Tag Archives: microsoft

When dominant powers assume that they make the rules

My friend Adrienne Dellwo (if you are in search of fibromyalgia info, she’s the authority) today posted a worthwhile article on how Wizards of the Coast has managed to lose the Dungeons & Dragons market. For those of you who don’t want to read it or have never cared about fantasy role-playing games, a few years ago WotC decided on a complete remake of the tabletop game (which is still popular). Whether the new edition was a good one or a bad one was up for debate; most players a) didn’t think it felt like D&D, and b) weren’t very interested in repurchasing all the basic books again. It’s safe to assume the move was revenue-driven in a saturated market (declining sales of expensive source books), and one empathizes with the need to keep customers buying stuff, but planned obsolescence always creates a crossroads. When deciding whether to buy the new thing, and annoyed about it, people may decide on someone else’s new thing.

It isn’t the first time that’s happened in some way. We can learn from the trend, which spans most aspects of human life. The pace has sped up as communication and transportation have accelerated.

The Roman Catholic Church defined religion in Europe for centuries, with an authoritative hand in economic, political, military and social life. A variety of reformers decided that heresy wasn’t nearly as sinful as venal, oppressive, centralized ecclesiastical leadership, and today a good chunk of Europe isn’t Catholic–and a good chunk of what remains nominally Catholic really doesn’t care.

In the Civil War, the South starved because “cotton was king!” Thus, wealthy planters kept growing the stuff rather than food, even though getting it to its European markets was problematic. A primarily agrarian population, with a healthy chunk of the workforce that didn’t have to be away at war, found a way to starve. The South also insisted on going to war to preserve slavery, when a quick look around the world would have told them it was unsustainable. The Confederate States are no longer a country.

Chrysler, GM and Ford forgot how to make cars that people wanted to buy. Never mind: buy Murrican! In Detroit, social pressure (patriotism, union allegiance) worked. Everywhere else, people bought cheaper, more reliable Japanese cars. They still don’t get it. The American companies remain at the top of the Consumer Reports recall lists, people who value reliability buy Toyotas and Hondas, and the whole industry had to be bailed out. Detroit? Not much left of it.

IBM popularized the personal computer and set all the standards. Just eight years later, it was flailing about helplessly as it tried to dictate that the market pay double for a new architecture and operating system that were mostly incompatible with all the previous IBM stuff. Everyone told IBM to pound sand and bought Compaqs, Epsons, Acers, HPs, and ASTs running the same OS in evolutionary form. Do you own an IBM computer?

AOL looked poised to redefine the Internet. AOL startup CDs were a primary form of junk mail. For a great many people, AOL was the Internet, despite the steady grumbles of the tech-savvy libertarian-leaning old school who had thought typing Unix commands wasn’t too bad and viewed with fear and loathing the influx of screaming, clueless newbies with their text-speak and tendency to call IRC channels ‘chat rooms.’ Then AOL users began to learn about the Internet, and came to realize that AOL was now more in their way than paving the way. How long has it been since you got an AOL CD ride-along?

CNN was all the rage after the first Gulf War. Now it’s just one of three incompetent news entertainment stations. Those who want their existing perceptions reinforced now watch the version of the competition whose slant they prefer. People who plan to think read it online. CNN may still be in business, but they aren’t really in the news business, and their reputation is lower than ever.

Flush with the market dominance of Windows, Microsoft insisted on shoving a lousy web browser at its customers. It became the Web Browser Most Often Used to Download a Real Web Browser. Microsoft can still make the rules for Internet Explorer; it’s just that no one will care. Microsoft also kept repackaging a boondogglier boondoggle and calling it the Next Great Windows. Apple’s stock sells today, as I type, for $483/share. Five years ago it sold for about $160. You can get a share of Microsoft for $32/share. Five years ago, you’d have paid about $26 for it. New Microsoft product announcements don’t change much, especially as many are flops that drive the stock price backward.

