December 10, 2006

Microsoft Has Lost Its Way, Not Coming Back Zune

I almost feel guilty pointing out how Microsoft is a very confused, bureaucratic dinosaur of a company now. It seems that after everybody else has come to the same conclusion, it's no longer hip, and piling on isn't going to do much good.

Yet, with the Zune launch universally seen as a dud, and the company's Internet enterprise flailing, one can't help but watch the train wreck as it happens. A company who has based its war fighting the battles of previous decades has not adapted, and the company has grown too fat and bloated to turn on a dime, as other more nimble players have.

Steve Berkowitz, responsible for Microsoft's online services unit, told the New York Times as much in a long-ranging article printed Sunday.

“I’m used to being in companies where I am in a rowboat and I stick an oar in the water to change direction,” said Mr. Berkowitz ... “Now I’m in a cruise ship and I have to call down, ‘Hello, engine room!’ ” he adds with an echo in his voice. “Sometimes the connections to the engine room aren’t there.”

The disconnect has left Microsoft trailing Yahoo! and Google in the Internet space, without much hope of taking the #1 position. But to me, it doesn't really make sense that Microsoft should be in this fight in the first place. If the company wants to be the world's leading operating system and productivity software company, it's done that. If it wants to move their Office suite to the Web, then great. But there is no real good reason or inherent birthright for the company to take on this new market. They haven't delivered any new features that customers have found interesting, and in a market when customers have a variety of options to choose from, they won't accept lower quality.

This issue can be seen easily with the early response to their iPod wannabe, Zune. Jupiter Research's Michael Gartenberg says there is much that could have been done to improve customer adoption of the device. Chief among them, that it "lacks elegance" and "doesn't feel complete". With the iPod's five year head start, Microsoft, as it has shown in its fruitless battle with Google, is not capable of innovating its way into  market where it doesn't belong.

Give it up, Microsoft. Do what you do best, and leave the innovations to others.

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