their home PC threat seems well contained. Windows Vista will, at last, be a great game platform. Game Studio will enable game development for Xbox and Windows. Xbox Live Arcade will evolve into a multifaceted Xbox and Windows online game community and mall. Xbox and Windows will converge. The Gates Xbox strategy is relentlessly moving forward, slowly but surely, step-by-step.

Copyright © 2006 Philip Bookman

Technorati: Xbox Microsoft

Piling on Carly

A few days ago, Jim Cramer used his Mad Money platform to trash Carly Fiorina and attribute HP's current great results to Mark Hurd. The way Cramer put it, you would think Fiorina had been holding HP back and Hurd finally liberated it when he took over as CEO 18 months ago.

Cramer joins many pundits who have dumped on Fiorina. They are mistaken. She was the right CEO for HP during her tenure, and Hurd is the right one now.

When Fiorina took over at HP, it was on its way to irrelevance, reduced to being pretty much a printer company with a legendary, quirky, anachronistic culture. HP was a Silicon Valley icon. It has Fiorina to thank that it still is.

Huge, sclerotic, aimless companies like HP had become need a particular kind of leader to survive and thrive. The alternative is either a slow decline, a dramatic implosion or a sale. They need a bold, dramatic leader with clarity of vision and the will to make the big moves to make that vision happen. Fiorina did that, acquiring Compaq after a bitter board and shareholder battle, moving the company from an engineering to a customer focus and blowing up the culture of complacency.

As with many such visionary leaders, Fiorina was a disaster at operations but was unwilling to have a great operations manager run things. These leaders succumb to Peter Drucker's maxim, "Vision without execution is delusion." Hurd excels at operations. He has rationalized the organization, cut costs aggressively and sharpened operational focus. HP is now firing on all cylinders and Fiorina's bold, often belittled ambition of it overtaking IBM as the top technology company seems immanent.

Fiorina blew up the inefficient, indecisive, unfocused HP culture. She made the big strategic moves. She started the revolution. Hurd was the perfect successor, but it took a Fiorina to create the situation in which he now thrives.

Give credit to HP's board for two great CEO choices.

Copyright © 2006 Philip Bookman

Technorati: HP Carly Fiorina

Game Studio Express: Visual Basic for Xbox

Developing computer games is too hard. There are too few titles with too little variety. This is about to end.

With the announcement this week of XNA Game Studio Express, Microsoft executes another step in its tried-and-true playbook. No one is better at supporting software developers of all skill levels than Microsoft -- as long as you develop for their platforms.

The strategy is simple: get as many people developing for your platform as possible. People then want your platform to run what the developers create. The developers become more and more invested in your platform Those developers are also the techies mere mortals turn to for technology advice, and their knowledge of your platform makes them more likely to recommend it to others.

This has worked wonders for Windows and Office, and no one supports developers better than Microsoft. Their formula has three parts: inexpensive, robust, easy-to-use, well supported development tools; lots of excellent documentation; frictionless distribution.

Visual Basic was Microsoft's first major step on this path for Windows. VB made thousands of programmers who had never worked on a GUI into successful Windows developers nearly overnight. It was revolutionary. VB begat Visual Studio, the platinum standard for software development environments. The contribution of all this to the Windows monopoly cannot be overstated.

Game Studio Express is targeted at today's generation of techie gamers. It is intended to make developing games for Xbox and Windows at least as easy as VB made developing applications for Windows over a decade ago. Microsoft also announced that the big brother of Game Studio Express, XNA Game Studio, will be released next year. Game Studio will have more breadth and depth of features than Game Studio Express, and Microsoft acknowledges that it is the Visual Studio analog for game development. Both Game Studio and Game Studio Express are based on Visual Studio .Net technology. Expect these tools to be robust, well supported, easy to use and continuously improved, and expect great documentation.

As for frictionless distribution, Microsoft pioneered this with VBX controls (which begat ActiveX controls) and the VB runtime modules, royalty free to distribute and without licensing hassles. Similarly, Microsoft will make its Xbox Live Arcade a distribution center for developers to sell and share their creations, online and via CD.

Let the game development begin!

Copyright © 2006 Philip Bookman

Technorati: Xbox Microsoft

Google Bamboozles Microsoft

Google is in the business of monitizing search. They therefore must strategically defend their search dominance. Microsoft represents perhaps Google's biggest strategic threat because they are committed to search as a category (we will examine why this is so at the end of this post). Microsoft is using its proven approach of continuous improvement to slowly, inexorably get very good at search. They have the resources to keep at this for as long as it takes and they are relentless.

The Google strategy to defend against the Microsoft search threat is to attack Microsoft's strength, Microsoft Office. Microsoft has two overarching strategic imperatives: defend Windows and defend Office, so this forces Microsoft to shore up its strength with resources that might otherwise go to improving search.

What I love about the Google brain trust is how cleverly, almost playfully, they have executed this strategy. Google has collected bits and pieces that seem like they could be assembled into an Office competitor. They have email, a calendar, a spreadsheet and, with the acquisition of Upstartle, the Writely word processor. Add a heaping tablespoon of Google mystique, a dash of AJAX, stir briskly in the presence of a pundit, bake in a slow oven and, behold, an Office-like suite starts to take form. It is never quite ready to eat, but it sure smells good!