SEIU, one of the dominant labor unions, truly believes that it got Barack Obama elected. It neglects to consider that organized labor, so long accustomed to having its way and having its sloganeering taken at face value, no longer has the power to get anyone elected. It has lost the battle for public influence. It has allowed its enemies to convince people that they are better off without the right to bargain collectively. That’s like convincing landowners that polluted water is actually better than clean water. Today, maybe 10% of American workers are in a union, and many of the other 90% would object strenuously to the concept.

Google perfected the search engine, then broke its “Don’t Be Evil” motto all over the place. People are increasingly open to search engine solutions that don’t feed the Google data hydra. Google Plus was rolled out to a tremendous yawn. Everything Google does raises the question: “in what way is this meant to spy on me?” No one will lament its downfall, when it comes.

USC college football had a motto: “Win Forever.” At one point, that looked likely. A private school, it treated NCAA inquiries with disdain. The resulting sanctions sent the Win Forever coach packing his bags for the NFL, led to the hire of a mercenary coach who has floundered, caused a demoralized team of stellar athletes to lose a bowl game to a team with a losing record, and lost the program its star power. Last week, USC struggled to defeat Utah State, a team with few athletes that USC would have recruited even when it wasn’t under scholarship reductions.

Adrienne commented to me: “To add to your list of companies that toppled themselves, I think the Big Three TV networks are next. When a show gets knocked off of my DVR and I can’t find it either on the network’s website or On Demand, and they don’t show it again for several months, it’s just plain stupid.” She’s got a point. The major networks have become increasingly less relevant, in large part because they’ve been difficult about content. Faux is the worst. Increasingly, the most compelling TV content is not on the major networks at all.

The American mindset continues to insist that its system is the world’s greatest, that its military might is unchallengeable, its currency is the world standard, and that every country’s most important relationship is that with the United States. This, as it: lags the developed world in most quality-of-living categories, tucks tail from Afghanistan, and tries to decide whether its worst enemy is a a) major world religion with a few extremists, b) people who want to sneak across its borders to pick fruit and mow yards, or c) two old Cold War adversaries who watch its missteps with bemused anticipation. It requires an enemy, lest its people look inward and see that its own government and corporations are a greater threat to them than all of the above in union. And in the meantime, increasingly, it fails to adjust to a changing world and falls behind, losing relevance and prestige.


My computer sales brain spasm

Back in the years of the XT, AT and early 386 clones, I used to sell computers. Sales had its moments. I was never a big star in sales, but I did it well enough that when I left after two years, it was of my own choosing. Remember the Microsoft/IBM wars? I was a foot soldier in the trenches of those, five miles from the M$ campus. One of these days I’ll write about just how tremendously out of touch IBM was with dealers and clients. For now, I’m going to make fun of myself instead.

One of my best clients was an underwriting firm south of Seattle, run by two brothers named Doug and Dick Rodruck. Great guys, steady customers, the sort of people a commissioned salesperson could make a living by helping. I looked forward to all their calls.

The sales floor could be chaotic at times, with people needing help on the floor, calls announced for you while you were helping them, stressed-out receptionists desperately seeking someone to help the biggest salesman’s clients (with zero hope of profit or appreciation from him), and warehouse staff moving forty boxes in for storage wherever space could be found. One could lose one’s focus. Sometimes real badly.

Of course, I knew most of my customers by voice. When I wasn’t going in six different directions, I picked up on who I was talking to. At the same time, I had a lot of customers, very loyal ones, amazed that I could ‘remember’ what they bought a year and a half back. (I wrote it all on rolodex cards. I cheated.) So when I heard the page “Dick is on line 1 for Jonathan,” I didn’t think. I took the call and said hello.

“Hello, Jonathan, it’s Dick. [Here followed a bunch of specifications for new hardware they wanted to buy.]” I listened and started working up pricing, but after a time it occurred to me: I do not know who this is. I can’t place him. Well, I’ll eventually pinpoint him.

