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
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
Labels: software strategy
posted by Phil Bookman at 9:22 AM
<< Home