Lessons from Microsoft: FAIL!

Microsoft Still Doesn’t Get “It”ms logo

Coming off of WWDC (LINK) – the Apple developers’ convention – as well as recent news about updated Chromebooks and Chrome Only “desktops” (LINK)– I find it hard to notice that the spotlight on Apple and Google put the low-light on Microsoft at a time when it should be using it’s marketing might for good — not evil. But they are foolish, stuck in the past, even as they continue to attempt to innovate – their business practices are not catching up. Microsoft is a multi-billion dollar example of an imbalanced business.

Operating Systems


The Chrome operating system is a web / linux based system that is 99% web functions with offline functions rolling out with updates. The idea is that 99% of business is done on the internet, including databases, web surfing, documents, email, etc — so a lot of the operating system as we know it (Windows, OS X) are bloatware that slows down the process. Google, by owning the system can make everything faster, easier to use and fundamentally steer people through their services such as GDrive, Apps, etc. Chrome is provided 100% free to anyone that wants to use it.

Google also has the Android operating system, which for it’s pros and cons of being an open interface that can be developed upon and customized — is a great operating system. Google provides this free in order to garner market share, views, traffic to it’s products and eventually search – of which generated over $2B in revenue last year from mobile.


The Apple operating system continually gets faster, easier to use and integrates with more and more Apple products and social features (Twitter / Facebook) with each update. Every year the software has been updated like clockwork while slowly brining the phone iOS and desktop OS X closer together. In fact, the most recent rollout “Mountain Lion” creates a seemless integration between desktop and phone whereas there is instant sharing and continuation of movies and documents across platforms.
(MS released a test version of Smart Glass last week that is similar but a distant thought (LINK))

Apple, since it is the only one making the iphone, gives the software away for free to manufacturers (themselves) — but it also provides sweeping updates for past generations for phones all at once. That is why people look to Apple and never use the word “fragmentation” that they use with Google. This is Google’s big downfall and possibly it’s only envy of Apple’s phone strategy.

apple chart

When it comes to OS X, the desktop version, Apple charges new users $19 for the update and existing customers who purchase a system from today on, get the update for no charge. The reality is that users are getting a completely new operating system, that is loadable across multiple computers for only $19. (LINK)


Microsoft is making more money off it’s licensing and patent defending in mobile then off it’s own devices. Report indicate that HTC is paying Microsoft up to $15 per ANDROID phone they sell.
(LINK) As Microsoft rolls out it’s phone strategy it couldn’t get anyone to buy their licensing for Windows Phone 7.5 so it paid Nokia in the amount of $250M+ to be an exclusive partner and committed an ad budget to match Nokias. Nokia will get charged an undisclosed licensing fee for using Windows Phone 7.5 software. Does that make sense?

To dirty the water even more, while trying to get developers into Windows 7.5 they are noting that Windows Phone 8, an extension of their new operating system due by September, is not compatible with Windows 7.5. The hardware, software, apps, etc. will not run Windows Phone 8. So for the 2% of consumers that MS 7.5 count in the market share, they will not get a free upgrade to Windows Phone 8. See another issue here?

Finally, the cash cow of Microsoft is Windows. CEO Ballmer recently said that over 600M windows 7 licenses sold. The retail is $100 and it has been reported that MS charges all but the highest producers close to that $100 per unit. (LINK) As they roll-out Windows 8, the company has expressed that it is a completely new operating system with complete functionality beyond the genius that was Windows 7, including thousands of new features and the wonderful Metro Interface — and will cost $100. While touting this number as a highlight, they also suggest that users that buy a computer now will have to pay to upgrade to Windows 8 — albeit at a discount — what a horribly effective way to stifle the PC buying cycle. (LINK)

How is this Relevant to you

While Apple and Google fight the good fight in getting their systems into as many hands as possible, Microsoft is erecting barriers that aren’t working in the new world. While the market is shifting towards a digital revolution, Microsoft is innovating it’s products, but not it’s business philosophy to match. Microsoft is an imbalanced enterprise.

Most companies are too.

A lot of companies have digitized part of their efforts, moving to online CRM programs, and relying on online reporting, etc. Some are reaching new customers through social media and internet search marketing. But what are they doing with their main business philosophy? The structure of their business? How does all that digital translate into their store to make an impact?

Brick and Mortar

How are you bringing the digital experience into your store?

How are you expressing your digital components to your customers?

Can you bridget the marketing gap between how you got the customer and how you interact with them once you have them?

Internet Companies

Do you balance real custom service to follow-up on digital communication?

Are your customer service forums monitored with real people?

How do you assist customers when a digital purchase or service goes wrong?

Balance. This is a hard act to pursue and it often takes a higher level, outsider approach to see how you can bridge these gaps in your business. If you don’t — you will be left behind by those that do. With businesses being closer to each other in the virtual and real world — you have a lot of competition and how you balance this digital world is imperative to success.

Todd Katcher
Digital Dealership System

c: 615.669.5244
twitter: @digitaldealers
web: www.digitaldealershipsystem.com
blog: www.fouronthefloorblog.com

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