Never mind that the ingredients are, in the main, half-baked. The mere threat of Google Office added to the existence of Open Office, has been enough to push Microsoft into a full commitment to some sort of online version of Office, an Office Live. Defend Office at all costs, please, Ray Ozzie! The amusing thing is that Google has pulled this off at very little cost, almost as a frolic.

To add to the fun, the mere rumor that Google might somehow be secretly working on a browser-based desktop thingy that would somehow make the underlying OS irrelevant, has created the specter of a threat to Windows. Google does nothing in this regard and the threat emerges! What magic.

I think Google may keep nudging its Office threat along, just enough to keep Microsoft worried. I think the Google Windows threat rumor will thrive without any effort on Google's part at all.

As for why Microsoft cares about search, there are two major reasons. Regardless of how they stumbled into search with MSN during their Internet portal confusion phase, Microsoft is now convinced that search is an essential part of computing, thus of Windows and Office. As Google has demonstrated, it also can be a fast growth category for revenue, where Windows and Office are at best slow-growth.

Google, meanwhile, focuses resources almost exclusively on its fast-growth opportunity, increasing the breadth, depth and use of its search machine, and extending its advertising model.

Copyright © 2006 Philip Bookman

Technorati: Google Microsoft

Gtunes and Goopons

To understand what Google does, repeat this mantra: Google is in the business of monitizing search. Anything they do (well, almost anything, they do some little things just for fun) should be viewed by how it advances their leadership in monitizing search.

For example, the Google announcement that they would offer Valpak coupons, or goopons, on Google maps extends the attractiveness of Google to searchers. When I search for pizza in Los Gatos, I not only find maps to local pizzerias, I find goopons for some of them. It also extends the attractiveness of Google to their advertisers who offer the goopons.

One thing the Google mantra implies is that they sell advertising, not stuff. If they sold stuff, they would be in competition with their advertisers, who would look elsewhere for ways to advertise, and the money to support the vast Google search machine would go away.

It came as no surprise, then, when at about the same time that Microsoft's Zune plans became public, Google announced that it did not plan to open an iTunes-like music store, which speculators had dubbed Gtunes. That would be selling stuff. Google would love to search online music inventories, but that is another story entirely. What I find amusing is that Google's "no Gtunes" announcement was just waiting to be released when Microsoft announced Zunes so Google could, again, steal some of Microsoft's thunder.

It is a wonder how the news media make a big deal even when Google says they do not plan to do something. They did it again today when Google confirmed that it had no plans to offer a national wireless internet service. Would that I could get so much attention out of announcing all the things I don't plan to do.

Copyright © 2006 Philip Bookman

Technorati: Google

Why Microsoft Needs Zune

The recent disclosure that Microsoft would be launching an iPod/iTunes competitor called (at least for now) Zune has caused some to ask "Why?" The answer, I believe, lies in understanding how Microsoft competes with Apple.

Microsoft needs Apple. With only 2% or so of worldwide PC desktops, Apple is at present no threat to the Windows desktop monopoly. At the same time, Apple provides anti-trust cover for Microsoft by being such a well-known competitor. It also helps Microsoft to have Apple try new things in the Mac operating system, OS X, that Microsoft can then adopt if they prove to be successful innovations.

On the other hand, the strategic threat of Apple is OS X unchained from Mac hardware, OS X on the generic Intel platform. This is perhaps Microsoft's worst nightmare. It would likely be a very successful competitor to Windows and gain substantial market share fast. With the Mac move to Intel hardware now complete, and OS X ported to the Mac-specific Intel platform, it is only a short step to making OS X run on generic Intel.

Defense of Windows is the primary Microsoft strategic imperative, and the Microsoft strategy versus Apple is to keep OS X pinned down on Apple hardware in order to keep it marginalized. To do this, Microsoft must attack Apple's strength, the iPod empire. By doing so, it forces Apple to defend iPod, and thus expend resources -- time, money, management thinking -- which might otherwise go towards unleashing OS X.

Apple is vulnerable to this Microsoft strategy. It is hooked on the fat margins Mac provides and this has kept it from truly competing with Windows by setting OS X free. Regardless of all the noise Steve Jobs and his cohorts make about Mac and OS X, it is not much of a growth story for Apple. The iPod empire is. For Apple, it is iPod that must be defended at all costs. Attacking Apple this way pretty much assures they will not have the energy to plan and implement a generic Windows strategy, even if they found the will to do so.

Microsoft has stated and demonstrated that it is willing to be number two, three or even four in a market, and is willing to invest in a new venture over many years before it becomes profitable, when doing so is strategic to the defense of Windows or Office. Microsoft has staying power, huge resources and strategic focus with a long attention span.

Bill Gates long ago mastered the "attack their strength" approach to strategic competition. He understands that if you attack a competitor's weakness, unless you can crush them, you only make a stronger competitor. When you attack a competitor's weakness, it will likely either shore it up or abandon it. Either way, the competitor emerges stronger. But when you attack its strength, you put it on the defensive expending more resources than it would otherwise on something it is already great at.

Thus the Zune strategy emerges.

Copyright © 2006 Philip Bookman

Technorati: Zune Microsoft