Which I did. Unfortunately, that was before I learned in life that not everything on one’s mind needs to be blurted out at random, especially stuff like evidence that you had no idea who was on the phone. I watched my mother do it all growing up, so in addition to the blurt genetics, I had an unhelpful example. I was still learning how to shut the hell up rather than spit out my latest revelation.

Thus, when Dick finished describing whatever computer need he was describing, and asked me a question, it was blurtin’ time: “Oh. Dick Rodruck! You’ll have to excuse me. There are a lot of Dicks out there.”

A very awkward silence. I realized what I’d just said.

Now what? The silence was mine to break. Or, at least, it had better be me.

“I do hope and trust you realize, Dick, that in no way did I intend that the way it came out. I apologize profusely.”

How you can know that Dick Rodruck was such a great guy? He forgave me. He said not to worry about it, and continued with the substance of the discussion. The bullet of a ruined relationship whistled past me.

Microsoft = IBM

Today John Dvorak wrote a pretty good article on why Microsoft’s stock is, in his words, dead money.  Yeah, I know it’s on Murdoch’s news service, but Dvorak’s old school and knows his stuff.

It is so odd how things cycle.  When I was hustling machines about five miles from the Redmond campus, I hated the IBM reps.  Every one of them.  They were not merely arrogant (though nothing like the Apple reps, the very snottiest of all), they were stupid (which the Apple reps were not).  We were making 5% margin on IBM machines.  We made 20% on others.  Also, no one wanted IBM.  Why should we sell it? Well, because it’s IBM.  In reality, we were selling them at cost to keep our dealership.  We couldn’t get to a profitable discount level with IBM unless we sold more.  However, when we had a line on a big account and were willing to go out at cost just to advance our business with IBM, IBM would go direct and undercut us (and we were to understand and accept this, that ‘business was business’).

Their attitude was that everyone should want IBM and we should push everyone to IBM, even when a retarded goblin could see that IBM was the very worst deal going.  Even when they came out with a good product, people didn’t want IBM’s MCA (‘MicroChannel’) architecture.  They had a great portable and I had a client interested in two.  He asked about the architecture, and I said ‘MCA’.  His words, quoted exactly as I recall:  “Not that f***ing MicroChannel.”

Microsoft, by contrast, was swift and slick and witty and inventive.  It was eating Lotus’s lunch, WordPerfect’s lunch and just about everyone else’s.  It was the smartest kids in the room.  Some of its stuff was dumb (remember ‘Bob’?) but a lot of it took hold.  Even IBM used Microsoft’s DOS (which M$ didn’t actually invent, but bought in desperation early on).  And when IBM tried to make everyone buy OS/2, the market said ‘meh.’  You could tell the Microserfs when they came into the store.  They looked like hippies gone full geek, total slobs.  You didn’t make judgments.  They were often FYIFV (‘f*** you, I’m fully vested’) tycoons and they might well write you a check for two brand new laser printers.

Now M$ is the dinosaur rather than the juggernaut.  It invents nothing.  It follows and tries to appropriate the market, and the market increasingly sneers.  In the process of its rise, its ruthlessness made it many, many enemies who yearned for the day M$ would become irrelevant.  I was one, as I labored on supporting M$ products in the workplace as an IT jock, basically forced to deal with them as the world was once forced to deal with IBM whether it liked IBM or not.

Dvorak’s right.  MSFT is a lousy buy, even though its price has been flat for years while the market has risen.  They’re not going to invent anything.  If they weren’t sitting on so much cash, and if they didn’t have so much inertia due to the past with regard to installed base, they’d collapse.  They are in much the same situation as IBM once was.  They can say what they want, but people no longer care.

Addendum: As an editor, I find it fun to look back in hindsight at my past commentary, especially where it missed something. This is how we learn. My views held up for two years on this one, and then MSFT began a climb. Writing in 2020, it’s up over 200–about a 9x gain in seven years. What I learn from this is why I no longer buy separate issue stocks at all.